Yesterday, we had the Union Budget being presented by our Finance Minister - Sh. Arun Jaitely. Kindly find below what is my best understanding of the budget for the sector which impacts Indias sustainable energy resource - Renewable Energy 1. Para 118 of the Budget Speech 118. New and Renewable energy deserves a very high priority. It is proposed to take up Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Laddakh in J&K. I have set aside a sum of ` 500 crores for this. We are launching a scheme for solar power driven agricultural pump sets and water pumping stations for energizing one lakh pumps. I propose to allocate a sum of ` 400 crores for this purpose. An additional ` 100 crore is set aside for the development of 1 MW Solar Parks on the banks of canals. Implementation of the Green Energy Corridor Project will be accelerated in this financial year to facilitate evacuation of renewable energy across the country. Impact - Ultra Mega Solar Power Projects - While there has been talk about it since the last 6-8 months, it is good that this has found mention in the budget. The estimated total cost of the proposed 1000 MW solar projects at each of the 4 locations would entail a cost of Rs. 25,000 Crores which has to be financed & constructed by BHEL, SJVN & other PSUs. Rs. 500 Crores sanctioned in the budget shall go in providing the feasibility reports and creating basic corporate structures for these behemoth projects. Energising 1 Lac Solar Pumps - There can be no greater good than having the diesel guzzling agriculture pumps being replaced by clean solar energy. There has already been a sanction for 14,500 pump sets for FY14-15 by MNRE and the funds for the same have been sanctioned from the National Clean Energy Fund (NCEF). Solar Park on Banks of Canals - Unlike the solar projects which have been installed on top of the solar canals, these ones are proposed on the banks. May be these would be clubbed with another mission announced in the current budget of making the banks of Canals & Ghats cleaner and augmenting tourism. Implementation of Green Energy Corridor - Though the funds for these have been allocated in previous budgets, the mention intents that the work shall be brought upto speed. Green Corridor shall bring a lot of stranded renewable energy resources in mainstream. 2. Para 200 of the Budget Speech 200. Supply of power continues to be a major area of concern for the country. Therefore, instead of annual extensions, I propose to extend the 10 year tax holiday to the undertakings which begin generation, distribution and transmission of power by 31.03.2017. This stability in our policy will help the investors to plan their investments better. Impact - This was more or less a given and taken for granted provision, however extending the provision till 2017 provides greater clarity. 3. Para 218 & 219 of the Budget Speech 218. We need to maximize our utilization of solar power. The existing duty structure incentivizes imports rather than domestic manufacture of solar photovoltaic cells and modules. Therefore, I propose to exempt from basic customs duty: specified inputs for use in the manufacture of EVA sheets and back sheets; flat copper wire for the manufacture of PV ribbons. A concessional basic customs duty of 5 percent is also being extended to machinery and equipment required for setting up of a project for solar energy production. 219. To promote wind energy, I propose to reduce the basic customs duty from 10 percent to 5 percent on forged steel rings used in the manufacture of bearings of wind operated electricity generators. Also, I propose to exempt the SAD of 4 percent on parts and raw materials required for the manufacture of wind operated generators. Further, I propose to prescribe a concessional basic customs duty of 5 percent on machinery and equipment required for setting up of compressed biogas plants (Bio-CNG). Impact - Exemption of Basic Custom Duty on EVA & Back Sheets, Coppers Wire - A long standing demand of the solar manufacturers, it is indeed commendable that the Finance Minister has observed and got the anomaly fixed. This would lead to a cost reduction by Rs.0.50 - 0.75 for the domestic manufacturers. Concessional Custom Duty on Plant & Machinery for Solar Energy Production - This goes with the intent of the government to create India as a vibrant manufacturing hub for solar. With so much of solar demand being created, it would be ideal to have Indian companies supply & meet the demand rather than imports. Reduction in Basic Custom Duty on Forged Steel Rings & Exemption of SAD on other raw materials for Wind - Shall lower the capital expenditure required for setting up wind projects, it needs to be seen whether this particular initiative would boost life into the ailing wind sector or do we need much greater incentives. 3. Para 233 of the Budget Speech - 233. To develop renewable sources of energy, I propose to exempt from excise duty: EVA sheets and solar back sheets and specified inputs used in their manufacture; solar tempered glass used in the manufacture of solar photovoltaic cells and modules; flat copper wire for the manufacture of PV ribbons for use in solar cells and modules; machinery and equipment required for setting up of a project for solar energy production; forged steel rings used in the manufacture of bearings of wind operated generators; machinery and equipment required for setting up of compressed biogas plants (Bio-CNG). Impact - All of the above are essentially a counter-balance to the reduction in basic custom duty provided for the above mentioned items in Para 218 & 219 of the budget speech. Apart from the above there have been other important initiatives like raising the coal cess from Rs. 50 to Rs. 100 per tonne of coal to finance clean energy & clean environment. Sanctioning of funds for setting up of coal washeries. All the above shall be of importance to make renewable energy more attractive & get more investments made into the sector which directly impacts our way of living. There would be many smaller items which shall be as a part of the Finance Bill, will keep readers updated on them after going through the Finance Bill in detail. Best Wishes Trivector Power Solutions Pvt. LTD
Posted on: Fri, 11 Jul 2014 05:59:33 +0000
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