Budget 2021 expected to be turning point for renewable energy sector

Budget 2021 expected to be turning point for renewable energy sector

 By – Bharat Bhut, Co-Founder and Director, Goldi Solar

Nations across the globe have been grappling with the COVID-19 pandemic with several sectors across India taking a hit. The upcoming budget comes with huge expectations from the country in a post-COVID era to ensure recovery and rebuilding of the economy.

2020 saw solar tariffs touch record low of Rs 2 per unit, making solar by far the cheapest source of alternate energy in India. With cheap renewables being favored over coal power, coal is no longer the kingpin of energy. During COVID, the government also provided ‘must-run’ status to renewables, thereby insulating the sector further. It further extended project commissioning deadlines and announced several initiatives to help stimulate domestic solar manufacturing and introduced the liquidity infusion scheme of Rs 1.2 lakh crore to de-stress DISCOMS.

The Union Budget 2021, therefore, can be the turning point for renewable energy sector in realizing India’s ambitious target of 450 GW by 2030.

India presently has 16 GW of annual solar module manufacturing capacity, which is much lesser than the 25 GW annual demand that is anticipated for solar modules in the country in the coming years.  Hence, to begin with, the solar manufacturing industry is also eagerly awaiting the PLI (Production Linked Incentive) scheme for high efficiency modules to come into effect.

The government urgently needs to provide clarity, and implement BCD (Basic Customs Duty) on solar cells and modules to bolster domestic manufacturing. Subversions or supportive policy measures, incentives and financial support need to be provided to local suppliers to strengthen the auxiliary industry and eventually make the domestic solar industry and the ecosystem cost-competitive. It is also our hope that this will give a significant boost towards achieving an “Atmanirbhar Bharat”.

Additionally, enthusiasm from both state and central governments are essential in giving the much-needed push for solarization. Take for instance Gujarat, which is leading in solar generation, and the government has also further introduced a new 5-year solar power policy which allows the consumers to rent their premises or roofs to third parties for power generation.

As for the non-renewable energy segment, GST has brought down the tax on coal from 11.69% to 5%, further reducing the cost of coal thermal power generation by 1.6%. It is important to also incentivize renewables and push to increase its contribution in the energy mix.

As an industry player, Goldi Solar would like to see some of the suggestions being implemented and believes that the ideas put forth can certainly provide the ammunition that the renewable sector really requires.