Reports say that a clutch of renewable energy projects are up for sale, following the phase-out of tax incentives from next fiscal. While doing away with generous fiscal benefits at the plant level is sensible, we do need to better allocate resources to boost capacity for evacuation and supply of renewable power. India needs green energy. Reportedly, some 3,000 MW of wind power capacity is on the block, with 40% accelerated depreciation on equipment being done away with from the next fiscal year. Earlier, the accelerated depreciation rate for wind turbines used to be 80%, and still earlier 100%. Now that more efficient wind turbines are available, including turbines that can generate power in lowwind density conditions, phasing out the fiscal benefit is unexceptionable. It is notable that several of the renewable energy projects seeking buyers are promoted by non-energy companies such as cement majors, steel companies and Indian arms of foreign energy firms. It makes no sense to grant tax benefits for renewable energy projects indefinitely, as it would plain dis-incentivise much-needed efficiency improvement in plant and equipment.
Given limited fiscal capacity, it does makes sense to fully optimise investments in renewable energy. In tandem, we need to shore up resource allocation for green energy corridors read grid capacity to evacuate and supply renewable power. Such investments would be for the greater good. What’s required is stepped-up usage of renewable energy in the overall energy mix. In parallel, there’s the need to provide off-grid supply of renewable energy, to boost access and remove energy poverty. But looking ahead, transparent incentives for smart grids and attendant line capacity for renewable energy brook no delay.
Source:TheEconomicTimes
