Budget expectations: energy and power sectors

27 Jan 2022 , 02:19 PM

“As a player in the energy and power sector, we are really hopeful that the Union Budget 2022-23 will set a path to recovery beginning this year. The Energy sector is pinning a lot of hopes that the upcoming budget shall offer the much-needed push to the revival of consumer confidence especially in renewable energy sector.

The Union Budget 2022-23 must focus on incentivising technology adoption in the renewable energy sector through tax concessions and credit guarantee. For the entire renewable industry to grow, structural incentives need to be built in the ecosystem, to both, enable the industry as well as the consumers to adopt and utilize technology efficiently. Whether it’s related to EV usage, investment in battery, lithium imports, lithium convertor & lithium refinery set up,  green hydrogen adoption, it is very imperative that the high costs associated initially with these technologies are socialized and given enough government protection.

The Government has an ambitious target of increasing the renewables installed capacity to 430 GW by 2030 and at the same time increased the GST on Solar Modules from 5% to 12%, which should certainly be reconsidered, as huge investments have been planned in this sector going forward. There is also a need to bring the generation and sale of power under the purview of GST.

Another important step we hope is taken, is utilizing the GST compensation cess for making the existing coal based plants environmentally compliant by installing FGDs. Allocating money in grants will avoid the need to increase tariffs and will be a positive move by the Government to mitigate pollution.

Additionally, if we look at strengthening the interstate transmission network, it will help to restrict the grid curtailment and ensure the power flow from renewable rich states to other states with waivers of Inter & Intra State Transmission Charges.

Going forward, there will be a much anticipated shift in the energy sector, with the focus on ESG and renewables, thus the steps taken from now on should complement that change. To start with, we expect the Government to consider reducing custom duty on Electrolysers required for Green hydrogen generation, in order to make India a Global manufacturing hub.”

The author of this article is Mr. Kush Singh, CEO, Essar Power

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com