“India will lead the energy revolution in the world with the electric vehicles” said Union Minister Piyush Goyal while presenting the Budget 2019 in Lok Sabha. Union Minister Piyush Goyal, who filled in for Finance Minister Arun Jaitley as the latter is recuperating in the US while presenting the budget said there are 10 dimensions to be focused till 2030 and the third dimension is clean energy and electric vehicles. Allocation for the power sector is expected to be increased by an additional 10% for infrastructure augmentation of grid and distribution. As the Government has near-achieved its target to electrify 100% households in the country, the focus should shift back to providing fiscal support to discoms who have been able to achieve their UDAY targets as envisaged earlier. A bulk of the allocation towards Roads & highways, Railways and Power sector will happen.
“This India will drive on electric vehicles. We would not have to import oil and will produce electricity on our own domestically. Till the year 2014, about 2.5 crore families were forced to live the life of 18th century without electricity,” Mr Goyal said. He also said India is fast becoming the automobile manufacturing hub of the world. However, no tax structures of rebate slabs were discussed during the budget. The government has connected about 96% of households across the country with electricity supply, and hopes to take power lines to the rest by January 26. That is a significant achievement the Narendra Modi government is expected to showcase to the voters before the next Lok Sabha elections.
“Under Saubhagya Yojna, we provided free electricity connection to almost every household. By March 2019, all willing families will get electricity connection. In mission mode, we have provided 143 crore LED bulbs with the participation of the private sector,” said Mr. Goyal. “This has resulted into a savings of approximately Rs. 50,000 crore per year in electricity bills of poor and middle class families,” he said.
In May last year, in a series of tweets, Prime Minister Narendra Modi announced that a village in Manipur was the last one to receive electricity in the country. More than 80 % rural homes in the country - and not the 10 % necessary to declare each village electrified - have electricity, the government later clarified.
Electrification has been on government agendas since the country’s independence from colonial rule, but it has run into hurdles, especially because of the huge logistical challenges of bringing electricity to faraway settlements in difficult terrain.
Finance Minister Arun Jaitley had announced the Deen Dayal Upadhyaya Gram Jyoti Yojana back in the Budget 2014-15. Aimed at providing 24x7 uninterrupted power supply to all homes, the scheme for feeder separation would augment power supply to the rural areas and strengthen sub-transmission and distribution systems. Jaitley set aside a sum of Rs. 500 crore for the new scheme. The NDA government led by Prime Minister Narendra Modi will ensure that every home across the country gets electricity connection by March this year, Union Minister Piyush Goyal said today in his Interim Budget speech that was seen as a populist budget in an election year.
A day ahead of the budget 2019, the government lowered customs duty on import of parts and components of such vehicles to 10 to 15% to promote domestic assembling of electric vehicles.
Until now, vehicle parts and components imported for assembly in India attracted import duty of 15 to 30 %. The Central Board of Indirect Taxes and Customs (CBIC) has carved out a separate category for parts and components of electric vehicle for which customs duty has been lowered to 10-15%.
Further, the CBIC has removed customs duty exemption to battery packs for electric vehicles and also doubled the duty on battery packs for mobile phones. Henceforth, import of battery packs for electric vehicles will attract 5 % tax. Customs duty on battery packs for mobile phone has been doubled to 20%.
In his first budget Jaitley announced several other proposals for the power sector such as a scheme for solar power driven agricultural pump sets and water pumping stations for energizing one lakh pumps and reducing the basic customs duty from 10 % to 5% on certain components used in in the manufacture of wind-operated electricity generators.
In Budget 2015-16, reiterating the government’s commitment to 24X7 power across the country, Jaitley had announced a slew of measures including five ultra-mega power projects (UMPPs) on the plug and play mode. Emphasizing the government’s focus on clean energy, Jaitley announced that the Clean Energy Cess would be doubled to Rs 200 per tonne of coal.
Jaitley also announced an ambitious target- to quadruple renewable power capacity to 175 gigawatts by 2022 as part of the governmen’t ambitious plan to increase the reach of electricity to every household. He said India would seek to add 100 gigawatts of photovoltaic capacity, 60 gigawatts of wind power, 10 gigawatts of biomass and 5 gigawatts of hydro projects.
In his Budget 2016 speech, Jaitley had informed that as on April 1, 2015, a total of 18,542 villages were not electrified. As on February 23, 2016, 5,542 villages have been electrified, which was more than the total combined achievement of previous three years, he said. He provided Rs 8,500 crore for Deendayal Upadhayaya Gram Jyoti Yojna and Integrated Power Development Schemes. In Budget 2017-18, he increased the allocation for Deendayal Upadhayaya Gram Jyoti Yojna to Rs 4,814 crore, a 25% jump from the outlay in the previous fiscal.
Mr. Jaitley also announced solar power supply at about 7,000 railway stations in the medium term though a beginning had already been made at 300 stations. He gave a boost to renewable energy, announcing another 20,000 mw of solar park development in phase II and a slew of duty reductions on components for fuel cell-based power generating systems.
In his Budget 2018 speech, Jaitley lauded the government’s efforts for providing electricity to all households of the country through the Prime Minister Saubhagya Yojana under which poor households are given free electricity connections. He said the government was spending Rs 16,000 crore under this scheme. He allocated Rs 3,800 crore for Deendayal Upadhayaya Gram Jyoti Yojna and Rs 4,900 crores for Integrated Power Development Scheme. He also allocated Rs 16,000 crore for the Saubhagya Yojana under which poor households are given free electricity connections. He said the government was spending Rs 16,000 crore under this scheme. He allocated Rs 3,800 crore for Deendayal Upadhayaya Gram Jyoti Yojna and Rs 4,900 crores for Integrated Power Development Scheme. He also allocated Rs 16,000 crore for the Saubhagya Yojana to enable last mile connectivity for rural households.
India’s solar capacity addition is set for a record in 2019. New installations this calendar year will reach nearly 14 gigawatts (GW), which is about 50% more than the capacity added last year, according to a report by the Gurugram-based renewable energy consultancy firm Bridge to India, released on Jan. 09.
The new capacity addition will take India’s installed solar capacity to about 38 GW by the end of the year. Overall, the country is estimated to add nearly 16 GW of clean energy capacity in 2019, driven by large-scale solar projects.
The Narendra Modi government has set a target of building 100 GW of solar capacity by 2022 to help meet one of the country’s goals under the Paris climate agreement: renewable sources must account for up to 40% of power-generation capacity by 2030. The central and state governments have been auctioning tenders to build large-scale solar projects, whose main customers will be state-owned power distribution companies.
Apart from such large-scale projects, installation of rooftop solar panels also continues to rise.
Indian households have not yet warmed to rooftop solar panels due to their high cost of purchase. But commercial and industrial buildings, which are supplied grid electricity at significantly higher rates than residential users, find it economical to switch over to solar panels.
Clean energy goals for the year
India’s renewable energy (wind and solar) sector’s contribution to the overall power generation mix is expected to cross 10% in FY20 as the country will add 10 giga-watt (GW) generation capacity during the period. In the preceding three years, the share of renewable in total generation mix has risen to 7.8% as of March 2018 from 5.6% in FY15 owing to large capacity additions witnessed in the wind and solar power segments. India plans to have 40% of installed power generation capacity on clean sources by 2030.
The boost came mostly from central and state governments policies, as well as the improved tariff competitiveness of wind and solar power. The lowest tariffs for solar and wind power now stand at Rs 2.44/unit and Rs 2.43/unit, respectively. The average rate at which states buy non-renewable power is Rs 3.53/unit.
The calendar year 2018 also saw over 10 GW of project awards by the central nodal agencies and state distribution utilities, which provide a healthy visibility for renewable capacity addition in calendar year 2019 and FY20.
To meet India’s 175-GW renewable energy target by 2022, the ministry of new and renewable energy plans to tender 60 GW of solar and 20 GW of wind capacity by March 2020, leaving a two-year window to complete the projects within the target period. As per estimates, 9 GW and 20 GW of renewable capacity would be added in FY19 and FY20, respectively.
Experts believe the year 2018 was a landmark year for domestic solar equipment manufacturers, who received support from the government’s imposition of the safeguard duty.
After a year of relative lull, renewable energy will be back on track in 2019 with new plants being set up and the introduction of the much anticipated policy on battery storage. The renewable energy sector in India had a sobering year in 2018 with the number of new projects slowing down and investors finding that the sector was generating lower power and financial returns than they had expected.
2019 will also be the year when floating solar projects will add significant capacity to the country’s generation scene, according to the India RE 2019 Outlook published by renewable energy consultancy Bridge to India.
Total renewable energy capacity addition in 2019 will be 15,860 megawatts (MW), up 50% compared to 2018, when there was a lack of clarity on goods and services tax (GST), safeguard duty and BIS standards, besides slow construction of large parks and poor grid connectivity. Dictated purely by tender timetables, capacity addition should jump from 10,560 MW last year to 15,860 MW in 2019. Most of the uplift will come from utility scale solar although rooftop solar is also expected to register another year of fantastic growth.