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.

Renewable Energy in India, 2017: A review

The year 2017 has been yet another landmark year for the Indian energy sector. At a national aggregate level India recorded net surplus energy for the first time. It also turned to be a net exporter of energy.  Renewable Energy capacity addition accounts for more than 50% of the total capacity added in this year.  Starting with national level policies, we had the Goods & Service Tax rollout in July. Although electricity supply has been kept out of the GST purview, its impact is felt considering the project development costs saw a price correction in the market. At a high level, there was a change at the ministry with R K Singh replacing Piyush Goyal as the Power Minister.

A comprehensive National Energy Policy was promised to be out by end of 2017 but we only had the release of draft version in June. The draft policy did receive critical feedback on how the supply and demand scenarios’ were forecasted running up to 2040. In a recent comment, the government has said the policy is close to being finalized.

The year in review was discussed in two parts on the Emerging Tech Radio, a podcast that I host. On the first part, Harsh Thacker joined the conversation.

Similarly, a draft policy on introduction of energy storage systems was proposed and again the industry is eagerly looking forward to the final version on that.

On the projects front, large scale project tenders was the order of the day. Wind power projects which for long has sustained on Feed in Tariffs at state level had to compete on a competitive tariff determined through reverse auctions. Solar tariffs first breached 3 rupee/unit mark in the bid for Rewa solar project in Feb and subsequently saw further bids stay below the mark. (Read more about solar bids)

Renewable Energy projects in India: A year-end discussion with Vish Iyer on the second part of the year-end review.

A big news that brought some cheer in the year was the release of the greening of grid report, a report that concluded that integration of 175GW of RE would be a possibility by 2022. The study was a collaboration between the Indian and US governments through the PACE-D programme. However, the analysis did leave some experts asking for details. For e.g. the report claimed energy storage wouldn’t have a great impact on grid integration and was not considered in planning. In return, grid balancing was mainly considered with hydro, gas and thermal power plants. The analysis expects the thermal power plants to operate below their current minimum requirement of 55% PLF.

The economic survey that precedes the union budget had valuable insights as expected. However, an interesting analysis came in the second part of the report released in the second half of the year. The Chief Economic Adviser in the chapter Climate Change Sustainable Development and Energy highlights the energy trajectory in India like projecting RE would account for a 43% of total grid capacity by 2027. The survey chapter also looks at the costs and benefits of different energy sources. Like for instance, looks at the record low solar tariffs and asks a question on whether there is an opportunity lost in land given for solar if they tend to under-perform etc. However, the report did leave some unanswered questions in terms of showing a low social cost for per unit of electricity from coal in comparison to renewables. (Read more about the analysis)

Forum of Regulators signed MoU with National Association of Regulatory Utility Commissioners (NARUC) the US body that represents the state public service commissioners. The MoU is part of the USAID’s PACE-D project, ‘Greening the Grid’. The partnership also aims to look at sharing experience in market design between the two countries.

So yes, there is optimism in the industry (ME INCLUDED). With a new minister at the helm, there have been some radical steps taken in the last few months which has created a new wave of enthusiasm in the sector. As Vish  mentioned in the podcast a few times (above), the RE industry now sees a transformative phase as India marches on towards an ambitious goal of 175GW of RE by 2022.

On a personal note, wrapping up five years of blogging on this platform (In case you missed my 5 year review as a clean-tech evangelist, here). More to come for sure. Just that it’ll also include integration of my audio blogging platform aka podcast.

Energy Access for All

If you have been closely following the global electrification drive, you would have heard of the ‘Power for All’ campaign. It is driven by a mission to deliver energy access to all by including decentralised energy solutions, mobilizing capital and delivering high quality energy technology solutions. Power for All is supported by UK Aid, UN Environment, Climate Works among other agencies. Partners associated with power for all campaign include various agencies working on energy access in India and Sub-Saharan Africa.

William Brent, a Director in the Power for All campaign joined in the conversation on Emerging Tech Radio podcast to talk about their objectives, progress and particularly on the opportunities for cross-region collaboration between India and Africa in the space of energy access

Part 1

In the first episode, William Brent spoke about Power for All’s  campaign  objectives work and progress in India and Sub Saharan Africa. He did highlight a few key findings from IEA’s recent publication, Energy Access Outlook for 2017. The report incidentally points out to a lack of progress in electrification in Sub Saharan Africa where it is failing to keep track of the population growth in spite of increased awareness. On contrast in India nearly 500m have gained access to electricity since 2000 i.e. close to 85% of the population have access to electricity in comparison to less than 50% in 2000. With the new electrification scheme, Saubhagya, India has a target of 100% electrification by end of 2018. The power for all campaign has also greatly emphasised on the United Nations Sustainable Development goals, particularly, SDG No 7 which aims to ensure affordable, reliable, sustainable and modern energy for all. The Sustainable Development Goals aim to achieve the objectives by 2030.

In the second part of our conversation where we discuss the technical collaborations that is happening between India and Sub Saharan Africa in the space of energy access and what are the key challenges to be addressed if the energy access for all is to be a global reality.

Part 2

You can find out more about the topic here.

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