The Ministry of New and Renewable Energy favors restoration of the accelerated depreciation benefit for wind energy projects and has taken up the issue with the Ministry of Finance.
The accelerated depreciation benefit was the primary driving force behind the growth of wind energy installations in the country between 1992 and 2012. The withdrawal of the benefit in April 2012 led to a sharp fall in wind energy capacity addition.
In 2012-13 and 2013-14, the wind energy capacity addition totaled 1,700 MW and 2,079 MW respectively. In comparison, the wind energy capacity addition stood at 3,097 MW in 2011-12 when the accelerated depreciation benefit was available.
During a recent meeting in New Delhi with the Union Minister for Power, Coal and New and Renewable Energy Piyush Goyal, stakeholders in the wind energy sector emphasized that the accelerated depreciation benefit did not cause loss to the government and was rather a deferment of income tax. The lack of investment in the sector due to absence of the accelerated benefit, they pointed out, meant that the government lost out on taxes such as MAT, service tax and central sales tax.
The meeting, attended by representatives of the Indian Wind Turbine Manufacturers Association, Wind Independent Power Producers Association, Indian Wind Energy Association and Indian Wind Power Association as well as officials from the Ministry, Indian Renewable Energy Development Agency Ltd. and Centre for Wind Energy Technology, also focused on some of the other challenges plaguing the sector.
Besides restoration of the accelerated depreciation benefit, the industry representatives at the meeting sought increased funding for the Generation Based Incentive scheme, augmentation of transmission and evacuation facilities, increase in corpus under the National Clean Energy Fund, higher cess on coal, a long term sustainable regulatory framework for handling big projects, enforcement of Renewable Purchase Obligation, continuation of the feed-in-tariff route instead of going for competitive bidding, timely payment by discoms, setting up of a payment guarantee fund, eliminating the uncertainties with regard to signing of Power Purchase Agreement in some states and grant of ‘Priority Sector’ status by RBI.
The Minister assured the industry representatives that all the problems facing the sector would be looked into and suitable action initiated. The issue of accelerated depreciation benefit has already been taken up with the Ministry of Finance, he informed. In response to the request for additional funding for the GBI scheme, the Minister said the needful would be done depending upon availability of funds. He asked officials of IREDA to simplify the procedure for GBI releases and also make it more transparent.
The country’s wind energy sector currently has an installed capacity of 21,264 MW.