India Sees $3.2 Billion Investment in Wind Power

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Researched by Industrial Info Resources India (Delhi, India)--India's cash-strapped wind energy sector is set for revival with an investment of 3.2 billion as the leading wind power producers across the sector are planning to set up 3,000-megawatts (MW) wind power projects in the forthcoming years.

The reintroduction of the Accelerated Depreciation (AD) scheme has made this sector more lucrative for captive use by companies and some even want to hive it off as a separate business unit due to stable long-term returns. AD allows greater deductions in the earlier years of the life of an asset thereby reducing the taxable income. The government proposed reintroducing the benefit in July 2014.

Spanish wind energy firm Gamesa Corporación Tecnológica SA (OTCMKTS: GCTAF) (Zamudio) plans to invest $125 million in the next five years to produce larger wind turbines at its new production facilities in India. Indian wind power major Suzlon Energy Limited (BSE: 532667) (Pune, Maharashtra), which is recovering from losses, also has major investment plans for the next financial year. The company has managed to narrow its net loss to $106.8 million during the second quarter of 2014-15 financial year, from $126 million a year earlier.

Due to re-introduction of a depreciation incentive power producing companies are planning to add 20-30 MW capacity each year until 2017 with an investment of $50 million. Various non-power sector companies such as Pharmaceutical firms, Cement and Textile producers are planning to pump in over $150 million to develop their own wind power capacity.

The withdrawal of Accelerated Depreciation had a major setback on the country's wind power sector in the year 2013-2014. Back in 2006 it was seen as the tax saving tool and companies started investing in the wind power sector.

At 21.6 GW wind energy contributes about 67% to the total renewable energy capacity in India. During its peak growth period the Indian wind energy industry added 2.5-3 GW capacity every year. As per Global Wind Energy Council (GWEC) estimates the annual capacity addition could increase to 5 GW. The Indian government, however, has intentions to add 10 GW capacity every year over the next five years.

The government hopes to achieve this ambitious target by encouraging developers to set up projects in regions with comparatively low wind power potential. The government also announced plans to set up offshore wind energy projects following which leading wind energy solutions providers also announced plans to set up similar large-scale offshore projects.

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