Expectations on renewable sector in the Union Budget
POWER & RENEWABLE ENERGY

Expectations on renewable sector in the Union Budget

India's Power Sector has gone through an extraordinary transformation over the last decade achieving ~100% electricity access (for all willing households) and an unprecedented acceleration in Renewable Energy (RE) capacity addition being the major highlights of the success story.

Developing low-carbon assets for future is important, however, scaling the decarbonisation of existing infrastructure, especially in transport, buildings, and industries also needs to be prioritised. A budgetary allocation towards pilot project for creating a Carbon Capture and Storage (CCS) demonstration projects for hard to abate industries would be welcome.

Rising Electric Vehicles (EV) sales in the country is an encouraging trend. Continuation and furthering of the momentum created through Faster Adoption & Manufacturing of (hybrid &) Electrical Vehicles (FAME) will be helpful.

Revamped Distribution Sector Scheme (RDSS) is already accelerating Smart Meter adoption and investments towards loss reduction. However, much of our T&D infrastructure is not designed to handle the sharp rise in frequency and magnitude of extreme weather events being witnessed in the recent times. Also, there is an increase in instances of downstream distribution network overloading during summer peak hours due to the unprecedented rise in peak demand over the last two years. Network strengthening to address these issues could be the focus of future capital investment schemes for DISCOMs supported by government of India.

In the last decade, India has successfully led a solar capacity addition program. In FY24, the country witnessed a record addition of 18 GW solar capacity. However, the pace of RE capacity addition needs to treble for achieving the 500 GW target by 2030 set by the Government. In addition to the existing mechanisms put in place, the next phase of growth in RE capacity additions will require 1) Enhanced focus on Corporate RE procurement with effective implementation of Green Open Access regime through favorable charges and Virtual Power Purchase Agreements (VPPA); 2) Continued support to RE manufacturing with integrated ecosystem; 3) Dedicated programs to promote New Innovative Solar applications; 4) Implementation of Distributed RE Obligation and adoption of differentiated tariff framework to promote Distributed RE.

Bringing electricity under the ambit of GST regime can remove current cascading effect of taxes and make input taxes in the entire value chain creditable thereby improving tax efficiency in the sector.

New manufacturing units commencing manufacturing by 31-Mar-2024, enjoy concessional corporate tax rate of 15%. This initiative has been instrumental in attracting investments in manufacturing sector in the country, including those towards solar PV modules, electrolysers, batteries etc. Extending the sunset date beyond 31-Mar-2024 by an additional five years or so will undoubtedly contribute to India?s economic growth.

To assist in funding some of the initiatives discussed above, the Government may also look to standardise and adopt new frameworks of Green Financing. Tax incentives for Green Bonds can help bring down the cost of green financing and encourage investments in energy transition initiatives. Interest income earned by investors in Green Bonds or profits earned by sale/ transfer of Green Bonds may be treated as tax exempt in the hands of the investors. Further the definition of ?Green Bonds? for the purpose of granting such income-tax benefits, may be aligned with the regulatory prescription issued by SEBI.

The 14th RAHSTA Expo, part of the India Construction Festival, will be held on October 9 and 10, 2024, at the Jio Convention Centre in Mumbai. For more details, visit: https://rahstaexpo.com

India's Power Sector has gone through an extraordinary transformation over the last decade achieving ~100% electricity access (for all willing households) and an unprecedented acceleration in Renewable Energy (RE) capacity addition being the major highlights of the success story. Developing low-carbon assets for future is important, however, scaling the decarbonisation of existing infrastructure, especially in transport, buildings, and industries also needs to be prioritised. A budgetary allocation towards pilot project for creating a Carbon Capture and Storage (CCS) demonstration projects for hard to abate industries would be welcome. Rising Electric Vehicles (EV) sales in the country is an encouraging trend. Continuation and furthering of the momentum created through Faster Adoption & Manufacturing of (hybrid &) Electrical Vehicles (FAME) will be helpful. Revamped Distribution Sector Scheme (RDSS) is already accelerating Smart Meter adoption and investments towards loss reduction. However, much of our T&D infrastructure is not designed to handle the sharp rise in frequency and magnitude of extreme weather events being witnessed in the recent times. Also, there is an increase in instances of downstream distribution network overloading during summer peak hours due to the unprecedented rise in peak demand over the last two years. Network strengthening to address these issues could be the focus of future capital investment schemes for DISCOMs supported by government of India. In the last decade, India has successfully led a solar capacity addition program. In FY24, the country witnessed a record addition of 18 GW solar capacity. However, the pace of RE capacity addition needs to treble for achieving the 500 GW target by 2030 set by the Government. In addition to the existing mechanisms put in place, the next phase of growth in RE capacity additions will require 1) Enhanced focus on Corporate RE procurement with effective implementation of Green Open Access regime through favorable charges and Virtual Power Purchase Agreements (VPPA); 2) Continued support to RE manufacturing with integrated ecosystem; 3) Dedicated programs to promote New Innovative Solar applications; 4) Implementation of Distributed RE Obligation and adoption of differentiated tariff framework to promote Distributed RE. Bringing electricity under the ambit of GST regime can remove current cascading effect of taxes and make input taxes in the entire value chain creditable thereby improving tax efficiency in the sector. New manufacturing units commencing manufacturing by 31-Mar-2024, enjoy concessional corporate tax rate of 15%. This initiative has been instrumental in attracting investments in manufacturing sector in the country, including those towards solar PV modules, electrolysers, batteries etc. Extending the sunset date beyond 31-Mar-2024 by an additional five years or so will undoubtedly contribute to India?s economic growth. To assist in funding some of the initiatives discussed above, the Government may also look to standardise and adopt new frameworks of Green Financing. Tax incentives for Green Bonds can help bring down the cost of green financing and encourage investments in energy transition initiatives. Interest income earned by investors in Green Bonds or profits earned by sale/ transfer of Green Bonds may be treated as tax exempt in the hands of the investors. Further the definition of ?Green Bonds? for the purpose of granting such income-tax benefits, may be aligned with the regulatory prescription issued by SEBI.

Next Story
Real Estate

Singapore's CapitaLand Plans Major India Expansion

CapitaLand Investment Limited (CLI), one of Singapore's largest real estate investment managers, has announced plans to significantly expand its investments in India. The company aims to more than double its India portfolio by 2028, signaling its confidence in the country?s burgeoning real estate market. Current Portfolio and Growth Target: CLI currently manages assets worth USD 3.3 billion in India. With its sights set on future growth, the company is targeting a dramatic increase in its India investment kitty to over USD 7 billion by 2028. This move comes as part of a broader strategy to ca..

Next Story
Infrastructure Transport

Air India MRO Facility Key Hub

Air India has launched a state-of-the-art Maintenance, Repair, and Overhaul (MRO) facility at Bengaluru Airport City, establishing a crucial hub for aircraft servicing in India?s burgeoning aviation sector. This new MRO facility aims to enhance Air India?s operational capabilities, improve turnaround times for aircraft maintenance, and reduce reliance on overseas servicing. Strategic Importance of Bengaluru: The facility, located at the Kempegowda International Airport (KIA) in Bengaluru, is strategically positioned to serve as a critical aviation hub. Bengaluru is a key center for both domest..

Next Story
Infrastructure Transport

BMC Notifies Properties for Water Tunnel

The Brihanmumbai Municipal Corporation (BMC) has initiated a crucial step in Mumbai's infrastructure development by notifying several properties for its ambitious underground water tunnel project. This project aims to bolster the city's water supply system, ensuring a more reliable and efficient distribution network. Project Overview: The underground water tunnel project is designed to address Mumbai's increasing demand for water by creating a robust network of tunnels deep below the surface. This tunnel system will transport water from reservoirs directly to various parts of the city, signif..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000