What the union budget (2018-19) means for Renewable Energy?

As yet another annual budget is presented, its time for a review just like in the previous years (Read more). This time, reviewing the budget from the Indian clean-tech sector’s perspective including a discussion with an expert from top global tax and advisory firm.

Listen to the complete budget discussion on the Emerging Tech Podcast (below).

Key Highlights

  • Renewable Energy budget outlay increased for wind 400 to 750Cr for 4GW target RE capacity expected to contribute to 17% of power generation in 2018-19
    • Decreased outlay for solar 2661Cr to 2045 (10GW grid and 1GW rooftop target)
    • Green Energy Corridor outlay increased from 500 to 600Cr
    • Off grid solar budget increased from 700 to 849Cr
    • DDUGJY outlay decreased from 4814 to 3800Cr although Saubhagya has a separate allocation of 3700Cr
    • Integrated Power Development Scheme has an outlay reduction from 5821Cr to 4935Cr
    • FAME has been allotted 260Cr (Subsidy for 1000 cars and charging infra)
  • Smart Cities : Budget Increased from 9000Cr to 12169Cr
  • Promotion of Manufacturing (though MSIPS and other schemes) increased from 745Cr to 864Cr
  • Budget outlay increased for MNRE from 9466 to 10317Cr with MOP declining from 64318 to 53469Cr with major reduction for NTPC
  • Electrification of railways: 4000kms targeted for commission in FY 18-19
  • Customs duty reduction from 5% to 0% for solar glass
  • Customs duty increase for Complete Knock Down (CKD) of automobile parts from 10% to 15%
  • Customs duty on Lithium ion batteries for mobiles increased from 10 to 20%.
  • Social welfare surcharge of 10% instead of existing 3% on imports.
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Why does the economic survey cover energy and climate change?

Sustainable Development, Energy and Climate Change find mention in the Economic Survey for a second straight year. Climate change is in fact mentioned in two chapters, with one chapter looking at the impact of climate change on agriculture. (Climate Change, Sustainable Development and Energy)

Sustainable Development

The government plans to setup a committee with NITI Aayog at the helm to track the implementation of Sustainable Development Goals (SDG). The SDG no 7 , access to energy is a crucial component to India’s progress. In addition to that, affordable urban housing is key and India is likely to have 7 mega cities with population of 10million+ by 2030.

Access to clean energy

The highlight of 2017, was the announcement of Saubhagya scheme, with a target to electrify the 40 million odd households by 2018.

The economic survey identifies another key issue, access to clean cooking which unfortunately is lacking in India.

Cooking

On the positive side, the percentage of Renewable Energy (RE) has been increasing year on year with a significant contribution from solar power projects which has seen rapid decline in tariffs. (Read more:Solar bids, no more outliers)

SolarTrendShare of RE

Climate Change

It is no surprise that climate change has been covered in two different chapters of the economic survey. The impact of climate change has been increasingly felt in India in recent years especially in the agricultural sector.

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There is one positive on the forest cover change in India, if the survey findings are correct.

ForestCover

Although the economic survey mentions about State level action on climate change there is not much progress on this front at the state level. On a different but important note, Delhi’s woes in tackling air pollution has been a major talking point in recent years.

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Budget 2018-19

One of the key takeaways from the economic survey reports, is an indication towards the annual budget and this year it was no different. The increased budget outlay for smart cities is a clear indication of the economic survey findings on the state of Indian cities. The Ujjwala scheme found mention in the budget speech and also saw an increased outlay, again building up on the findings of the economic survey. Saubhagya as expected featured prominently in the budget speech with the target year being 2018. The air pollution woes of the national capital Delhi also found mention with a special package announced to stop the burning of crop residues.

Overall, the economic survey in the last couple of years has increasingly emphasized on energy, climate change and sustainable development. India is also spearheading the International Solar Alliance which also finds mention in this year’s economic survey. The analysis that looks at the correlation between agriculture and climate change is very interesting and with increasing use of analytic tools the survey documents is definitely a good read.

Reference documents : Climate Change and agriculture; Sustainable Development, Energy and Climate Change

Is it too late for a public consultation on Electric Vehicles (EV)?

NITI Aayog earlier this month released a Public Consultation document on Zero Emission Mobility. The document as it claims, aims to align with the Government of India’s vision to have a policy that facilitates a transition only Zero Emission Vehicle (ZEV) sale in 2030. The consultation specifically seeks opinions on 12 aspects on the proposed policy namely

  • The global scenario of ZEV in the past few years and future forecasts in terms of technology and performance.
  • Prioritizing the first adopters of ZEV: Which category of vehicles should be prioritized, whether public of private fleet?
  • Charging Infrastructure
  • Manufacturing: Policy options to promote manufacturing of EVs and batteries
  • Balancing energy demand for EVs with influx of Renewable Energy (RE)
  • Regulatory reforms/amendments
  • Fiscal and non-fiscal incentives
  • Promoting Research & Development (R&D) in EV and energy storage
  • Skill development
  • Recycling and treatment at end of life of EV and battery
  • The general user perspective of EVs
  • Potential impact on the automobile industry

NITI Aayog’s open consultation is a welcome step considering it is looking to formulate a road-map that involves multiple government ministries. For once, it is a real test of its ability to break the silos in the government and get every ministry on board through this policy, the very purpose it was entrusted to do at inception.

India’s ambitious Electric Vehicle vision: What does it mean?

Is it too late?

As it stands, the draft of the national Electric Vehicle (EV) policy was first submitted to the inter-ministerial group around September-October 2017. There has been no traction at the ministry level ever since. In the mean time, Karnataka has come up with a comprehensive policy on energy storage and electric vehicles and Telangana is close to releasing its policy.

Irrespective of what happens with the existing draft of the EV policy, there is not much that can get into it from the public consultation that NITI Aayog is currently hosting unless the proposal is any radical step. Sources from the team have already confirmed to me that they are already aware of the popular schemes and are definitely not keen to hear them again through this process. On the other side, the entire process could actually delay the release of a policy. It is definitely a welcome step to open the doors for public consultation, but NITI Aayog should focus its efforts on plugging the regulatory hurdles that are already known. It would enable private players to actual invest and create a market rather than wait for a full policy. All said, now that an opportunity is given, I will definitely submit my views.

Reference:Zero Emission Mobility. (Full document)