Industry exceeds development target -- State policies slowly emerge

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India increased its wind power generation by 233 MW in fiscal year 2002, a better result than expected, though 55 MW less than the previous year reports the Ministry of Non Conventional Energy Sources (MNES). Fiscal year 2002 ended on March 31. India's total operating wind power capacity is now 1861 MW, up from 1628 MW in 2001. "The Indian wind industry has performed surprisingly well," says an MNES spokesman. "We did not expect to cross our target of 200 MW."

India is aiming for 10,000 MW from renewables by 2012, half of which is expected to be wind energy. More states are expected to follow the recent examples of Gujarat and Rajasthan and introduce market incentives for wind development as proposed by MNES. Maharashtra could be next. A public hearing on energy policy, called for by wind project developers and the Maharashtra State Electricity Board, is due soon.

With potential for over 3000 MW in the state, the industry's hope is that the hearing, overseen by the Maharashtra Electricity Regulatory Commission (MERC), will result in a reasonable tariff and purchase conditions for wind power. "The Commission has taken into consideration the views of consumers, who feel that in light of substantial tax benefits, tariffs should be low, and the views of developers who feel that regulatory uncertainties should not affect their projects," says a MERC spokesman.

A proposed wind tariff for new installations in Maharashtra, backdated to April 1, is described by one analyst as "even better than MNES guidelines." The suggested rate is INR 3.50 (0.074/kWh), although there will no longer be any relief from sales tax. The tariff will rise by INR 0.003/kWh for the first ten years from the date of commissioning of the project, after which it will be reduced and frozen at INR 3.25/kWh from 2013-14. Regulations for wheeling and banking power and selling it to a third party as part of the power purchasing agreement with Maharashtra electricity board (MSEB) are expected to be part of the package. "This will not only set the pace for the new policy but also firm up the returns of our already invested projects," says one industry player. Wind power projects that may sell power to MSEB will be limited to a combined capacity of 100 MW or less a year for the remaining four years of India's Tenth Plan period, ending March 31, 2007.

Maharashtra can look to Gujarat as an example. Its new policy is already seeing a resurgence in activity. Vestas RRB is just one of the companies which has applied for land being offered by the state government for wind development. The company hopes to build a 15 MW wind farm in the region.

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