Union Budget 2022: What Renewable Energy Sector Is Expecting?

The world is rapidly moving toward renewable energy, from electric automobiles to solar cells. There is a growing recognition that excessive reliance on fossil fuels to build the economy is unsustainable in the long run.

India is also working hard to increase its green energy production, establishing a number of initiatives to harness the power of solar, water, and wind. Given the Indian Government's strong policy focus on renewable energy, investment requirements in the industry remain high. Here's what the sector experts expect from the budget 2022 for the sustainable growth of the sector:

Long term Financing

The Union government has announced a number of policy measures in the last 2 years, including the PLI (Production Linked Incentive) scheme, all with the goal of promoting domestic cell and module manufacturing. Despite this, given the high interest from potential players in the IREDA's recent tender, a further rise in the financing outlay for the PLI plan for solar module manufacture is predicted. Given the large financial requirements for renewables, the availability of suitable long-term financing options at cost-competitive rates is critical to meeting these goals. In this regard, legislative actions are expected to supplement the renewable energy sector's long-term funding options.

Tax Concessions

FICCI recommended that the 15% tax rate be extended to enterprises engaging in green technologies, as well as full deductions for investments or purchases of green technology assets. The second proposal is designed to encourage businesses to replace outdated technology with more environmentally friendly alternatives. Another key industry proposal is to use the residential sector to build rooftop solar capacity. It stated that developing a loan guarantee plan would go a long way toward making solar roofs more appealing and reducing risk concerns. 

Transmission Network Strengthening 

Even if a 300-GW renewable energy (excluding hydro) scenario is assumed, renewable energy's proportion of the entire energy mix is predicted to climb to around 28% by 2030. As a result, upgrading the transmission network and adding storage capacity to maintain grid stability and balance remains vital. In addition, incentives and legislative measures are needed to encourage investment in the energy storage sector, which could be either in the form of battery storage, or pumped-storage segment. Budget 2022, according to several experts, should focus on long-term policy stability to encourage investments in the renewable energy sector. 

Strong Policy Focus

Budget 2022 is projected to offer an additional boost to assist the investment requirements in renewable energy, as well as to improve the availability of long-term finance channels, given the strong policy focus on renewables and the development of transmission and distribution networks.

The sector anticipates a significant and ongoing focus in the budget on expanding renewable energy adoption through different sustainable schemes and tax incentives. As a result, the domestic, industrial industry's reliance on costly fossil fuel imports will be reduced.

 

To meet the PM Narendra Modi's ambitious aim, the renewable energy industry would need a lot of government help in the form of interest-free loans, targeted subsidies, and a fairer tax structure, which will affect policy change not just at the state level, but also at the discom level.