With crude prices rising and thermal power failing to keep up with the growing demand for energy in the country, the Centre has been increasingly working towards developing alternative energy sources. While it stutters in its attempts to open up the nuclear energy option thanks to political posturing by its allies, the government has also been paying significant attention to the renewable energy sector.
On Friday, the Centre announced fiscal incentives for the wind power sector. Under the new policy, the ministry of new and renewable energy (MRES) would provide the generation based-incentive of 50 paise per unit for period of 10 years to eligible promoters through Indian renewable energy development agency (IREDA). The incentive would be available to those wind power units with a minimum installed capacity of five mega watt (mw).
The fiscal assistance would be availed by only those independent power producers whose power are to be sold to state?s powergrid and those producers who use wind energy for captive use would not be eligible for the schemes. Those wind producers who have been getting earlier benefits of 80% accelerated depreciation would not be able to avail the generation based incentives scheme.
?Through such fiscal measure, we would be definitely on course of meeting the 11th Plan target of 10,500 mw from the wind energy,? Vilas Muttemwar, union minister for MRES said here. At present the country?s installed capacity is 8760 mw while the estimated potential is to the tune of 45,195 mw.
He acknowledged that due to the provision of 80% accelerated depreciation measures, the investment in wind energy have been restricted to only those investors who have a strong balance sheet to absorb the depreciation benefits. ?With the entry of independent power producers is expected to ensure entry of market forces and competition into wind energy sector,? he said.
The incentive came after a huge rise in the cost of steel, a main factor in setting up a wind energy tower, in the last few months. According to industry watchers, the cost for setting up a wind energy unit has increased from Rs 4.50 crore per mw in 2004 to Rs 6.50 per mw at present.
Tamil Nadu, Gujarat, Maharashtra , Andhra Pradesh, Karnataka and Rajasthan have been the major producers of wind energy. India is the fourth biggest producer of wind energy after Germany , Spain and USA. Germany produces more than 25000 mw of electricity out of wind energy.
Besides the announcement of fiscal sops, Prime Minister Manmohan Singh has MNRE to draft schemes and guidelines for the introduction of renewable energy certificates to encourage states to promote and trade in renewable energy.
At a meeting of the Energy Coordination Committee, Singh had authorised the MNRE to draft schemes and guidelines for the introduction of renewable energy certificates. He said that the government would soon set up solar energy mission and promote use of solar laterns across the country.
Muttemwar said that a national biofuel policy would be soon announced. The draft biofuel policy has been referred to a group of ministers headed by union agriculture minister Sharad Pawar. Under the policy, a national biofuel board is expected to be set up with Prime Minister Manmohan Singh as its chairman.
Rajasthan has shown extremely positive results in producing power through new renewable sources, Muttemwar added. At present, the country generates 11,272 mw of electricity from sources like agro residues and plantation, wind, small hydel power, solar, cogenearation-bagasse and waste to energy, while the estimated potential is 84,776 mw.
The fiscal sops announced come within a few days of US-based Astonfield Renewable Resources announcing plans to set up renewable energy projects close to 500 megawatt across the country. Because of various measures undertaken by the government, the grid interactive renewable power installed capacity at 6770 mw during 10 th plan is more than double the target of 3075 mw. Of these, three fourths is from wind power and the balance is from bio-power and small hydropower.