Suzlon banking on AD boost – Tanti

Suzlon is counting on the Indian government to revive the generous accelerated depreciation (AD) scheme for wind power, according to chairman Tulsi Tanti, who says the AD will kick-start growth in one of the world’s key wind markets.

Tanti’s comments come several weeks after Farooq Abdullah, minister for India’s Ministry of New and Renewable Energy, said that the Finance Ministry will likely include money for a revived AD in its interim budget, to be presented this month.

The AD, which was instrumental to India’s wind boom over the past decade, fell out of favour with officials who felt that it too strongly encouraged investment from investors otherwise uninterested with the wind sector – and in some cases fostered fraud.

Initially allowing wind farm owners to depreciate 80% of their investment in the first year of a project’s operation, the AD scheme was in spring 2012 pared back to allow for a mere 15% depreciation, eliciting howls of protest from many segments of India’s wind sector.

The Indian Wind Power Association, a lobbying group, claims the scheme is revenue neutral over a seven-year period.

Speaking to the Press Trust of India, Tanti says: “We are expecting the government to bring the accelerated depreciation back.

“Accelerated depreciation will bring back the good growth in the wind sector,” Tanti says, and “give huge benefits to small companies investing in the sector”.

In addition to being India’s largest wind-turbine manufacturer, Suzlon also at one time did a roaring business in turnkey installation for investors looking to avail themselves of the AD scheme.

India installed 1.73GW of new wind capacity in 2013, according to the Global Wind Energy Council, roughly on a par with its lacklustre 2012 performance, and down nearly 50% in 2011.

That means the country is well off its energy targets for 2017, which call for some 3GW of new wind installations each year.

Loss-making Suzlon has acutely felt the impacts of India’s slowdown, exacerbated by problems at its German Senvion (formerly REpower) subsidiary, which recently announced plans to cut the hours of nearly 250 workers at a blade plant in northern Germany.

In addition to the AD, India has committed to reinstating its generation-based incentive (GBI) scheme, whose benefits will apply retroactively to spring 2012, and it recently confirmed plans for a long-rumoured National Offshore Wind Energy Authority.

Aside from wind, India is also trying to pick up the pace of its solar energy roll-out, with developers in the country having recently seen the unveiling of a new 750MW national tender and plans for a 4GW mega-solar project in Rajasthan state.