New Delhi: As part of the National Democratic Alliance (NDA) government’s focus on clean energy, the Union Budget may announce an energy access scheme powered by renewable sources for providing round-the-clock power to villages that can’t be reached by the national electricity grid.
According to the International Energy Agency (IEA), around 300 million Indians, roughly a quarter of the country’s population, do not have access to electricity.
“The budget may announce an energy access scheme for those villages where the national grid can’t reach,” said a senior government official, requesting anonymity.
India’s per capita power consumption, around 940 kilowatt-hour (kWh), is already among the lowest in the world. In comparison, China has a per capita consumption of 4,000kWh, and developed countries average around 15,000kWh.
While India has an installed power generation capacity of 255,012.79 megawatts (MW), its national grid has an inter-regional power transfer capacity of about 46,450MW; the government has plans to increase this to 72,250MW by 2017.
Renewable power has a share of only 12.42%, or 31,692.14MW of India’s installed capacity.
Finance minister Arun Jaitley, in his last year’s budget, had announced an ambitious initiative to supply electricity through separate feeders for agricultural and rural domestic consumption, aimed at providing round-the-clock power to village households.
The Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), named after an icon of the ruling Bharatiya Janata Party (BJP), is aimed at ensuring around eight hours of quality power supply to agricultural consumers and 24-hour electricity to households.
In addition, the import duty for input material for solar power generation projects may also be waived in this year’s budget as part of the plan to promote green energy. It requires an investment of around Rs.8 crore per MW for setting up solar photovoltaic power projects. India requires around Rs.10 trillion of green energy investments.
“There may be zero duty on input materials for solar projects,” added the government official cited above.
The BJP-led NDA government has sharply raised an earlier solar energy target of achieving 20,000MW capacity by 2022 to 100,000MW.
The government is also targeting wind power capacity of 60,000MW by 2022. It plans to start five funds of $5 billion each to promote green energy sources.
“We expect to see more allocations and more sops for the energy projects. It may be in the form of tax sops and other means to attract foreign investors,” said a second government official who also didn’t want to be identified.
Queries emailed to a spokesperson for the ministry of new and renewable energy (MNRE) remained unanswered till press time. The finance ministry’s stance on the green energy plans could not be confirmed as the ministry is under quarantine in the last phase of preparations for the budget, which will be announced by Jaitley on 28 February.
Anlaysts say India would add large green energy capacities.
“Capacity additions in the renewable energy (RE) sector in FY16 would be driven by the solar segment on the back of a strong policy thrust by GoI (government of India) towards setting up solar installations,” wrote India Ratings and Research Pvt. Ltd, the domestic arm of Fitch Ratings Inc, in a 29 January report.
“The share of solar capacity in the RE sector is likely to increase to 11% in FY16 from 8% in FY14. Additionally, Ind-Ra believes solar-based capacity addition has reached a tipping point in terms of grid price parity (Rs.6.0/kWh-Rs.7.0/kWh) and hence could see accelerated adoption,” the report said.
Guaranteeing adequate supply at affordable prices is a priority for the government. The government has approved an outlay of Rs.43,033 crore for DDUGJY. The scheme would also help reduce India’s aggregate transmission and commercial (AT&C) losses by five percentage points from the present 27%.
In sync with the Narendra Modi-led government’s aim of promoting clean energy, finance minister Jaitley in the budget presented last year unveiled a detailed road map for harnessing India’s renewable energy resources.
The strategy, aimed at contributing to India’s energy security, included schemes such as setting up so-called ultra mega solar power projects, or plants capable of generating as much as 4,000MW, developing solar parks on canal banks, constructing transmission corridors for renewable energy and energizing 100,000 solar power-driven agricultural pump sets and water-pumping stations.
Last year’s budget had also extended the concessional basic customs duty of 5% for setting up solar power generation projects.
The government’s renewed focus on green energy comes in the backdrop of the US and China inking a climate change deal under which the US will reduce its emissions by 26-28% below its 2005 level by 2025 and China will reach the peak of its harmful carbon dioxide emissions in around 2030.
India’s National Action Plan on Climate Change recommends that the country generate 10% of its power from solar, wind, hydropower and other renewable sources by 2015, and 15% by 2020.
