India Eyes Policy Changes To Cut Renewables Energy Costs

India, which hopes to attract $16 billion in renewable energy investments by 2012, will soon announce new policies to cut the cost of investment in the green sector, the chief of India's renewables agency said on Thursday.

Proposals include financial incentive models linked to units of green power generated and tax cuts based on accelerated depreciation benefits. India currently has an investment-linked incentive policy.

"Issues such as accelerated depreciation are being now discussed and we should be able to announce the plans soon," Debashish Majumdar, chairman and managing director of the Indian Renewable Energy Development Agency, said at the Reuters Global Climate and Alternative Energy Summit.

India has already attracted about $5 billion worth of investment in renewables over the past two years -- leading to 4,000 megawatts of green power, mostly from wind -- but the high initial investment cost of green power has deterred many investors.

India hopes to attract about $21 billion worth of investments in renewable energy in the 2007-2012 plan period.

Majumdar, whose agency makes loans to renewables projects, said it hoped to meet that target but the global financial downturn had slowed investment during the past year-and-a-half.

This could hurt India's target of generating 25,000 MW of power from renewable energy over the next four years, more than double the current generation level of 12,000 MW.

"We have about 40 projects in the pipeline worth about $500 million," Majumdar said in New Delhi.

This is below the usual pace of investment, typically between 50 to 60 projects every quarter. The new projects are mostly for wind, hydro and bio-mass power.

Just three percent of India's total power mix now comes from renewables, and developing the sector is at the core of a national plan on climate change that does not commit to any emission targets.

In spite of its pledge to adopt clean technology, pollution-spewing coal remains the backbone of India's power sector -- making up about 60 percent of generation -- with the government planning to add about 70,000 MW in the next 4 years.

One of the thrusts of the national climate plan is developing solar power and India plans to generate 20 gigawatts of solar power by 2020.

Wind could generate a "considerable share" of India's power, the Global Wind Energy Council said in a new study released on Wednesday.

Source : REUTERS