Incentives For Use Of Renewables Design of Renewable Energy Systems Incentives For Use Of Renewables Presented by, Adinath Jain Assistant Professor Dept. of EEE RVCE, Bangalore

Government incentives for use of renewables Foreign Direct Investments (FDI) India permits up to 100% FDI in renewable energy sector for projects that are subject to the provisions of Electricity Act of 2003. Under the act, no prior approval of regulatory authority is required for infusion of foreign investment, the only exception being if the investment is made in a limited liability partnership (LLP). Tax holiday under domestic income tax law Undertakings engaged in the generation or generation & distribution of renewable power have been offered a 10-year tax holiday if power generation has begun before 31 March 2017. However, the plants have to pay a minimum alternate tax (@20.4-21.4% based on income), which can be offset over the next 10 years. Financing The Indian Renewable Energy Development Agency (IREDA) has been established under the MNRE as a specialized financing agency to promote & finance renewable energy projects. Tax & Fiscal Incentives The central government has offered exemption from customs and excise duties on specific goods required for setting up renewable energy projects, provided the prescribed conditions are satisfied. Some state governments have provided incentives in the form of VAT at 5% instead of the actual 15%.

Government incentives for use of renewables Generation-based incentives Under this scheme of the MNRE, wind power projects (which are not availing the Accelerated Depreciation benefit) are eligible for an incentive of Rs. 0.50 per unit of power fed to the grid for a minimum period of 4 years and a maximum period of 10 years subject to a ceiling of Rs. 10 million per MW. This incentive can be claimed by wind projects commissioned on or after 1 April 2012, through IREDA, and is over and above the tariff approved by the State Electricity Regulatory Commissions (SERCs). Accelerated Depreciation (AD) Under the domestic income tax law, companies involved in renewable energy are provided with accelerated depreciation at 80% on a written down value (WDV) basis. However, windmills installed on or after 1-April-2012 but before 1-April-2014, would be eligible fore depreciation at the rate of 15% on WDV basis. Renewable Purchase Obligation The SERCs are required to set a fixed RPO for distribution companies to enable the purchase of 2-14% of their total power requirement from renewable energy resources. National Solar Mission The Jawaharlal Nehru National Solar Mission (JNNSM) was established to promote production of solar energy. As part of this, the Solar Energy Corporation of India (SECI) auctioned 750MW of solar projects divided into open and domestic projects. This promoted strong interest with bids from 58 developers totalling 2170MW, much higher than the original offer.

Summary of incentives for renewables Financial Incentives for Solar Preferential tariffs at both state and central levels Capital subsidy for off-grid projects, process heating, solar heating Soft loans for off-grid PV projects and solar heating Financial Incentives for Wind Income tax holiday u/s 801A Excise duty relief Concessional customs duty Preferential tariffs by SERCs AD @ 35% for first year

Solar water heating system 13000-20000 6000-6600 2 Solar Cooker Sl. No. Product Cost Range (Rs.) MNRE Subsidy (Rs.) 1 Solar water heating system 13000-20000 6000-6600 2 Solar Cooker Box type Dish type Scheffles type 3500-4200 6500-8000 15000-20000 30%-60% 3 Solar home lighting 11000-15000 4 Solar street lighting 17000-22000 5 Solar lanterns 1700-3000 6 Solar pumps 170000 per kW 7 Family-type biogas plant 20000-25000 8000-14700 8 Small wind turbines (off-grid) 200000 per kW Up to 120000 per kW 9 Water mills 70000 to 80000 35000