BUDGET EXPECTATIONS: POWER & RENEWABLES

17 Jan 2023 , 09:59 AM

With the growing share of renewables in the energy generation mix, energy storage system or ESS (either battery or pumped hydro) holds critical importance for ensuring grid stability. In this context, policy measures like PLI scheme to incentivise the manufacturing of grid scale battery storage facilities are expected. Similarly, incentives may be required to promote investments in and improve the cost competitiveness of pumped hydro projects. This apart, a PLI scheme is expected to incentivise the manufacturing of electrolysers for producing green hydrogen, given the policy push on the same.

Strong tariff competitiveness and policy thrust remain the key drivers for capacity addition in RE, as is evident from the strong project pipeline of over 50 GW, which comprises projects awarded through both Central nodal and state agencies. Achieving the renewable purchase obligation (RPO) target of 43% by FY2030 would require adequate grid infrastructure along with storage capabilities to manage the intermittency associated with wind and solar power. As a result, supportive policy measures in the Budget are expected to ensure long-tenure financing avenues for RE as well as grid strengthening transmission (inter-state and intra-state) projects.

The weak financial profile of state-owned discoms continues to be of concern for the power sector, given the limited improvement in the operating and financial performance of these utilities. Hence, higher budgetary allocation to strengthen the distribution infrastructure is expected, which will enable the discoms to improve their operational efficiencies. Nonetheless, proactive focus and timely implementation of various capex measures by the discoms themselves is also required to minimise the AT&C loss levels.