india vies to climb wind power ranks with new subsidies
India’s Ministry of New and Renewable Energy has announced a new plan to subsidize wind energy, earmarking $81 million (3.8 billion rupees) to lower the price of each kilowatt-hour generated by wind turbines by half a rupee (about a penny), bringing down the average price of wind power in the country, which currently hovers around 3 rupees per kilowatt hour.While this doesn’t sound like much, it could be a good start for India, which has so far been talking a big game about adopting greener policies. While there is a lot of pressure for developing nations with large populations to convert to clean sources of energy now, especially right now with the climate talks in Copenhagen. But, considering how expensive this could be, and how much it could stunt important growth over the next few years, it makes sense for countries like India to walk before they can run.
That’s why its government is capping its new wind incentives at 6.2 million rupees per megawatt hour. On top of that, wind farms with capacities exceed 4,000 megawatts will not be eligible for the money. The latter restriction won’t apply to many, seeing as how the world’s largest installation puts out 782 megawatts. The subsidy program will remain in effect anywhere between four and 10 years, depending on how much growth and business it stimulates.
The announcement is just the latest in a series of incentive package launches for wind power in India. Others include tax exemptions for the first ten years of wind farm operation, sales tax exemption, and 80 percent accelerated depreciation. However, project developers will have to choose between cash subsidies or accelerated depreciation — not both.
Right now, India has 10,500 megawatts worth of wind power installed. But its potential is estimated to be over 45,000 megawatts. The country is ranked fifth in installed wind power globally, behind the U.S., Germany, Spain and China.
It also raised energy tariffs this year to bolster domestic manufacturing and green industry. In June, the tariff jumped from 2.90 rupees to 3.30 for wind power. Biomass went from 3.15 to 4.50, and solar tariffs were hiked to 3.15 rupees per kilowatt hour.
With direct cash benefits for domestic wind developers and increased tariffs for outside suppliers, conditions are favorable for wind companies in India. The government is hoping to stimulate new growth in that sector, generating more economic activity as well s power. The move should also reduce carbon emissions — although it is unknown by how much.
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