• Down To Earth expose on Maharashtra’s wind power sector
• State has spent crores on subsidies for wind, but is getting very little in return
• Installation-based incentives have ensured installation, but very little generation
• Companies have made windfall gains, even as the state goes powerless for days
• In the current situation, wind is not part of the energy plan of the state -- only a plan for tax breaks for investors and cash for manufacturers

New Delhi, August 6, 2008: Maharashtra, which is reeling under one of its worst power crises ever, could have used wind energy to help in its crippling shortage of power; the state has paid a huge amount to install wind power systems.

But wind energy in Maharashtra, reveals Down To Earth magazine in its latest issue, is a business of cash-rich companies interested in tax breaks, and not for power generation. Down To Earth is a New Delhi-based science and environment fortnightly, published with assistance from the Centre for Science and Environment (CSE).

The report analyses data from the the Maharastra Energy Development Agency to show that wind farms in the state are working at a plant load factor of as little as 11.7 per cent, which is pathetically low compared to Tamil Nadu and Karnataka, and certainly much lower than global averages.

“It would seem that nobody is really interested in selling power, increasing efficiency or cutting costs,” says the magazine. Instead, wind farms, which have seen investment from everyone including Bollywood film stars, have become a way for companies to take advantage of fiscal incentives like accelerated depreciation and other schemes.

Capable, but unwilling
Maharashtra has tripled its installed wind power capacity in the past few years to reach 1,756 megawatt (MW). But official data shows that all the plants put together only generated 1,804 million units in 2007-08, which adds to less than 12 per cent of its installed capacity. If the plants worked at 20 per cent plant load factor, which is what the regulator expects in the state, the wind farms could have substantially added to the state’s power generation.

Worse, the data shows that even as more capacity has increased and technologically advanced turbines have been installed, the plant load factor has decreased in the last few years – going from 19 per cent in 2003-4 to 11.7 per cent in 2007-08. “The sector has rightly got incentives, but these have not increased power generation and this must change,” says Chandra Bhushan, associate director, CSE and head of the Centre’s industry unit.

The study recommends that while promoting the sector is important, the kind of subsidies being given need a paradigm shift. Subsidising more installations would encourage companies to only add more and more capacity to claim depreciation and will give no incentive to actual generation. The government should only subsidise actual electricity generated from a wind farm. Public good in terms of green electricity must be given priority over private profits.

Shadowy business
“Reaping benefits while the wind blows,” says Chandra Bhushan about the way companies are making money in this sector. The wind energy business needs to be opened and regulated, he points out. The sector is a ‘closed’ one, with very little transparency. “Companies determine their costs, and with few companies making windmills, there is no competition and even less transparency. It is a closed cycle -- a wind turbine company interested in selling equipment sets up the plant on behalf of the private entrepreneur interested only in depreciation benefits. Nobody seems really interested in selling power, increasing efficiency and cutting costs,” says the Down To Earth story.

Companies sell a wind turbine generator for over Rs 6 crore per MW, but nobody knows what its actual manufacturing cost is. No figures are available in the public domain. Worse, data on payments made to wind farm developers for power fed into the state grid is not available anywhere.

The ongoing power crisis, believes Chandra Bhushan, offers Maharashtra an opportunity to revisit and re-examine its policies and priorities on wind energy. With its impressive installed capacity, immense potential, and huge investments, the state certainly holds the resources for making a turn-around. But the policy has to move away from giving incentives on adding capacity to giving incentive for actual generation. Also, the companies must come clean on the economics and the government has to keep a tab on the financial details.

  For more details, please contact:

• Nidhi Jamwal in Mumbai ( 98672 13234, nidhi@cseindia.org) or Kushal Yadav in New Delhi (98108 67667, kushal@cseindia.org).
  
  
• For the full Down To Earth article, please visit our website (www.downtoearth.org.in).