With Incentives Set To Expire, Indian Wind Energy Market Faces Challenging Times
Wind energy companies are India faces tough times ahead as critical incentives for project developers are set to expire in one year.
According to sector analysts, and some developers themselves, annual capacity addition in the wind energy sector is expected to see it final bloom this financial year. The Generation-based Incentive, or GBI, is set to expire at the end of the current financial year, on 31 March 2017. Through this incentive developers get Rs 0.50 (US¢0.75) for every kilowatt hour of electricity generated.
Another incentive, accelerated depreciation shall be reduced from 80% to 40%. Through this incentive project developers can claim higher tax deductions on revenue generated from wind energy projects.
Over 2 GW of wind energy capacity was commissioned in financial year 2013-14 and 2014-15 each. Financial year 2011-12 was perhaps the most successful year for the Indian wind energy market when over 3.2 GW capacity was commissioned. Annual capacity addition in 2012-13 fell by around 50% to 1.7 GW when these incentives were suspended.
Similar market conditions are expected to prevail once these incentives expire on 31 March 2017.
Several wind energy developers in India are already looking at other renewable energy sectors to protect their interests. Suzlon Energy, one of the largest wind energy solutions providers in India, has entered the solar power market by actively participating in competitive auctions. Gamesa, which has increased its market share in wind turbine supplies in India, has also started offering EPC services in the solar power market. Independent power producer ReNew Energy Ventures, which concentrated on wind energy projects in its initial years, has also successfully participated in several solar power auctions.
Image Credit: Michael Hoefner | CC-BY-SA 2.5