The Hindu Business Line : Money in the air

WHAT HAVE Aishwarya Rai and Sachin Tendulkar in common? Apart for being the best-known Indians, they are among a growing tribe of high net worth individuals who have invested in wind power, purely as an investment.

The returns are attractive, according to wind turbine manufacturers, who take care of everything — from installing the machines and maintenance to ensuring prompt payments — for such investors.

According to the manufacturers, the cost of a 750 kW turbine in Tamil Nadu works out to about Rs 3.50 crore. This will generate about 18 lakh units a year. The Tamil Nadu Electricity Board buys wind power at Rs 2.70 a unit, which will result in an income of Rs 48.60 lakh a year.

Typically, individuals go in for a loan to finance 75 per cent of the cost at interest rates of about 9 per cent a year, to be repaid in seven years. According to the manufacturers, the key financial indicators considering the depreciation benefit of 80 per cent are: Equity IRR - 48 per cent; project IRR - 17 per cent; payback period for total investment - six years; and payback period for equity - one year.

The return on investment in wind power is better than from any conventional investment such as fixed deposits or government securities. Wind power offers hassle-free and steady income and does not require constant monitoring, as would playing the stock market, for instance. The icing is the 10-year tax-free revenue from the project (under Section 80 IA of the Income-Tax Act). According to the manufacturers, the HNIs investing in wind power depends entirely on the price at which utilities buy electricity. Most prefer Tamil Nadu and Karnataka.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Policy is the key to wind power' — Mr Ramesh Kymal, MD, NEG Micon (India) and Chairman, Indian Wind Turbine Manufacturers Assn

Money in the air

Revising the IPO norms

The burden of farmers' debt

Unheard of outcomes

A review of the economy — Good intentions must lead to tangible results

The ITER fusion experiment — Solution to a looming energy crisis?

Another gold rush in the making in US?

Oil price burden

Public sector banks

Green signal