While the Union Budget 2019 largely failed to cater to the domestic renewable energy sector, the industry is hoping for a better package in the upcoming budget which is set to be released in February 2020.Industry experts share their expectations for the renewable energy sector and the impact on the overall industry…
Rajiv Srivastava, Managing Director and CEO, IEX
“Power Exchanges have been playing a transformative role in achieving the government’s vision of ‘Affordable power for All on 24X7 basis’. Exchanges deliver competitive advantage to all stakeholders through their process of efficient price discovery. In this context, we have a two-fold expectation from the Union Budget.
The first aspect that deserves attention is implementation of open access in its true sense. Central and state governments should work towards eliminating Cross Subsidy Surcharge (CSS), Additional Surcharge (AS) as well as other non-tariff hurdles impeding open access of electricity. This will bring immense benefit to all kinds of industries and hence should be rolled out at the earliest.
Other expectation is to rationalise policy and regulatory framework to reduce dependence on long term power purchase contracts and move towards flexible and competitive contracts offered through various market based mechanisms. This will potentially facilitate sectoral transformation to the highest order of efficiency and viability.
These steps would bring significant benefits to the economy – industry as well as end-consumers. Round the clock access to competitively priced energy will boost industry profitability which will manifest in increased investments and job creation.”
“A $5 Trillion economy would mean a GDP per capita of about $3,000. This can only be made possible if the industry is fuelled with 24X7 uninterrupted power, at a per unit cost that is comparable to that of China. In this budget the focus needs to be on large scale reform in the ailing power distribution sector, with privatisation and competition being two key themes of any such reform. In addition to this, pension and insurance money needs to be channelled towards infrastructure assets so that developers can recycle their capital and use it towards creation of greenfield assets. This is the much needed impetus in infrastructure financing in India.”
“The industry expects some clarity on GST for solar projects. There should be an incentive for developing next-generation solar panel manufacturing technology in India as well as investing in energy storage and hybrid projects. We must wield more advantage through the technological edge that India can provide, and power for neighboring countries like Bhutan, should be treated fully so that these hybrid projects support grid stability and act like pumped storage.
Another important aspect is policy initiatives so that payments against renewable power supplied to the state distribution companies can be secured as per timelines specified in the agreement. In my view, renewables will be India’s next IT provided the government incentivises the industry through a policy framework. We expect to see the Budget to give impetus to funding, investment and incentivise technology for manufacturing and further proliferation of renewable energy across the nation.”
“With the government likely to set the ball rolling for its ambitious Rs 2.86 trillion scheme for power distribution reforms on the Budget day, we expect a higher budgetary allocation for the transmission and distribution segment and a slew of policy measures to expedite the upgrade of both inter-state and intra-state transmission network for the evacuation of renewables.
The government should give impetus to renewables by exempting solar and wind energy equipment and installations from GST. It should announce financing schemes for the renewable energy sector at concessional rates of interest. Concessional credit through green bonds can go a long way in boosting solar capacities and developing green transmission grids.
So as to make the cost of renewable energy more competitive, the government should offer exemptions from cross-subsidies and transmission charges. Proceeds from the clean energy cess should be used to promote electricity generation, particularly renewable energy.
We also expect the government to tap the immense potential of rooftop solar by creating a more conducive environment for investments through an enabling regulatory framework, a single-window system for procedural approvals and favourable net metering regulations.”
Sanjeev Aggarwal, Founder and CEO, Amplus Solar
“The last year has been full of challenges for the solar industry and we hope that this year’s budget will provide the much needed impetus to the solar industry. There is a need for bringing in structural changes to the electricity sector in India recognising the rise of renewable and decentralised power generation resources. There is a need for the free market forces driven by renewable sector to co-exist with the legacy electricity system. The consumers deserve to break away from the monopoly being enjoyed by incumbent utilities and the budget can provide strong policy statements to this effect.”
“In this year’s Budget, our expectation from the government is to formulate incentives for promotion of domestic manufacturing in the heavily import dependent solar industry. Local manufacturers need to be safeguarded through duties on imported products, so as to make domestic products more cost-effective. It is our hope that this will give a significant boost to the “Make in India” vision of the government.
While the government has made major policy and regulatory interventions in order to promote solar power development, what is expected in this Budget is the stability of policies. The various regulatory uncertainties that are impacting investor confidence need to be addressed urgently. In addition, we expect the government to ensure better synchronisation between the discoms and solar companies to ensure a win-win situation for all stakeholders.”
“The government has taken some significant steps towards making renewable energy both solar, and wind more mainstream, and affordable. The upcoming Union Budget 2020 should focus on areas such as import duties, taxation, R&D, technology and affordability etc. for it to assume long-term significance.
The required FDI and investments in the power and energy industry will strengthen the country’s mission of proclaiming itself as a sustainable dependent energy source.”