The renewable energy sector is expected to get a big boost in this year’s union budget. An increased budgetary allocation for the sector will be in line with a slew of measures and promises announced by Prime Minister Narendra Modi.
The boost will be in sync with India’s goal of achieving 100 Giga Watts of electricity production by 2022 and also its global commitments of reducing per capita carbon emissions by two-thirds in the next 15 years.
Sources in the government told Rajya Sabha TV about government’s plan to announce incentives for setting up solar power plants having power generation capacity of 3,000 megawatt in the near future.
“It is our commitment at the Cop21 (climate change summit in Paris). We have to build adequate infrastructure to generate power from non traditional sources,” said the official.
The government has already set up an inter-ministerial committee headed by the Secretary of Department of Industrial Policy and Promotion (DIPP). The committee will explore the financial options to fund solar projects in the country and then submit a report. Sources reveal that the committee has proposed both fiscal and non-fiscal incentives to push mega solar power projects.
The Ministry of New and Renewable Energy has also placed a proposal with the Ministry of Finance to increase the budgetary allocation by two times to achieve solar power generation capacity to 100 Giga Watt by 2022.
Recently, the Modi government scaled up its target of renewable energy capacity to 175 GW by 2022 which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power. But according to the ministry, as of now India only has the capacity to produce 38 GW of grid-interactive renewable energy. To achieve the ambitious target, the government estimates an investment of around Rs 6 lakh crore.
“Our estimates suggest that we need at least one Lakh rupees to produce one mega watt power and we need investment of at least Rs 100 billion to achieve the target. Government alone cannot provide this,” said Ajay Prakash Srivastava, the Director of the Solar Energy Society while explaining how the target requires a joint effort from both public and private sectors.
Srivastava also said that solar power generation was costly and Indian private companies must get low interest funding from foreign agencies.
“We pay interest at the rate of 12.5 % to 13% depending upon the credit rating of the firm. It’s very difficult to operate in such low profit margins,” he explained.
Finance Minister Arun Jaitly is also expected to set aside a sum of around Rs 500 crore in this year’s budget for creating the necessary infrastructure for International Solar Alliance launched by PM Modi during the COP21 Paris summit held in December 2015.
At the climate change summit, India promised to produce about 40 % of its electricity from non-fossil fuel based sources by 2030. It also committed to reduce its greenhouse gas emissions by 3 times by that time. According to World Bank report, India emits 1.7 metric tons of carbon-dioxide per person per year.
Increased use of indigenously produced renewable energy is expected to considerably bring down India’s dependence on expensive imported fossil fuels. As of now India imports nearly 80% of its crude and gas requirements. India is the 4th largest importer of crude oil and the 5th largest importer of petroleum products and Liquefied Natural Gas (LNG) globally.