The subsidy is blowing in the wind!

After witnessing the “almost magical” effect of generation-based subsidy in the solar energy sector, the ministry (MNRE) has announced a subsidy of 50 paise per unit on wind energy generation. Be it increasing crude prices or the drive to meet energy targets of the current 5-year plan period, the government has finally woken up to the fact that wind energy sector needs to be rescued from the pressure of increasing steel prices. Estimates suggest that per-MW cost of wind energy installation has climbed from Rs 450 million to Rs 650 million owing to spiralling steel prices.

The 10-year incentive, limited to grid-interactive systems with a minimum of 5MW installed capacity, will surely help independent power producers, especially companies with strong balance sheet (with no attraction to get into wind energy for 80% depreciation benefits) to jump into the wind energy game. Owing to this policy change, we may now see big names in wind energy.

Subsidy, though a “dirty” word in the current market-driven world, is welcome in the case of clean energy since it provides the much needed encouragement to the sector. Well I am not against the conventional energy systems, but haven’t we subsidized coal-based generation for decades? (through lower and controlled mining/transportation costs and sales price)

I am not sure if the government has “fallen in love” with clean energy over the past one year (first it was per-unit subsidy on solar generation, now it is subsidy on wind energy; and the biofuels policy is due over the next few weeks). I feel the government is just waking up to the changed energy scenario marked by increasing crude prices (and hence increasing oil subsidy), rising levels of pollution, climate change imperatives, and the general “cool” quotient attached with clean energy.

Nonetheless, the move is welcome. Let the subsidy blow in the wind!