In the Budget 2015-16, there are many positives for the power industry as well as renewable energy. The decision to electrify 20,000 villages by 2020 is a laudable goal. The decision to have five new ultra-mega power projects of 4,000 MW each in the plug-and-play mode and commissioning of the Kudankulam nuclear power station in 2015-16 should also augment power supply.
The clean energy sector will also receive a boost with renewable energy capacity target being revised to 175,000 MW, comprising 100,000 MW solar, 60,000 MW wind, 10,000 MW biomass and 5,000 MW small hydro. The other notable steps to promote renewable energy include the decision to raise the clean energy cess from R100 to R200 per metric tonne (for coal, lignite and peat) to fund clean environment measures as well as concessions on custom and excise duty for electrically operated vehicles and hybrid vehicles being extended up to 31 March 2016.
The additional depreciation at the rate of 20% being allowed on new plant and machinery installed by manufacturing units or a unit engaged in generation and distribution of power; the electrification of 20,000 villages, including with off-grid solar power, and connecting 178,000 unconnected homes should also boost power generation.
Finally, lowering the basic customs duty to reduce the cost of raw materials for active energy controllers used in making renewable power system inverters to 5% is another thoughtful move that should benefit clean energy producers.
While some of the announcements may seem ambitious, the success of the measures will depend on how the government executes them.
By Anil Chaudhry
The author is country president and MD, Schneider Electric India