Post Budget Analysis | Power and Green Energy

<span style="font-weight: bold;">Proposals</span><br />
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<ul>
<li>Allocation of Rs 3,800 crore and Rs 4,900 crore for the Deendayal Upadhayaya Gram Jyoti Yojna (DUGJY) and Integrated Power Development Scheme (IPDS), respectively.</li>
<li>Allocation of Rs 16,000 crore (of which Rs 2,750 crore has been allocated for FY2019) under the Saubhagya scheme to enable last mile connectivity for rural households.</li>
<li>Mechanism proposed to buy surplus solar energy from solar pumps by the DISCOMs at reasonable price.</li>
<li>Increased capex by railways, particularly for electrification and augmentation of line network.</li>
<li>Allocation of Rs 4,200 crore for capacity addition in wind power, solar power and green energy corridor.</li>
<li>Measures proposed to facilitate access to bond market to meet 25 per cent of the debt needs by large corporates, including those rated in the µA¦ category.</li>
<li>Reduction in corporate tax rate to 25 per cent for entities with turnover of up to Rs 250 crore.</li></ul><br />
<span style="font-weight: bold;">Impact: Positive</span><br />
Thrust in ensuring 24-hour electricity access to all rural households under the Saubhagya and DUGJY schemes is likely to boost energy demand to some extent as well as improve the quality of life for rural households. Further, the mechanism proposed to buy surplus solar energy from solar pumps by the distribution utilities as well as push for deployment of solar energy under the smart city programme would facilitate solar capacity addition, given the improved tariff competitiveness of solar energy. However, uncertainty over the imposition of duties (import duty/safeguard duty/anti-dumping duty), including timelines and the quantum thereof, continues to prevail for the solar energy sector. The measures proposed to facilitate access to bond market to meet 25 per cent of the debt needs by large corporates will allow the entities in the power and renewables sector to diversify the funding sources at cost competitive rates, given the highly capital-intensive nature of the sector and large funding requirements. The reduction in tax rate to 25 per cent for entities with a turnover of Rs 250 crore is a positive sign for renewable independent power producers (IPPs) as most of these have capacities of less than 200 MW and thus garner revenues within the prescribed limit.<br />
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<span style="font-weight: bold;">Gyanesh Chaudhary, MD and CEO, Vikram Solar</span><br />
Budget 2018v19 is not very encouraging for the renewable and solar energy sectors. The government has missed out on a major opportunity to take the lead in combating climate change. The recently released Economic Survey highlights the impact of climate change in India, especially to farmers. It mentions that rainfall extremities have increased in the past 10 years and climate change can potentially reduce farmers¦ income by 20 to 25 per cent. Renewable energy, especially solar, can play a crucial role in reducing the impact of climate change in our communities.<br />
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<span style="font-weight: bold;">Tulsi Tanti, Founder, Chairman and Managing Director (CMD), Suzlon Group</span><br />
The Budget has given significant impetus to MSMEs which form the backbone of the wind energy sector of India, as they manufacture components and provide various services. Reduction of corporate tax for MSMEs will help them reinvest the surplus capital in establishing newer units to meet the overall target of 175 GW renewables by 2022. Also, the government¦s initiative to recapitalise PSU banks, enables the banks to provide loans to MSMEs. <br />
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<span style="font-weight: bold;">Shivanshu Thaplyal, Associate Partner, Khaitan &amp; Co</span><br />
The Finance Minister has acknowledged the fact that many farmers are installing solar water pumps to irrigate their field. In respect of the same, it has been announced that the Government of India will take necessary measures and encourage the state governments to put in place a mechanism that surplus solar power generated by farmers is purchased by the distribution companies or licensees at reasonably remunerative rates. While this is a welcome move as it would assign an opportunity cost to the surplus power that is being generated, the FM could have also proposed a framework around energy storage solutions, as it will be the next step in dealing with surplus energy management in the country.<br />
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<span style="font-weight: bold;">Dr Ashok Haldia, MD &amp; CEO, PFS (PTC India Financial Services Ltd)</span><br />
The Budget rightly focuses on the rural and infrastructure growth, which are the backbones of the Indian economy. <br />
A 50 percent higher spend on the infrastructure sector will reboot the demand and create jobs through multiplier effect. This would raise the demand for funds and funding opportunities for existing projects that are under stress, stalled, or under implementation, and for new projects. We can expect increase in the demand of finance and fund raising opportunities. Permitting investment in A-rated bonds would boost fund raising options, particularly for infrastructure projects. Focus on schemes, such as Saubhagya Yojna for Power for All, coupled with impetus on rural spending would generate electricity demand. Installation of rooftop solar units under smart city projects would further boost achievement of 175 GW of renewable energy mission.<br />