Local Taxation on Indian Wind Turbines
The Indian Wind Industry in 2012 is finding the going a bit difficult after a record breaking year in 2011. First the accelerated depreciation subsidy which has been around for a long time making India the 5th largest wind energy producer, has been removed. Second the GBI incentive scheme too was removed so that the Wind Energy industry depends on the Renewable Energy Certificates (REC) scheme which is quite fickle and market based. Now the Wind Energy Industry finds itself facing a new set of problems in its bastion of Tamil Nadu which accounts of almost 1/3rd of the total wind energy capacity in the country.
First Tangedco, the distribution utility is threatening to remove the “banking facility” of the wind energy producers which allowed them to sell power at a time when the electricity prices were high. The wind turbine producers like Suzlon, Gamesa and others were also accused by the wind farm owners of colluding to set higher prices. Now the local bodies such as the collectorates have decided to impose local taxes and fees on wind turbines which are installed. The wind energy companies are protesting such a move as it would increase the capital costs (by around 1-2%, which is not that much) questioning the legality of such a move. The biggest fear for the wind industry is that, this tax which has started in one district could easily be copied by other local administrations around the country.
The conflict started this May when the Tirunelveli collector R Selvaraj passed an order to levy a slew of taxes and fees on wind turbine generators justifying it on the grounds that this would empower local people and make panchayats more viable. Theni district has since followed the example. But the Indian Wind Turbine Manufacturers Association is aghast at what it says is a “rude shock” . The association has sent a petition to Chief Minister J Jayalalithaa and obtained a court order staying the levies. The wind association’s secretarygeneral DV Giri reckons that the taxes will make a megawatt of wind power costlier by Rs 8-10 lakh. “This steep demand will push up the capital costs and impact the returns for the investor. The qualitative impact will be delays, bureaucratic holdups and an atmosphere of apprehension and doubt by investors.”