Union Budget@10: Renewable energy has grown over the last ten years, but production and transmission have lagged

 Union Budget@10: Renewable energy has grown over the last ten years, but production and transmission have lagged

Union Budget@10: Renewable energy has grown over the last ten years, but production and transmission have lagged

While there has been progress in the last ten years in terms of consumer rights, capacity increase, and deficit reduction, transmission infrastructure and manufacturing facilities for renewable energy still lag far behind expectations.

India's demand for electricity has grown during the last ten years, from 135 gigawatts (GW) in 2013 to 240 GW in 2023, but the country's energy deficit has decreased from 4.2% in FY20 to 0.2% in FY24.

However, the nation's power consumption is projected to reach 335 GW, posing a challenge to the government in terms of maintaining access to and affordability of electricity.

The electricity sector's budget allocation throughout the last ten years.

The government has declared that it would continue to rely on coal to fulfill rising demand, with an additional 80 GW of coal-fired capacity planned by 2030. Along with this, India will increase its hydropower and renewable energy capacity. The government has set a lofty goal of having 500 GW of installed capacity come from renewable energy sources alone.

Over the last ten years, India's power industry has made significant progress, turning the nation from one with a power deficit to one with a surplus of electricity. We have added 97,501.2 MW and 96,282.9 MW of renewable energy capacity to the nation's conventional power industry between 2014–15 and today. Union Power and New and Renewable Energy Minister RK Singh told Moneycontrol in a statement that "we have increased the generation capacity by 70% from 248,554 MW in March 2014 to 425,536 MW in October 2023."

Over the last ten years, the electricity industry has used its budget.

Nonetheless, some regions hindered the expansion of India's power industry. Over the last ten years, Moneycontrol has examined the major achievements and setbacks in the power and new and renewable energy industries.

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Rights of consumers: Distribution firms (discoms) are required to reimburse customers for any unplanned power outages as of the first instance under the Electricity (Consumers' Rights) Regulations, 2020, which were announced by the government. The regulations set deadlines for discoms to provide services to customers.

Making the power industry viable: The problems of state power companies' mounting dues and the deficiency in aggregate technical and commercial (AT&C) resources have been addressed by policies like the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022 and the Revised Distribution industry Scheme (RDSS). is spoken to. Decrease. Discoms' legacy debt to Genco has decreased by 63%, from Rs 1.396 lakh crore to Rs 51,268 crore. The electricity ministry's preliminary data indicates that AT&C losses of discoms decreased from 22.62% in 2013–14 to about 14% in FY23.

Increasing the amount of renewable energy: From Rs 956 crore in 2014–15 to Rs 10,222 crore in 2023, there was a 99% rise in allocation for the new and renewable energy industry. India's installed net renewable energy capacity (network excluding hydropower) increased from 28 GW in 2013–14 to 132 GW now, almost quadrupling in that time.

National Green Hydrogen Mission (NGHM): The Central Government of India has made an effort to embrace new energy sources like green hydrogen since it believes that renewable energy sources by themselves would not be enough to satisfy the country's energy demands. On January 4, 2023, the Union Cabinet authorized the NGHM, with an initial budget of Rs 19,744 crore, which included Rs 17,490 crore for incentives. Under NGHM, the government hopes to create 5 MMT of green hydrogen annually by 2030. This would need 125 GW of renewable energy and 60-100 GW of electrolyzer capacity.

Give up

Transmission networks to support large-scale renewable energy generation: In order to evacuate electricity from significant prospective renewable energy projects, the government had intended to improve the transmission network. However, these projects, which include a 9,700 circuit kilometer intra-state transmission corridor and a 3200 circuit kilometer inter-state transmission corridor, have been frozen for the last several years. The government had said in December 2022 and 2023 that it will establish a Green Energy Corridor to facilitate the exploitation of renewable energy.

Slow emphasis on increasing production capacity: Prior to the significant fundamental customs tariffs being lifted in April 2022, China was the main source of imports for all solar project-related products, including solar cells, modules, wafers, ingots, and polysilicon. not mandated. But there are still not many fully integrated solar module manufacturing facilities in India, despite tariffs and the government's introduction of PLI plans to increase solar manufacturing. In spite of the desire to establish solar facilities, there is still a significant shortage of locally made solar module components.

Absence of Research and Development: Research and development receives little attention from the government. Whether it is in the field of green hydrogen, developing energy storage, or renewable energy, there is no financing or incentive program for research and development. The private sector is now mostly responsible for this.

PM Kusum, Rooftop Solar, and Solar Parks: The previous ten years also witnessed a number of poorly executed central government initiatives. Pradhan Mantri Kisan Urja has a 1.4 trillion rupee value. Due to the pandemic, a lack of funding and awareness, the remaining portion of the PM Suraksha and Utthan Mahabhiyan Yojana (PM-KUSUM) plan has been impacted. Because of this, the government intends to phase down the program in FY 2015 without providing any funding from the budget. The government had set a goal of 40 GW capacity for the solar park program, but only 10 GW have been reached so far. Regarding the rooftop solar initiative, it is likewise well behind the government's goal of installing 40 GW by 2022. There are now only 11 GW of installed rooftop solar panels for homes.

What actions ought the government to take?

The next budget will address industry demands and R&D activities, as well as government-supported credit enhancement programs to encourage additional investment in new clean energy projects, according to Disha Aggarwal, Senior Program Head, Council on Energy, Environment and Water (CEEW). Funds allocated to expand the workforce need to rise in proportion.

"Fiscal and financial incentives should be included in the government agenda to lower the cost of energy storage products and decentralized energy solutions for end users," he said.

Reduced reliance on imports for the bulk of renewable equipment is necessary, according to Induslaw partner Deepak Choudhary. "The government should increase its focus on R&D emergence of all major equipment, provide rebates in taxes for local manufacturers, easy access to financing at attractive interest rates," he said. He said that the construction of evacuation infrastructure would also need greater attention.

The government should also concentrate on rationalizing power pricing based on market data, according to Choudhary.