Budget 2023: Top 10 Demands of Energy and Power Sector

Industry Outlook Team | Monday, 30 January 2023

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Government of India has vowed to reduce the total projected carbon emission by 1 billion tonnes by 2030. Achieving this goal is going to be a herculean task and a lot will depend on the development of green energy sector and revamping the power sector. The key implementation challenges facing the Indian power sector include effectively undertaking new project management and execution, ensuring availability and adequate fuel quality, developing the vast coal and natural gas resources available in India, to name a few.

Over the years, the renewable energy industry has become a significant player in India, especially in terms of power generation capacity. This supports the government's sustainable development agenda while also being an integral part of meeting the country's energy needs.

Experts believe that finance minister is going to announce multiple initiatives to support India’s energy transition in budget, including a Rs 21,650 crore scheme to promote the setting up of grid-scale battery energy storage systems (BESS), Rs 3,765 crore in viability grants for such projects, and reduced import duties on parts to build BESS.

Pinning its hopes on the Budget 2023, the industry has the following 10 most pressing expectations from this year’s budget:

1) PLI scheme for galvanizing domestic manufacturing of green and sustainable solutions

2) Support for research and technical advancement for OEMs in wind energy sector

3) PLI in ammonia sector as it is crucial to energy transition and food security

4) Reversal of GST on solar modules which was increased from 5% to 12% last year

5) Use of GST compensation cess for making the existing coal based plants environmentally compliant by installing FGDs

6) Transition to become a gas-based economy, bringing natural gas under the purview of GST

7) Strengthening of interstate transmission network, ensuring power flow from renewable rich states to other states

8) Reduction of custom duty on electrolysers required for green hydrogen generation

9) Postponement of BCD implementation on solar modules and cells, until sufficient domestic manufacturing capacity is operationalized

10) Bringing the generation and sale of power under the scope of GST.

“We look for the 2023-24 Union Budget to prioritize decarbonization, accelerate energy transition towards RE and development of a manufacturing and support ecosystem to enable this transition. In order to meet our RE goals by 2030 and truly compete with regions like US, China and the Middle East on emerging technologies like Green Hydrogen which are aided by access to low-cost capital and extremely favorable Tax and Duty regimes in those countries, the GoI must provide some immediate relief to counter significant cost and schedule disruptions in the wake of the implementation of BCD and ALMM and the global supply chain disruptions.

One area would be in the form of deferment of BCD implementation on solar modules and cells, till such time sufficient domestic manufacturing capacity is operationalized to fulfil the annual demand estimated to reach the 2030 targets. Also, parallel measures to reduce the incidence of domestic solar module manufacturers exporting a large portion of their production, leaving the domestic Industry without viable alternatives.

Another area here would be to ensure access to low-cost capital for RE, BESS and Green Hydrogen project development, in line with most other RE focused regions and economies across the globe. Additionally, measures like rationalization of GST on Solar Power Generating Systems and the O&M of wind and solar projects, tax incentives for residential and commercial Rooftop solar consumers, no capital gain tax on sale of land for wind and solar farms and other associated land reforms will bolster the growth and public support for RE and accelerate the country’s green Transition,” says Srivatsan Iyer, Global CEO, Hero Future Energies.