The Union Budget 2022-22-23’s outlook on the renewable energy sector is for India to become more competitive and self-reliant. It includes several measures to help India transition to a cleaner, lower-carbon economy. This is a critical step, given the threat of climate change. Incentives, subsidies, and policies by the government will prioritize domestic solar PV manufacturing to meet ambitious solar targets. They will also install Distributed Renewable Energy projects at several border villages.
Focus on Domestic Manufacturing
India plans to increase its capacity to reach the 280 GW installed solar capacity goal by 2030, as stated in the Union Budget 2022. The country will do something different this time. It will support the local manufacturing sector via the Production-Linked Incentive program (PLI), which has been well received since its introduction last year in the budget.
The budget allocation for the PLI program will be increased by Rs 19,500 crore, a 29% increase from the previous year. This is to help boost the production of high-efficiency solar panels. This funding will support domestic production of fully-integrated units, including solar PV modules and polysilicon (a crucial input to the solar supply chain). This funding will allow India to become self-sufficient in solar production and less dependent on solar equipment imports across the value chain.
Key Points of Discussion From the Union Budget 2022 Speech
- Energy Storage
The ministry will ensure credit availability for clean electricity storage and digital infrastructure via data centers and energy storage systems. These systems will include dense charging infrastructure, grid-scale battery systems, and many other features. However, a battery-swapping policy will be applied to compensate for the limited number of charging stations available in urban areas.
- Efficiency and Energy Saving
The budget highlights the importance of energy saving. It encourages the Energy Service Company model to implement energy efficiency and savings measures in large commercial buildings. Through commercial solar solutions, the intention is to help build capacity (the process of strengthening organisational structures, among other things for sustainability). It will also raise awareness about energy audits and performance contracts.
- State Inclusions
The new legislation will replace the Special Economic Zones Act (SEZ Act) and give states the ability to participate actively in the development and maintenance of service and enterprise hubs. This legislation will apply to all industries, current and future. It will allow India to leverage its existing digital infrastructure to improve export competitiveness and provide a better platform for future growth. The budget 2022-22-23 allows states to have a fiscal deficit of 4% of GSDP. 0.5% of this is tied to reforms in the power sector, as per the conditions of the previous budget 2021-22.
- Duty Concession
In the budget speech, the finance minister made a strong case against concessions to import duties. The data shows that reasonable tariffs can help create a level playing ground for local manufacturers/solar panels companies and support “Make in India” without significantly impacting import prices. This is especially true for power generation, coal mining and transmission or distribution projects, as well as metro and railway. The budget proposes to restore gradually a moderate tariff at 7.5% with the exception of advanced machinery, which India does not manufacture.
2030 Commitment – How Will This Budget Help You?
Refer to Mr. Sanjeev Aggarwal’s response to the Union Budget 2022
The policy announcements made in the energy storage sector, such as battery swapping framework, battery-as-a-service, and storage, will certainly help to gain the right traction for the essential component of green energy ecosystem.
With a PLI increase of Rs.19.500 Cr for solar module production, the government has pushed Make in India further. We should expect more companies benefit from this. Other forward-looking measures such as biomass palletization, energy efficiency and coal gasification can help reduce our dependence on fossil fuels.
The government’s proposal to increase funding via sovereign green bonds is well-timed and can reduce borrowing costs. The state being allowed to have an extra 0.5% fiscal deficit for reforms in the power sector will also help strengthen the struggling distribution sector i>
Making Solar Installation Easy
India’s solar industry had two main expectations from the budget for 2022. These were to protect and encourage domestic producers and introduce policy changes/incentives to provide financial support to the sector, boost demand and attract investment. These needs are also recognized by the Union Power minister.
Increased funding through the PLI scheme will allow for domestic production of solar cells and PV module. This will make India more self-reliant in solar technology and potentially export-oriented. The country will also be able to make solar panels locally-sourced, making it easier and cheaper to install solar power systems in commercial and industrial settings. The budget for MNRE in SECI investments has been cut to Rs 1,000 Cr for 2022-23, from Rs 1,800 Cr for 2021-22.
India’s 2022 solar budget offers much to be excited about. It is expected to encourage residential and commercial rooftop solar system installation, as well as industrial and commercial solar adoption. Amplus Solar is a company that supports homeowners and businesses to be power-independent by providing customized on-grid or off-grid solar systems to meet their specific energy needs. Our project portfolio includes a wide range of global clients, making us Asia’s largest distributed energy company. We offer low-carbon solar energy solutions. We can help you reduce your operational costs and create a sustainable future.
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