Union Budget 2023: Anticipations for the Renewable Energy Sector

Industry Outlook Team | Friday, 20 January 2023

In 2022, India made tremendous advancements in the field of renewable energy. Over 170GW of installed renewable energy capacity and over 80GW of projects are currently being developed in the nation. India has to instal 25–30 GW in 2023 and succeeding years in order to reach its 500 GW goal by 2030. The industry anticipates strong help from the government to do this.

Issues and concerns: Solar module supply and demand are severely out of balance. Imports have been discouraged by high customs duties because there isn't enough domestic capacity. The industry claims that this has increased costs and affected the feasibility of projects. It is possible to make commercial operations even more simple.

Key demands
General
• Lower interest rate funds at 3-4% available to overseas competitors against 8-10% in India
• Production Linked Incentive (PLI) scheme for wind turbine generation and device
• Increase PLI allocation for solar module manufacturing; currently at Rs 19,500 crore
• Incentives for Provisions for the development of battery storage system
• Incentives to promote 2G ethanol, flex fuel hybrid vehicles

Tax
• Favourable tax on income derived from the sale of renewable energy certificates (RECs)
• Treating RECs similar to carbon credits
• Lower mport duty on wind and electrolytes
• Remove levy on biofuels is also one of the key demands.
• Lower duty on solar panels till domestic capacity comes up

"Import restrictions caused by high tariff barriers on imports (BCD) have raised module prices in India, thereby hurting project viability and impeding the expansion of the renewable energy sector. High interest rates on project finance are also badly harming the industry and placing tremendous pressure on project economies "affirmed Surendra Kumar Gupta, Amp Energy India's CFO.