India to remove cap on wind incentives

The Ministry of New and Renewable Energy (MNRE) is planning to remove a cap it had previously imposed on wind-energy projects.

The move is expected to increase foreign investment in the sector.

Ministry secretary Deepak Gupta said today that the department intends to scale up the generation-based incentive model currently in effect, using plant load factor as a guiding principle.

The MNRE previously offered incentives only to wind projects with a total annual power production of 49 megawatts or less.

Gupta said the ministry also plans to increase the total amount of power derived from renewable energy in India from 8 percent to 10 percent by 2015. An additional 7,000 MW capacity, most of which is expected to be derived from wind and hydro energy, would be needed to achieve that goal.

The proposed changes come too late for large wind projects done by companies such as India's Suzlon Energy (BOM: 532667) and Hong Kong’s CLP Holdings (OTC: CLPHY).

Suzlon Energy completed a 51 MW wind power project in the western state of Gujarat last month, while CLP Holdings recently announced plans to build a 113.6 MW wind farm in India’s Maharastra region (see CLP Holdings plans 114-MW Indian wind farm).

Gupta’s remarks reiterated comments made by MNRE minister Shri Vilas Mutemwar in his keynote address at Cleantech Forum XIX last week.

Mutemwar told the audience that he wanted to scale-up government incentives to cover all wind energy generation projects by the end of 2011. He also said another pet project involves replacing older, smaller capacity wind turbines with generators that have higher efficiency and capacity (see Leapfrogging the West).

India is the fourth-largest wind energy producer in the world, with 9,500 MW of wind energy installed, according to the Indian Wind Energy Association.