INDIA RETHINKS WIND INCENTIVES

India to End Wind Farm Tax Break Next Fiscal, Official Says
Natalie Obiko Pearson (w/ Abhay Singh and Sam Nagarajan), January 17, 2012 (Bloomberg BusinessWeek)

"India will discontinue a tax break for [accelerated depreciation] wind farms starting in April, the beginning of the financial year, potentially stalling growth in a $3 billion market dominated by turbine-supplier Suzlon Energy Ltd…[India’s energy ministry favors extending an alternate subsidy called generation-based incentive that rewards wind power producers for the amount of electricity produced]…

"General Electric Co., Siemens AG, and Spain’s Gamesa Corporacion Tecnologica SA are expanding wind-turbine manufacturing capacity in India in a bid to take market share from Suzlon, India’s biggest wind-turbine maker. New installations next year may [however] fall 15 percent, or a decline of $540 million in investment, if the federal tax break ends…"

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"Accelerated depreciation allows companies to write off investments at a faster rate, helping reduce tax liabilities…The government has said it will end the incentive either on March 31 or with the introduction of a new taxation framework…in April unless the government takes a special decision…

"Demand could dip for about two years before growth resumes as the industry adjusts to changes in state incentives…[because] the accounting method has encouraged companies to erect wind projects as a way of cutting taxes rather than generating power…The government may continue the generation based subsidy, which pays wind farms 500 rupees ($9.8) for every megawatt-hour fed to the grid, next financial year…"