The Indian government supports renewable energy and there are a number of financial and fiscal incentive schemes that wind farm owners can benefit from, including:
Accelerated depreciation
Investors can take advantage of accelerated depreciation of up to 80% of the project cost if the project is commissioned before 30 September of the financial year, or 40% if the project is commissioned before 31 March of the financial year.
Income tax exemption
Wind power project owners are exempt from income tax on all earnings generated from the project for any single 10-year period during the first 15 years of the project's life.
Soft loans from IREDA
MNRE and IREDA have issued guidelines for financing wind energy projects, applicable from 3rd February 2009.
Key points include:
| Interest rate |
11.75 – 12.9% |
| Repayment period |
10 years |
| Loan moratorium |
1 year |
| Promoter’s contribution (equity) |
30% |
Generation Based Incentives (GBI)
In December 2009, the Ministry for New and Renewable Energy (MNRE) announced the scheme for implementation of the Generation Based Incentives (GBI) for Grid Interactive Wind Power Projects. The introduction of GBI aims at attracting large IPPs and Foreign Direct Investors to the Wind Power Sector by playing a levelling field between all classes of Investors. IREDA will be the nodal agency for the implementation of GBI.
Key Features
· The ministry will provide a GBI of INR 0.50 /kWh through IREDA with a total cap of INR 6.2m /MW spread over a minimum of 4 yrs (i.e. an annual cap of INR 1.55m/MW)
· Maximum capacity limited to 4000 MW for the remaining period of 11th plan period (Dec 17, 2009 to Mar 31, 2012)
· Grid connected wind power projects can avail either accelerated depreciation or GBI, but not both. The option cannot be changed later.
· Provision of accelerated depreciation in parallel with GBI will continue until the 11th Plan period or the introduction of Direct Tax Code, whichever is earlier.
· The incentive is over and above the feed-in tariff specified by the respective SERCs.
· The scheme is not applicable for third party sale and merchant plants but is applicable for Captive.
