The Union Budget 2022-23, announced by Finance Minister Nirmala Sitharaman on February 1, 2022, included extensive provisions for the country’s expanding clean energy sector. From domestic manufacturing of solar cells and modules and battery swapping for electric vehicles (EVs) to the issue of sovereign green bonds, a series of far-reaching reforms formed part of the much-awaited budget speech. Industry experts share their reactions on the union budget and its likely impact on the overall renewable energy sector…
Sanjeev Aggarwal, Managing Director and CEO, Amplus Solar
“The budget announcements have been fairly progressive, laying out the framework for the emerging requirements of the energy sector. The policy announcements in the energy storage sector like battery swapping framework, battery as a service, and storage being part of the infrastructure will surely help get the right traction to this essential component of the green energy ecosystem.
The government has also further pushed the agenda of Make in India with PLI enhancement of Rs.195,000 million for solar module manufacturing, and we should expect more companies to benefit from this. Similarly, other forward-looking measures like biomass palletisation, energy efficiency, and coal gasification will help in reducing our fossil fuel dependence.
The government proposal to raise funding from sovereign green bonds is a well-timed one that can help in reducing the cost of borrowings. Similarly, allowing states to have an additional 0.5% fiscal deficit to power sector reforms will go a long way in strengthening the ailing distribution sector.”
Gyanesh Chaudhary, Vice Chairman and Managing Director, Vikram Solar
“The Union Budget 2022-23 is visionary and action oriented. The key measures announced in the budget towards enabling ease of doing business, climate action, digital economy, strengthening the start-up ecosystem, job creation and supporting industrial growth, will propel a strong growth momentum.
The Budget 2022 is growth focused with clear roadmap for infrastructure. The PM Gati Shakti master plan focusing on seven growth engines and four big priorities, including the energy transition and climate action will bring transformational changes and accelerate India’s green energy growth. The increase in capital expenditure by 35.4%, as a pump-priming measure, is a significant boost for employment generation.
We are glad the finance minister, continued to focus on enabling India’s clean energy transition. We welcome the additional PLI allocation of INR 195,000 million for manufacturing high-efficiency solar modules for the existing wait-listed PLI bidders. This will strengthen the domestic solar manufacturing ecosystem, thereby reducing our import dependence, creating jobs, attracting investments and enabling the Make in India vision. Additionally, the sovereign green bonds will boost green infrastructure development which will help in meeting India’s carbon emission reduction targets. Green bonds will also enable international yield curve for Indian corporates leading to better pricing for bonds. The battery-swapping policy with interoperability standards will boost the EV ecosystem.
As domestic solar manufacturers, we are appreciative of the government’s focus towards strengthening domestic solar industry by notifying the basic custom duties on solar modules and solar cell effective April 1, 2022. We are confident, with the implementation and roll-out of the measures announced in Budget 2022, we will move closer towards realizing the Aatmanirbhar Bharat vision in solar sector and India’s energy security through green power.”
Animesh. A. Damani, Managing Partner, Artha Energy Resources
“The sheer inclusion of renewable energy and cleantech in the Budget 2022-23 speech by the hon’able FM is a clear indicator of the increased prominence that the renewable energy segment has had in the last few years! The sector has grown by leaps and bounds, thus establishing a formidable position.
The focus on EV and energy storage solutions is clearly the need of the hour. The introduction of battery swapping initiative is in line with our expectation for a while. Interoperability of energy storage is going to revolutionise the consumption of renewable energy in India. It is not only going to improve logistics for EV users, but also create a micro-economy – that will create budding entrepreneurs in the segment.
Moreover, the hon’able FM has granted energy storage solution and grid scale battery system an ‘infrastructure’ status, which has been done largely to boost demand. This move is bound to attract better financing options for the said segment, increase scalability, which in-turn will eradicate the barrier of discoms not opting for RE power on account of intermittent supply.
On the accountability front, I truly hope that the forward-looking move by the central government to introduce end-to-end online e-billing system is trickled down and implemented at central agencies such as SECI and IREDA. This will better the payment cycles and improve the financial standing of the power generation companies”
Adarsh Das, Co-Founder and Chief Executive Officer, SunSource Energy
“As an industry, we welcome the inclusion of ‘Climate action’ as one of the key pillars of the budget. Several important announcements such as an additional allocation of Rs. 195,000 million for the PLI scheme for module manufacturing, sovereign green bonds for funding solar projects, and a robust battery swapping policy will pave the way for reaching the target of 500 GW of non-fossil energy capacity by 2030 and achieving net-zero by 2070. Additionally, the move to provide infrastructure status to data centre and energy storage system will help facilitate cheaper credit for digital infrastructure and clean energy storage. As an industry we support indigenous manufacture of solar modules. The clarity on import duty on solar cells and modules will help the local manufacturing capacity ramp up to meet both Indian and global demand for solar modules. While the higher duty will increase the cost of setting up solar plants, we believe long-term it would be a net positive for Indian industry and developers.”
Hitesh Doshi, Chairman and Managing Director, Waaree Energies Limited
“As an ardent believer of energy security through renewable energy with aatmnirbhar hharat, we bow with gratitude to the vision of government of India and believe that the announcements by honorable finance minister in the budget dawn a new era for the renewal and solar energy industry in India. Both demand and supply side have been addressed along with forward looking announcements.
We welcome and express sincere appreciation for the clarity on BCD, expanding the pool for PLI for solar manufacturing and initiatives which clearly outline the expedited deployment of solar in various segments with special focus on rural sector and smart cities”.
SK Gupta, Executive Director and CFO, Amp Energy India
“We sincerely thank the Finance Minister for unfolding another growth oriented budget which will drive the economy to high sustainable growth. The Budget 2022-23 also has a focus on transitioning to clean energy and helping India meet its climate action goals. There is a specific focus on growth of infrastructure sector and higher allocation to capital expenditure in the budget-which will result in an all round growth.
Reinforcing the need that India should continue to lead its green energy renewable drive, allocation of Rs.195,000 million of additional funds for PLI for domestic module manufacturing is a welcome step. Extending it beyond modules to the complete solar value chain is the need of the hour and has been well recognised in the budget. This will go a long way in ensuring that India becomes self-sufficient in this critical field in near future and will play a key role in ensuring that the sector is capable of providing green energy at highly competitive rates to the society in the long run.
Raising or issuance of sovereign green bonds for promoting green infrastructure in the company is welcome news and should further drive the growth of the renewable industry in coming years. Making grid stage battery solutions as part of infrastructure projects will give further impetus to seamless integration of renewable generation and distribution systems with improved grid stability. The industry was expecting a rollback on GST on renewable projects to the old rates and also some relief/ delay on the custom hike on cells and modules but there is no change in this and hence a little unexpected.”
Srivatsan Iyer, Global CEO, Hero Future Energies
“The allocation of Rs. 195,000 million under the PLI scheme for domestic manufacturing of high efficiency solar modules with priority to fully integrated units will help create much needed size and scale and foster global champions. This will go a long way towards creating an Atmanirbhar renewable energy sector besides generating significant employment. The decision to issue sovereign green bonds will also help tap domestic and foreign capital and enable viability gap financing for green projects, thus catalyzing decarbonization of the Indian economy. The proposed battery swapping policy and formulation of interoperability standards coupled with incentives to the private sector for innovative “battery as a service” business models will fast track nationwide rollout of electric vehicles, thus ushering in an era of clean mobility. The industry now keenly awaits the roll out of the National Hydrogen Policy as India pursues rapid, sustainable and low – carbon economic growth”.
Rahul Kale, Founder and CEO, Sunpower Renewables
“We are encouraged with this climate-friendly budget and happy to work with the Government in achieving the goal to be net-zero by 2070. The aggressive allocation of 195,000 million for Production Linked Incentive (PLI) is a huge boost for players who are in the segment of product development for harnessing solar energy. We are glad to see the focus and support from the government for the domestic manufacturing of solar products. This can help build India as an exporting nation. This move will further enable the private sector to come up with sustainable and innovative products that can bring the last mile connectivity and improve the efficiency in the EV ecosystem. The budget also announced that sovereign green bonds will be issued for mobilizing resources for green infrastructure. These bonds are an important source for funding carbon-neutral projects. Availability of funds would be a key driver to help India accomplish its net-zero ambition.”
Maxson Lewis, Managing Director and CEO, Magenta
“While there was more focus expected in the Union Budget towards clean mobility, here are, my views on the hits and misses:
The Union Budget 2022 did show its intent on promoting cleaner mobility. The fact that the Union Budget 2022, did not focus on the traditional auto business does show the intent of the government to focus on new technologies with its zero fossil fuel policy.
The introduction of battery swapping policy and interoperability standards will go a long way in building the use cases. The fact that government will also formulate interoperability standards to improve the efficiency of EV business is a good indication and will support the growth of the infrastructure.
What was missed was an explicit statement of the extension of the FAME scheme and how it can support the expansion of the charging network in India to help facilitate the switch from petrol and diesel-based vehicles to EVs.
The Finance Minister’s words that the private sector will be encouraged to develop sustainable and innovative business models for battery and energy as a service is a great boost to co-develop the battery swapping and EV charging ecosystem.”
“The Indian renewable energy industry, notably the solar sector, must applaud the Indian government’s efforts to promote green energy during the last decade, especially during the pandemic. The appropriations in the most recent budget strongly emphasize renewable energy, energy efficiency, electric mobility, data centers, building efficiency, grid-connected energy storage, and green bond assistance, which is a terrific development. Following India’s broader global commitment to fighting climate change, the 2022 budget emphasizes allowing energy transition through provisions to boost local manufacturing of solar power equipment and batteries. The basic customs duty (BCD) of 25% has been imposed on imported solar cells and 40% has been imposed on solar modules by the Ministry of New and Renewable Energy recently which will be effective from April 1, 2022. This will discourage Chinese imports of solar panels and solar cells to a great extent, giving further boost to the ‘Make in India’ mission of the Government of India.
It’s a wonderful move as the risks of climate change are the strongest negative externalities that affect India and other countries. As the Hon’ble Prime Minister said at the COP26 summit in Glasgow last November, “what is needed today is mindful and deliberate utilization, instead of mindless and destructive consumption.” The low carbon development strategy as enunciated in the ‘panchamrit’ that he announced is an important reflection of our government’s strong commitment towards sustainable development.
In addition, to facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of 195,000 million for Production Linked Incentive for manufacture of high efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made. This initiative is expected to produce 60 lakh new employment and an extra 30 lakh crore jobs over the following five years, which is recommendable.”
Jaideep Mukherji, CEO, Smart Power India
“Budget 2022 has clearly laid a major focus on the green energy transition, reducing carbon footprint, and inclusive economic growth. As we move towards a greener economy, the role of distributed renewable energy as a catalyst in the empowerment of MSMEs, job creation, and reforms in agriculture will be crucial.
New initiatives to encourage productive use of clean energy in rural areas driven by distributed renewable energy can be of great value to the rural as well as the national economy.”
Abhishek Nath, Sector Head – Energy and Power, CSTEP
“Today’s budget is probably more important from the perspective of what has not been stated in the Union Budget 2022 speech than what has been stated. One needs to go into the details of the budget document before being able to comment properly.
However, on the basis of the Finance Minister’s speech, one noticeable announcement is the provisioning of clean, decentralised renewable energy for border villages, though with India’s 2030 and 2070 climate commitments in view, this could have been broadened.
Also, there is this push for manufacturing solar PV end-to-end in the country and this is very welcome. Apart from that, the Finance Minister also talked about non-fossil power for EV charging and a larger push for EV itself, standardisation of EV batteries, and dense charging. She also mentioned grid-scale storage and giving some leeway to states, up to 0.5% of fiscal deficit tied to the power sector. This, combined with the removal of concessionary import duties for articles used in the manufacturing process, with help the Atmanirbhar Bharat initiatives.
Energy Service Companies (ESCOs) for building energy efficiency is also a welcome announcement. As also are the sovereign green bonds and the climate action fund for blended finance.
Yet, one was left looking for some incentives or a big announcement on the green hydrogen policy also, which is in the making for more than a year now.”
Mahesh Palashikar, President, GE South Asia
“I am happy to see this year’s Union Budget laying down a blue print for sustainable development in the future. We applaud the government for its consistent commitment and sharp focus on the important priorities of improving climate change and accelerating energy transition. We welcome the actions on national digital health mission. The suggested framework around Gati Shakti (infrastructure development) and inclusive development will lay a good foundation for long-term infrastructure with an eye on short term economic and job growth. The launch of the sovereign green bonds is an evidence of the government’s active support to ‘Green’ which will significantly help reduce the carbon intensity in the years to come. For India to achieve its climate goals, financing is the need of the hour. This will require deep public-private partnerships. We at GE, have been investing in sustainable technologies for decades. We welcome the encouragement to private industry for taking up the design and development of military platforms and equipment in collaboration with DRDO. We are committed to bringing those technologies in the areas of sustainable aviation, green hydrogen, emission controls and decarbonization to India to support the country’s goals.”
Kush Singh, CEO, Essar Power
“The Union Budget 2022 is a welcome move and continues to provide impetus for growth especially in the energy and power sector. Two of the four pillars of development by the government include energy transition and climate action, which are extremely important for the sustainable progress of the economy. The low carbon development strategy shows the strong commitment of the government towards a greener future. The allocation of Rs.14,000 million towards hydro and solar projects is in line with the governments ambitious vision of increasing the renewables installed capacity by 280 GW by 2030. The additional allocation of Rs. 195,000 million for PLI incentives in solar module manufacturing and conversion of coal into chemicals, are bold steps taken by the our government in anticipation of the shift in the energy sector with a strong focus on ESG and renewables going forward. Also, the move to frame a battery swapping policy for EV charging stations and to issue sovereign green bonds for funding green infrastructure will provide a big boost to the economy by reducing carbon intensity and will lead to positive environmental and climate effects.”
Tulsi Tanti, Chairman and Founder, Suzlon Group
“This was a very crucial budget post pandemic and it will go a long way in stimulating the economy. I congratulate the government for coming out with such a growth oriented budget in challenging times with focus capex expenditure. This is a landmark budget for prioritizing renewable energy in line with our commitments at COP26.
There is good support to domestic manufacturing aligned strongly to building an Aatmanirbhar Bharat.
I especially applaud the green bonds announcement as this will bring about the much needed investment in green energy projects. Battery swapping and support for distributed renewable energy projects are also critical announcements which can change the course of our energy roadmap.
Overall, this is a budget that we should all welcome with enthusiasm.
There are some areas where we could do better. Firstly, we really need to understand that renewable energy can catalize the revival of the economy but the main constraint is that there is no GST on power sales to complete the pass-through mechanism. The government really needs to look at this.
Secondly, to accelerate the transition to a carbon neutral economy and to reduce the exorbitant costs of oil imports, we must have incentives in place for generation of green fuels. This is a critical missing aspect so far.”
Dr Rahul Walawalkar, President, India Energy Storage Alliance (IESA)
“Infrastructure status for energy storage sector will address the biggest concerns of industry related to ease of financing. IESA believes that over past decade the energy storage technologies have made tremendous advancements in improving performance and reducing capital cost, so availability of financing was identified as the key hurdle for rapid adoption. IESA had requested MOF to extend infrastructure status to storage projects vide budget recommendations to Ministry. We are glad our submission was considered positively. Providing the infrastructure status to the energy storage projects (covering both manufacturing and deployment). As the Harmonised Master List of Infrastructure sub-sectors already includes electricity generation and electricity transmission, the inclusion of energy storage will help cover all the important segments of energy under the infrastructure status.”
