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India

India

THIS TIME IT'S FOR REAL

The wind energy market in India is booming. Implementation of market incentives, recognition of the role of the individual consumer in electricity generation, massive government back-up via demonstration projects, and national wind mapping research programmes have all contributed to speeding the market along. No other country has taken quite such a whole-hearted approach to the business of getting wind turbines up and running.

India has long held outstanding promise as a wind energy market, but the pace of development has never matched the grand vision of its leaders. Not until now, that is. Suddenly the dreams are turning into reality. In the past six months or so India has installed 64 MW of wind power capacity (see pages 24-31). That is more than any other country except Germany. And over 900 MW of proposals from private sector developers are in the pipeline. If the current rate of growth continues -- and that requires fast processing of an enormous amount of paperwork plus the ability of utilities to pay the premium price for wind electricity stipulated by government -- the Indian wind market will become the biggest in the world by this time next year.

That prophesy will have many sceptics. We have been hearing similar grandiose predictions for the past eight years. But India has not wasted those years; it has been using them to develop an administrative structure and introduce market incentives which appear to exceed even the wildest dreams of the most optimistic wind energy lobbyist in the West.

There are three main elements to the Indian approach: first, market incentives have been introduced which make developing, operating and owning wind power plant an attractive and lucrative proposition for big business; second, in recognition of the role individual consumers can play in generating electricity (and their desire to do so) schemes are being initiated nationwide which invite participation from private individuals, organisations, and small business; and third, the government will provide vital back-up, with demonstration projects and a national wind mapping programme.

No other country has combined all three of these promotional policies. Denmark and Germany have provided market incentives to get small consumers involved, but they have not encouraged big business. Britain has done so, but neglected the role small consumers could play -- and reduced its R&D support. And the US, smarting for years from the errors of its tax credit bonanza for Californian wind power in the early 1980s, has only recently introduced a one-and-half cent production incentive, backed by an R&D budget which at last is nearing a size where it could have some useful effect.

India is only too aware, from the Californian example, of the dangers of an overheated market. Poor technology and develop-and-be-damned businesses will be quickly rooted out. Not only is the government ready to cut incentives, such as the 100% depreciation on wind turbines, if they start inviting the wrong kind of entrepreneurial technology, it is also setting up procedures for quality control, including wind turbine test stations.

Driving India's wholehearted embrace of wind is the need to cure its chronic power deficit, currently crippling industrial expansion, by using as much of its own energy resources as possible. Wind power is currently one of the country's best options for achieving these aims. The mainstay of the new market programme is a demand that utilities take as much wind into the grid as they are offered and purchase it for some $0.07/kWh. Coupled to this, the individual states are offering benefits to operators. These include a five year tax holiday, energy and sales tax exemption, cheap loans, free or favourable land leasing, direct capital subsidies, and technical assistance. More importantly, companies generating their own power do not often get cut off from the supply. Co-ordination and control of development is provided by government agencies in each state who work in tandem with utilities to process wind farm applications. There are even strict time schedules (in weeks not months) for paperwork processing. The Ministry of Non Conventional Energy Sources has also issued rulings on who pays for grid connection and has said that wind farm operators -- at a reasonable price -- should be granted access to the grid to wheel power to third parties.

This is a lot more than governments in the West have achieved. They could learn a lot from India about how to get a market moving -- and how to efficiently and effectively dismantle barriers to it. For its part, India should continue to learn from the West about free markets. Duty imports on wind turbines -- and wind turbine components -- should be completely removed. Talk (threats) of reintroducingduty on exempt components must be forgotten. With plenty of cheap and good labour in India, Western wind companies will soon move their machine production to the sub-continent. Import duty might possible speed this proces, but it is far more likely to severely brake the market -- just as it had finally got going.

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