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Andhra Pradesh is one of several Indian states which have now introduced market incentive programmes for non-conventional energy sources. The state has an estimated wind energy potential of 852 MW in the districts of Anantpur, Kurnool, Cuddapah, Chitoor and Nellore. These areas have been identified after extensive wind monitoring. The managing director of the Non Conventional Energy Development Corporation of Andhra Pradesh (NEDCAP), T V Chowdary, says: "The corporate sector in Andhra Pradesh is going in for wind power in a big way and setting up wind farms. This is primarily because of the incentive programme."

The state is also developing a series of demonstration projects, including a 2 MW wind farm together with MNES. This is to consist of 110 kW machines made by BHEL, a state conglomerate, under license from Nordex of Denmark. A 500 kW project at Tirulvia, put up by TTG/Bonus, is also being expanded by another two wind turbines from NEPC-Micon in Tamil Nadu. TTG imports wind turbines from Husumer Schiffswerft in Germany and expects to start building them on licence this year.

As well as these public sector projects, three local companies have asked permission to develop wind farms of 5 MW each. According to Chowdary, a memorandum of understanding has been signed with Carter Wind Turbines Asia Inc of Madras for 20 MW while an agreement was made with Intervolt Cannon Power Corporation of the US for a 105.75 MW wind farm. This deal, though, seems to have fallen through.

The Andhra Pradesh incentive programme includes the following:

Â¥ a 20% government subsidy of the capital costs of the project up to a limit of INR 2.5 million

Â¥ government land leases of 20 years, rent free for the first five years with a fixed rent for the remainder of the leasing period

Â¥ permission to sell power to a third party who must be a high tension consumer of the State Electricity Board (SEB); the utility can buy power at INR 2.25/kWh

Â¥ the SEB will levy a wheeling charge of 2% of the value of the power transmitted

Â¥ energy banking is permitted for a 12 month period with 2% of the energy collected to cover banking charges

Â¥ 100% depreciation of the wind turbine during its first year of operation

Â¥ 100% foreign equity participation permitted for projects set up by foreign private investors

Â¥ a five year tax holiday for any new industry generating or distributing electricity

Â¥ advantageous loan facilities through IREDA for up to 75% of a project's cost at an interest rate of 12.5%

Â¥ the project's sub-station will be provided by the SEB for exporting the wind power produced

Â¥ technical consultancy services will be provided by NEDCAP.