Government extends popular accelerated depreciation scheme for wind power producers
The government has decided to extend the popular accelerated depreciation incentive for wind power producers beyond March 31, when it was due to be terminated, as the alternative generation based schemes have not found enough takers.
Power producers can opt for either of these incentive schemes, and since as many as 70% have opted for accelerated depreciation, an overwhelming majority of the companies have been lobbying for extension of this scheme which provides subsidies for setting up wind-generated power plants.
At the same time, the generation-based incentives, introduced in 2009, have fallen way short of the government’s target of 4,000 MW, yielding just 1,500 MW so far.
“We have asked the finance ministry to let accelerated depreciation continue as it will help us achieve the earlier missed targets,” said GB Pradhan, secretary, ministry of new and renewable energy.
“Accelerated depreciation has been a major support to industries looking to captive power capacity for energy security and to freeze power costs, making the sector even more globally competitive,” said the official spokesperson of Suzlon, the leader in the domestic market.
V Subramaniam, secretary-general of Indian Wind Energy Association, said the extension of the scheme will prove a boon to the companies that can take the depreciation on their balance sheets. This will help attract more orders, said Subramaniam, calculating an investment of Rs 15,000 crore at an estimated installation of 3,000 MW of wind-generated power this year.
Accelerated depreciation incentive will, however, cease when the direct tax code comes into force. Subramaniam said the co-existence of various incentives, including the renewable energy certificates, has proved beneficial.
“This co-existence is actually beneficial for the economy,” said Subramaniam, “Accelerated depreciation attracts new players while GBI ensures the presence of large power plants and investment.” Generation-based incentive scheme provides grants to the power plants based on the amount of power generation.