The reduction of Goods and Services Tax to 5% from 12% earlier on the renewable energy value chain will save up to Rs 1-1.5 trillion by 2030 while achieving the target of 500 gigawatts (GW) of renewable energy capacity by 2030, Union Minister for New and Renewable Energy Pralhad Joshi said on Monday.
“Approximately for the target of 248 GW which we will install further in the coming five years, the savings with this GST cut will be nearly Rs 1-1.5 trillion. This will be the biggest advantage,” Joshi said.
The country has a target of adding 500 GW of installed RE capacity by 2030, of which it has already added 252 GW.
Lower costs to boost affordability
The rationalization of GST rates across the renewable energy value chain from 12% to 5% will bring down the cost of clean energy projects, making electricity more affordable and directly benefiting consumers, the government said.
As per the Ministry of New and Renewable Energy, the capital cost of a utility-scale solar project, which typically amounts to around Rs 3.5–Rs 4 crore per MW, will now see savings of Rs 20–25 lakh per MW. At the scale of a 500 MW solar park, this translates into project cost reductions of over Rs 100 crore, significantly improving tariff competitiveness.
A typical 3 kW rooftop system will now be cheaper by about Rs 9,000–10,500, accelerating large-scale uptake under the PM Surya Ghar: Muft Bijli Yojana.
Push for Swadeshi solar value chain
Further, the government is preparing a comprehensive plan to develop a complete Swadeshi solar value chain including wafers, ingots and polysilicon, and may explore schemes like Viability Gap Funding and Production Linked Incentive to give a boost to domestic manufacturing.
“We have started building a trajectory for ingots, wafer, and polysilicon and we are going to come out with viability gap funding or PLI whatever is there,” Joshi said at CII’s 6th International Energy Conference.
The ministry of new and renewable energy is working on bringing out a similar list like Approved List of Models and Manufacturers for ingots and wafers used in making of solar modules in an attempt to boost domestic manufacturing of these products.
The ministry has already released a draft amendment proposing the implementation of the ALMM List III for wafers, with an effective date of June 1, 2028. However, the ALMM list III will only be issued when there are three independent manufacturing facilities in the country with an aggregate capacity of 15 GW.
Currently, the country’s domestic wafer capacity stands at just 2.2 GW with the country heavily relying on China for imports of such components.
ALMM is a list of the models and manufacturers from which solar project developers can buy required equipment from. Presently, ALMM has been imposed for solar modules and is to be implemented for solar cells starting June next year.