Indian wind turbine manufacturers and project developers have been advised by the government to make efforts to increase annual capacity addition to five times its current level, a leading Indian newspaper has reported.
The new Indian government is looking to promote aggressive investment in the wind energy sector after it re-introduced financial incentives in this year’s budget. The current rate of annual capacity addition is around 2,000-3,000 MW. The government has restored the accelerated depreciation tax benefits in addition to the existing generation-based incentives with a hope to rekindle growth in the sector.
On May 31, 2014, India had an installed wind energy capacity of just over 21,200 MW, with an estimated 2,000 MW to be added between April 2014 and March 2015. Wind energy has a share of almost 67% in India’s renewable energy capacity. Wind energy is clearly a favourite for the project developers, as well as financial institutions, as it is a proven technology.
A wind energy project at Kanyakumari (Tamil Nadu) India
The Indian government is expected to take several additional measures to boost wind energy infrastructure in the country. A national wind energy mission is slated to be launched soon, which will, in all likelihood, implement capacity addition targets higher than those set under the ambitious national solar mission.
The national wind energy mission will also include the central and state governments to implement additional regulatory and financial incentives for project developers. This will lead to more project developers getting into the market which, in turn, will spur competition and drive tariffs down.
Rapid evolution in wind turbine technology, and rising preferential tariffs have attracted many companies to invest heavily in the sector. Recently, GE announced that it will invest $200 million to set up a wind turbine manufacturing unit in India. Over the last couple of years, ReNew Power (an independent power producer) has raised $390 million in equity funding from a fund backed by Goldman Sachs, the Asian Development Bank, and the Global Environment Fund. The company had announced plans to invest about a billion dollars to boost its wind energy capacity to 1,000 MW in the short-term.
Some wind energy companies, like ReNew Power and Inox Wind, are also planning initial public offers to raise additional funds to boost capacity.