Solar and Wind Power Generation-Based Incentives

In January 2008, the federal minister responsible for renewable energy announced that the Indian government would provide a subsidy for solar power plants to help develop renewable energy infrastructure. The subsidy will consist of 12 rupees (USD 0.30) per kilowatt hour for solar photovoltaic power and 10 rupees per kilowatt hour for solar thermal power fed to the electricity grid. A maximum capacity of 10 megawatts from each Indian state will be eligible under the scheme and 5 megawatts per developer. Capital investors will not be eligible to apply. Developers will sell electricity to state-run utilities and the incentives will be paid to them based on the tariff the utilities provide. The incentives, for a period of 10 years, will be over and above any financial assistance provided by the states.In July 2008, the Ministry of New and Renewable Energy (MNRE) launched a new generation-based incentive scheme for wind power production. The scheme is designed to promote investment in new and large independent wind power producers, to fulfil a target of securing 10, 500 MW of new wind power capacity by 2012. To be eligible, new wind power projects must have at least 5 MW of grid-connected capacity, and must be installed at sites validated by the Centre for Wind Energy Technology. Investors in eligible projects will receive an INR 0.5/kWh payment for ten years, over and above the tariff determined for wind power by the relevant regulatory authorities. The tariff does not apply to investors setting up capacities for captive consumption, third party sale, merchant plants, and to those benefiting from depreciation under the Income Tax Act. The payment will be funded by the MNRE, disbursed through the Renewable Energy Development Agency (IREDA) on a half-yearly basis.

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