Textile industry, local bodies in Tamil Nadu turn to windmills

It seems that the Technology Upgradation Fund Scheme (TUFS) launched for the textile industry modernisation has caused a spillover effect on the growth of windmill projects in Tamil Nadu.

This permits textile mills to invest 25 per cent of the core upgradation project cost in captive power generation projects. With 5 per cent of the interest charged by the financial institutions on sanctioned projects reimbursed, the mills can comfortably make these investments. Using this money to set up wind farms is a more viable option than using diesel-run generators, sources say.

Moreover, investors can also claim an 80 per cent accelerated depreciation in the first year of commissioning a windmill. The profits from wind farming enjoyed a 10-year tax holiday too. Investment in windmills can give returns to the tune of 10-15 per cent.

The installed capacity in the State by May is expected to be around 3,000 MW. This is nearly 1,100 MW more than was available about a year ago. The concessional funding for windmills envisaged under the TUFS could have acted as one of the catalysts for the spiralling number of windmills in the State.

Recently, Gangotri Textiles Limited (GTL), which owns the brand 'Tibre', announced that it would install six windmills, each with a capacity of 1.65 mega watt, by October 2007, to meet part of its power requirement.

The six captive power plants would generate a combined 9.90 mw of electricity and is scheduled to be completed by October 2007. "Currently, the company spends around Rs 15 crore to meet its power expenses. We expect a reduction of at least a 15 per cent in this cost after commissioning its own windmills," C R Vasudevan, vice president (Projects), GTL, told Business Standard.

Not only textile mills but civic bodies and educational institutions are interested in making money out of 'thin air' by setting up their own windmills.

The Madurai Kamaraj University has floated a plan to set up a windmill of 1.25 mw at an estimated cost of Rs 5.65 crore. The idea came after its power bill shot up to Rs 1.71 crore during the last fiscal and this year it is expected to touch Rs 2 crore.

Similarly, civic bodies such as Erode municipality and Odanthurai panchayat in Coimbatore have also considered the idea of commissioning a windmill.

The administration of Erode municipality has been spending around Rs 2.50 crore annually by paying at the rate of Rs 3.50 per unit to the Tamil Nadu Electricity Board (TNEB). Annually, the consumption was around 35 to 40 lakh units, according to sources. The municipality would set up a 1560 mw unit at a cost of Rs 10 crore and generate more than 45 lakh units of electricity and sell it to the State grid at Rs 2.70 a unit.

The Odanthurai panchayat, 40 km north of Coimbatore, will soon have a 350-kw windmill to meet its energy needs. This is the first such project by a local body in the country.

P Jeyabalakrishnan, project officer of the District Rural Development Agency (DRDA), told Business Standard that the Rs 1.70 crore project was likely to be commissioned by the end of March 2006. While the panchayat would contribute Rs 35 lakh, the rest would be obtained as a loan. The windmill would produce 8.5 lakh units of energy annually.

Earlier, the panchayat was shelling out Rs 8 lakh a year towards electricity charges, he added.

But evacuating the power generated by these windmills through the State electricity board's grid seems to be a problem here. This is due to the mismatch between the transmission line infrastructure and the number of windmills in operation. To overcome these hurdles, the TNEB is planning to commission around 20 sub-stations of 110 kv and five sub-stations of 230 kv at a total project cost of Rs 235 crore.