In order to generate more electricity from clean energy sources, the government announced a massive renewable power production target of 175,000 megawatt (mw) by 2022.
The revised total target, which includes 100,000 mw from solar power, 60,000 mw from wind energy, 10,000 mw from biomass energy and 5,000 mw from small hydro power projects, has excited the industry.
At present, renewable energy contributes about 6.5% to the electricity mix. It is proposed that this would be taken to about 12% in the next three years.
Electrification of the remaining 20,000 villages through means such as off-grid solar power generation, was also good news for the renewable energy sector.
The cess on coal was doubled to Rs 200 per tonne from Rs 100 per tonne, which will boost renewable energy financing. The cess is collected as National Clean Energy Fund and is disbursed for renewable energy-based initiatives and power projects.
“The budget has further reinforced a positive sentiment already prevailing among the various stakeholders in the power sector,” said Madhusudan M Chakrapani, chief technology officer, RE Connect Energy Solutions. “Most significant growth will be seen in solar sector capacity, which will increase from 3.5 gigawatt (gw) today to 100 gw in seven years, and will help catalyse the renewable industry further. Additional depreciation of 20% allowed on distributed power generation (taking it to 100% depreciation in the first year) will also benefit rooftop solar deployment.”
However, industry officials say lack of clarity on fund allocation is a dampener.
Policy measures for achievement of the highly-stretched goal of renewable energy have not been detailed out, said Manish Aggarwal, head of energy and natural resources, KPMG.
“The general emphasis on renewable energy and revised target of 175 gw is not adequate to make capacity creation happen in reality,” said Anish De, partner, KPMG. “Unlike rail and roads, tax-free bonds have not been specifically proposed for this sector. It would have been better to propose specific allocations and measures, especially on availability of low-cost funds for the renewable energy sector.”