Budget 2020: Expectations From Renewable Energy Industry

With this year’s Union Budget scheduled to be tabled on 1 February 2020, experts from renewable energy industry have set their expectations high. Considering the present state of the economy and the renewable industry, the upcoming budget can be a great opportunity for renewable energy sector industries. Read what experts expect from Budget 2020.

In 2019, the Union Budget had an outlay of ₹9.20 billion (~$130 million) for wind power, ₹30.05 billion (~$440 million) for solar (both grid-connected and off-grid) and ₹5 billion (~$73 million) for green energy corridor. The budgeted expenditure for 2019-20 included Rs 2,479 crore as CFA for capacity addition of 7,500-megawatt projects. The rest – Rs 525 crore – was provided for off-grid and decentralized solar sector.

Yogesh Mudras, MD for Informa Markets in India

According to different reports, the solar installations in the year 2019 have declined. High taxation and low tariffs have has affected the wind sector. Yogesh Mudras, MD for Informa Markets in India, said, “The industry witnessed newsworthy developments in terms of installation of capacity, but the renewable energy sector grew at a much-reduced pace last year. The slowing economy, high taxation, low tariffs, coupled with investors sentiments has contributed to slower growth.”

According to different reports, the solar installations in the year 2019 have declined. High taxation and low tariffs have has affected the wind sector. Yogesh Mudras, MD for Informa Markets in India, said, “The industry witnessed newsworthy developments in terms of installation of capacity, but the renewable energy sector grew at a much-reduced pace last year. The slowing economy, high taxation, low tariffs, coupled with investors sentiments has contributed to slower growth.”

“In the upcoming budget, we are expecting the government to address the cross-subsidy and transmission charges as these hinder the development making renewable energy more expensive. Not only this for the overall development of renewable energy infrastructure, but the government should also provide exemptions to the Indian cement sector as they play a crucial role in boosting the renewable sector.” He added.

India has continued its solar and wind energy journey by adding around 11 GW capacity in 2019. This growth can be further enhanced, by addressing key barriers in the upcoming budget.

Nikunj Ghodawat, Chief Financial Officer, CleanMax

Nikunj Ghodawat, Chief Financial Officer, CleanMax said, “renewable, like any other infrastructure business, is capital-intensive and availability of funds at a competitive price is an important ingredient for growth. While the RBI has brought down the repo rates periodically, it hasn’t been translated to the banks passing on the benefit to the end customer. Add to this, the tight lending environment on liquidity front - there are a handful of financial institutions doing fresh project finance. This needs to change soon to uplift investment and confidence in the industry. Additionally, the removal of capping in the priority-sector lending limit for rooftop solar projects will ensure higher credit financing and give a much-needed boost to the sector.”

“The Government should also focus on implementing the amendments in the Electricity Act of 2003 with a focus on accelerating open access policies, privatization of the DISCOMs and separating content & carriage, to address many of the challenges and inefficiencies prevalent within the power distribution sector. This will eventually reduce the energy cost burden on the end consumer and improve the financial health of the DISCOMs,” he said.

Further, he mentioned that a comprehensive Credit Guarantee Mechanism promoted by the Government or perhaps, a multilateral agency for MSMEs with a credit rating below 'A', would be a welcome step. This would throw open the rooftop solar market to a multitude of small businesses, creating a huge market and would also bring down electricity costs for these companies."

Dhananjay Sharma, Director & CEO, Log 9 Spill

Dhananjay Sharma, Director & CEO, Log 9 Spill, said, “Cleantech companies around the country seek special incentive programs and larger tax benefits with an aggressive government push for innovative cleantech solutions. So that this sector becomes more desirable and stable resulting in more investments in this sector. A conducive environment should be provided to encourage the creation of new cleantech businesses by easing regulatory and compliance policies for such companies.”

Hartek Singh, Chairman and Managing Director, Hartek Group

Hartek Singh, Chairman and Managing Director, Hartek Group, said, “With the government likely to set the ball rolling for its ambitious ₹2.86-trillion scheme for power distribution reforms on the Budget day, we expect a higher budgetary allocation for the T&D 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.”

He also said that “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 segment 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,” he mentioned.

“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 favorable net metering regulations,” he added.