Reinstatement of AD for Wind Power

The sun has risen again for Wind Energy stakeholders in the country.
Earlier this month, after the Union Budget was presented, there was a mention of reinstatement of AD (Accelerated Depreciation) for Wind Energy generators in the Hindi version of the budget, whereas it found no mention in the English version.
This had created an air of confusion among the wind power stakeholders, as they didn’t know whether it would really be reinstated or not. Since 2012, when AD and GBI (Generation Based Incentive) were withdrawn for wind power, they have kept lobbying for its reintroduction, but in vain. GBI was later restored at Rs. 0.5/Unit.
The primary reason for withdrawal of AD was that some generators were misusing it by installing mills using old machines and did not care about the production after first year.
As per IANS, the new government has announced that it was reintroducing AD (possibly 80%), much to the delight of Wind Power stakeholders. This will help utilize the wind manufacturing capacity of 10000 MW, and attract heavy investment in the sector.
The Clean Energy Cess on coal has gone up from Rs. 50/ton to Rs. 100/ton and concessional customs duty on import of equipment is to be continued.  This will infuse more funds for research and site assessment under NCEF.
Wind tariffs in recent years have become very attractive and are close to solar tariffs in many states. In Rajasthan, Maharashtra and MP, tariff in the range of Rs. 5, whereas solar tariffs are generally in the range of Rs. 6, leaving a very small gap.
At the same time, wind energy policies do not generally cap the amount of MWs a state would buy, which is often the case in solar energy. As a result, many states restrict their solar energy purchase to few hundred MW, but technically have no upper limit for wind energy purchase.
The boost to wind energy will come at the cost of the solar sector which is suffering on various counts – no preferential tariff regime, steep fall in tariffs, poor state of RECs markets, and uncertainty on the anti-dumping duty issue. With the flight of AD capital, the sector is likely to suffer further.
This can be seen as a good signal for exponential growth of Wind Power and a fallback for Solar Power.
The relevant media article can be accessed here.
Contributed by Vibhav Nuwal