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Budget 2018: After record growth, India's renewables progress is slipping

Author: Dimple Shah
by Dimple Shah
Posted: Jan 25, 2018

Budget 2018

In line with its climate-change commitments and domestic pollution concerns, India has one of the world’s largest programmes to expand renewables–a tripling of capacity over the next five years.

But after two years of record expansion, the diversion of a national clean-energy cess to subsidise GST (goods and services tax)-induced losses and a new import duty to protect domestic manufacturers of solar equipment threaten to derail India’s ambitious 2022 target.

This is why February 1, 2018–the day the ruling Bharatiya Janata Party (BJP) will present its last full budget before the 2019 general elections–is of particular significance to the renewables sector, which comprises electricity from solar, wind, hydro and bio power.

These are the issues the budget must contend with: India has missed yearly renewable expansion targets since 2016; no more than 29% of the clean energy cess–a major source for funding renewables in the country–has been spent over six years, with Rs 56,700 crore diverted in 2017 to subsidise GST losses; a new import duty on solar modules from China, Taiwan and Malaysia threatens to increase production costs and record low solar tariffs; and the rural poor may miss a renewables job boom, if a workforce cannot be trained.

Addressing these issues are important if India is to fulfill its commitment to the Paris Climate Agreement 2015 to install 175 gigawatt (GW) of renewables power capacity by 2022. This is enough to replace 175 coal-fired power plants of 1,000 MW and reduce India’s dependence on fossil fuels–92% of India’s electricity comes from fossil fuels–that produce greenhouse gases and hasten global warming.

Of India’s 2022 renewables target, 100 GW is supposed to come from solar and 60 GW from wind power, according to government data. India installed 62 GW renewable power capacity by November 2017, of which 27 GW, or 43.5%, was installed over four years from May 2014.

Consequently, budgetary allocations to renewable energy rose by 38.9% between 2014-15 and 2017-18.

Rapid renewables growth but targets missed

By November 2017, renewables constituted 18% of India’s installed power capacity of 331 GW, up from 13% in 2014, when the BJP government took office.

But over two years to 2017, India missed its ambitious targets substantially.

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Author: Dimple Shah

Dimple Shah

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