Budget 2017: Need energy security to help low carbon economy, says

 Suzlon The wind energy sector can easily achieve the target of 60 GW by 2022, and also harness the export potential of 10 GW (~ USD 10 billion), if the following recommendations can be considered in the upcoming Union Budget, says Tulsi Tanti, Chairman and Managing Director, Suzlon Group. Tulsi Tanti (more) Chairman, Suzlon | The renewable energy landscape is undergoing a significant transformation both in India and globally. With over 28 GW wind energy, India is the fourth largest in terms of wind installed capacity. We see the demand for clean, sustainable, and affordable power continuing especially in emerging markets. India’s commitment at COP21, to reduce 30 percent to 35 percent carbon emission and increase renewables to 40 percent of the energy mix by 2030 will continue to give impetus to incremental demand for renewable energy. The wind energy sector can easily achieve the target of 60 GW by 2022, and also harness the export potential of 10 GW (~USD 10 billion), if the following recommendations can be considered in the upcoming Union Budget. The expectations from the Union Budget 2017 are:

Continuation of Accelerated Depreciation & Section 80 IA for Wind Operated Electricity Generators (WOEGs) -There is a fair amount of Indian capital that has and is investing into wind energy projects, because of presence of Accelerated Depreciation. Most of these investments come from the manufacturing sector in India, which utilises renewable energy for their captive consumption, so that they hedge their energy costs. -In a typical process industry i.e. textile, energy consists more than 30 percent of their operating costs, if such industry invests into renewable energy, the energy costs dips to less than Rs 1 per kWh after 6-7 years, making them competitive and profit making. -In order to continue the impetus for Make in India and make it successful, AD should be allowed to be continued. -Further, with presence of MAT, and removal of Sec 80 IA, would make the energy costs higher than today, so Sec 80 IA needs to be retained. Incentive mechanism for State DISCOMs to procure wind energy -There is a requirement to incentivise state DISCOMs to meet the RPO compliances, today, there is no such mechanism. 

MNRE, recently floated a paper to extend Performance Based Incentive (PBI) to the tune of 62 paise/kWh to DISCOMs, which is a very good move, should be implemented. Generation Based Incentive (GBI) should be continued to maintain the growth momentum and to achieve the target of 60 GW by 2022 “Zero” rate GST for Wind Operated Electricity Generators (WOEGs) -Renewable energy products currently are excise exempt, and currently electricity duty is kept out of GST, because of which the entire GST chain breaks while producing electricity, if not corrected would lead to increase in cost of generation anywhere between 30 – 50 paise/kWh. -Since, it is important to contain or reduce the cost of generation, best would be to peg GST at 6 percent slab (revenue neutral) or best to be at ‘zero’ rate, which would reduce cost of generation, making renewable energy most acceptable to DISCOMs and end consumers.

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