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Central and State Government Policies for supporting Wind Power Projects

Latest News for Energy Efficiency, Solar, Wind, Biomass Power, Biofuels, Waste to Energy

Central Government Policies

Central government policies have favored many Wind Energy companies to set up Wind Power projects. power The General guidelines for developing Wind Power Projects are available here. Other policies and programmes are discussed below.

CERC Tariff orders for procurement of power from Wind Energy Generators

Central Electricity Regulatory Commission in its order dated 16/09/2009 introduced its regulations and tariff orders for procuring wind power into the grid; for control period from 16/09/2009 to 31/03/2012. The tariff structure consisting of fixed cost components: Return on Equity, Interest on loan Capital, Depreciation, Interest on Working Capital and Operation & Maintenance Expenses. Detailed tariff structure and regulations are available here.

Description CERC Regulation
Capital cost Rs5.15 Crore/MW, linked to indexation formula
Commercial operational life (including evacuation systems) 25 years
Return on Equity 19% for first 10 years and 24% from 11th year pre-tax
Debt Equity Ratio 70:30
Interest on loan Average SBI long term PLR plus 150 basis points
Depreciation 7% per annum
Interest on Working Capital Average SBI short term PLR plus 100 basis points
Operational and Maintenance cost Rs. 6.50 lakh/MW
Escalation 5.72% per annum
Capacity Utilization Factor for wind power density 200-250: 20%for wind power density 250-300: 23%for wind power density 300-400: 27%for wind power density above 400: 30%
Sharing of CDM Benefits First year: 100% to the project developerSecond year: 10% beneficiaries,to be increased at 10% per annum upto 50%.Thereafter to be shared on equal basis
Taxes and Duties Tariff determined should be exclusive of taxes and duties levied by government provided allowed as pass through on actual basis

 Accelerated Depreciation

The main incentive for wind power projects in the past, was accelerated depreciation. This tax benefit allows projects to deduct upto 80% of value of wind power equipment during first year of project operation. Investors are given tax benefits upto 10 years. Wind Power producers receiving accelerated depreciation benefits must register with and provide generation data to IREDA and are not eligible to receive more recent Generation Based incentives.

 Indirect Tax Benefits

This includes concessions on excise duty and reduction in customs duty for wind power equipment. Wind powered electricity generators and water pumping wind mills, aero-generators and battery chargers are except from excise duties. Indirect tax benefits for manufacturers of specific energy parts vary from 5-25% depending upon the component. Other direct tax benefits & liabilities are shown here.

 Central-level Generation-based Incentives

Offered by the central government since June 2008 and administered by IREDA, the GBI for wind is available for independent power producers with a minimum installed capacity of 5 MW for projects commissioned on or before 31/03/2012. As of December 2009, the GBI is set at INR 0.50/kWh (USD 0.01/kWh) of grid- connected electricity for a minimum of 4 years and a maximum of 10 years, up to a maximum of INR 6.2 million (USD 140,000) per MW. The scheme will deploy a total of INR 3.8 billion (USD 81 million) until 2012 and aims to incentivize capacity additions of 4,000 MW. Wind power producers receiving a GBI must register with and provide generation data to IREDA. The GBI is offered in addition to SERC’s state preferential renewable energy tariffs. However, IPPs using GBIs cannot also take advantage of accelerated depreciation benefits. The GBI program will be reviewed at the end of the Eleventh Plan and revised as deemed appropriate. As of December 2011, 58 projects had been registered under this scheme with over 288.8 MW commissioned. (Tamil Nadu-30, Rajasthan-21, Gujarat-3; Andhra Pradesh, Maharashtra and Karnataka-1 each). More details are available here.

 Renewable Purchase Obligations

Several states have implemented RPOs with a requirement that renewable energy supplies between 1% and 15% of total electricity. The impact of the RPOs on wind development may depend on the penalties and enforcement of the targets as well as an effective REC market to promote development of areas of the country with the most abundant wind resources. More details are available under state initiatives and policies towards Wind Power development.

 Renewable Energy Certificates:  framework on Forbearance and Floor Prices

This is framed to be applicable from 1st April 2012 for a control period of 5 years.

In Rs/MWh control period upto FY 2012 Control period 1st Apr 2012 onwards
Non Solar REC Solar REC Non Solar REC Solar REC
Forbearance Price 3,900 17,000 3,480 13,690
Floor Price 1,500 12,000 1,400 9,880

More details on the APPC and RE tariffs is available in the “”Order on Forbearnace & Floor Price dated 23-8-2011”.

 Small Wind Energy and Hybrid Systems Programme

This programme is implemented through State Nodal Agencies for meeting water pumping and small power requirements in rural/semi-urban/urban windy areas for the categories of users:

Individuals, farmers, NGOs, Central / State Government agencies, local bodies and Panchayats, Autonomous Institutions, Research Organizations, Cooperative Societies, Corporate Bodies, Small Business Establishments, Banks, etc.

Category Cost Central Financial Assistance
Gear type Water Pumping Windmill Rs. 80,000 Maximum 50% of Ex-works cost in general placesMaximum 90% of Ex-works for un-electrified islands
Auroville type Windmills Rs.1,50,000
Wind Solar Hybrid Systems Rs. 2,50,000/kW Rs. 1,50,000/kW for Government, Public, Charitable, R&D, Academic and other non profit making organizations
Rs. 1,00,000/kW for other beneficieries not covered above

 A cumulative capacity of 608kW of wind solar hybrid systems and 1180 water pumping windmills have been installed by 31st July 2010. Technical Specifications and list of small windmills and hybrid wind systems manufacturers is given here.

State Governments' Policies

 Several states have come up with Renewable energy policy. Such Policies favor development of state in wind energy power production- opening up new strides in Wind Energy Busines Opportunities and new career options. The states have not framed out separate Wind Energy Policy but the RPO Obligations and other criterions for Wind Power Production has been emphasized in several State Renewable Energy Policies. Summary of those policies are discussed below.

StateWheelingBankingBuy-BackThird Part SalesCapital SubsidyOther Incentives

Andhara Pradesh

5 % of energy wheeled

Not allowed

Rs. 3.50//KWh w.e.f. 09.09.2008 (frozen for 10 years)

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

Industrial Status

Reactive Power: 10 p/KVARh upto 10% & 25 p/ KVARh above 10%.

Tamil Nadu

5% of Energy

5% (12 months financial year April to March)

Rs. 3.39/ / KWh (No Escalation)

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

Nil

Reactive Power: 25 p /KVARh upto 10% & 50 p / KVARh above 10%.

Karnataka

5% of Energy

Allowed @ 2% of energy Input

Rs. 3.40/ / KWh without any escalation for 10 years of commercial o/ation

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

No Electricity Duty or 5 Years

Reactive Power: 40 p / KVARh

Kerala

To be decided by SERC

To be decided by SERC

Rs. 3.14/ KWh for 20 years

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

 

 

West Bengal

7.5%  of energy fed of grid

 

Rs. 4/ KWh

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

 

Reactive Power: 20 p /KVARh

Gujarat

4% of energy

Settlement to be done month to month & surplus energy at end of month & surplus energy at end of month shall be deemed as sold to Utility as / Tariff Rate.

Rs. 3.50/KWh for 20 years

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

Electricity duty exempted

Reactive power < 10% energy wxempted, then 10 p/ KVARh. Reactive Power > 10% of energy expoeted, then 20 p/ KVARh

Madhya Pradesh

2% of Energy

Allowed, but proposal for this invited from DISCOM

Year wise rates (Rs./kWh) from 1st to 20th year 1styr- 4.03 2nd yr - 3.86 3rd yr- 3. 69 4th yr- 3.52 5th yr - To 20th yr - 3.36

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

No Electricity Duty for 5 years

Reactive Power: 27p/KVARh

Maharashtra

2% of Energy + 5% as T&D Loss

12 Months

Rs. 3.50/KWh (first year of commissioning) (Escalation of 15 p / year for 13 years)

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

Power evacuation arrangement, Approach Road, Electricity Duty, Loan to Cooperative Societies

Reactive Power: 25 p/KVARh

Rajasthan

50% of normal charge as applicable for 33 KV, in addition to the transmission charges of 3.6% 8 surcharge

Six Months (Apr. to Sept. 8 Oct. to March. Utilization of banking energy not /mitted in Dec. to Feb.)

Rs. 4.2S/ KWh for Jaisalmer, Barmer 8 Jodhpur. Rs. 4.50/KWh for all other districts

Allowed under Electricity Act 2003 subject to regulation framed by respective SERs

Exemption from Electricity Duty @50% for 7 years

Reactive Power 5.75 p/KVArh with escalation of 0.25 p/year

 

Other details of state renewable energy policies are avaialble here. Separate pages on Tamil Nadu, Karnataka and Andhra Pradesh policies are discussed.


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