Budget 2020: Solar Power’s Allocation Rises by 10 Percent
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While India's industrial community holds mixed views on the Union Budget 2020 depending on their perspective, there is widespread satisfaction with the continued focus on transitioning toward a renewable energy-driven economy. As part of its commitments under the Paris Agreement, India aims to derive 40% of its total energy needs from non-fossil fuel sources by 2030. Currently, as of 2019, the nation has already achieved 17% of this goal, with an installed capacity reaching 35%.
The Ministry of New and Renewable Energy (MNRE) saw an increase in its allocation by 10.35% in the latest budget, marking a compound annual growth rate of 10% over the past three years. This steady rise signifies India’s proactive stance in the pursuit of sustainable development, positioning the country ahead of many global peers in adopting cleaner energy solutions.
One of the most transformative initiatives highlighted in the budget is the Kisan Urja Suraksha Evam Utthaan Mahaabhiyaan, commonly known as KUSUM. Launched in 2018, KUSUM initially planned to install 17.5 lakh 3 HP solar irrigation pumps in off-grid areas and another million pumps in regions served by the grid. The initiative sought to promote cleaner energy usage while boosting agricultural income by allowing farmers to sell excess electricity back to the grid. The recent budget has doubled the pump installation target to 35 lakh, allocating ₹700 crores for expanding KUSUM and an additional ₹300 crores for utilizing barren lands for grid-connected solar power generation. With this ₹1,000 crore allocation, the goal is to generate 4 GW of power. Proper implementation could provide farmers with supplementary income from power sales while improving productivity on idle rural land, although there is concern about potential overuse of groundwater resources.
India currently relies heavily on diesel and electric irrigation pumps, contributing significantly to fossil fuel imports and environmental challenges. Shifting to decentralized renewable energy systems presents a massive opportunity to align with the Paris Agreement goals and reduce costs while fostering economic growth.
Another notable measure in the budget encourages state-owned entities like the railways to produce solar power. The railways plan to generate between 18-20 GW of energy, partly through installations along rail tracks and rooftop solar panels at their facilities. A pilot project in collaboration with Bharat Heavy Electricals Limited (BHEL) aims to launch a 1.7 MW plant in Bina, Madhya Pradesh, supplying 2.5 million units annually to the railways' grid.
To further incentivize renewable energy investments, corporate tax rates have been reduced to 15% for new manufacturing units, including those focused on renewable energy. Additionally, the dividend distribution tax, which had acted as a deterrent to foreign investment in renewables, has been eliminated, creating a more favorable climate for international investors.
A proposal for smart metering seeks to alleviate financial pressures on power distribution companies (DISCOMS). By introducing a system akin to mobile SIM cards and handsets, consumers would pay upfront for their electricity usage and choose their service provider. Providers could then charge based on time-of-use tariffs. While ambitious, the logistics and funding of such a large-scale rollout involving 3,000 INR per meter remain uncertain.
In conclusion, the budget reflects a strong commitment to renewable energy, ensuring brighter prospects for India's solar sector and aligning with global sustainability goals.