Future growth opportunities of renewable energy sector after union budget 2022
When we are planning to make & see the future as eco-friendly then we have one option left for energy production that is Renewable energy source. Depending upon on fossil fuels and natural sources is not going to give a long way for energy production.
It’s evident that power generation from renewable sources is easy, convenient, less man-power involvement and eco-friendly as well.
Renewable energy sources are set to account for almost 95% of the increase in global power capacity by 2026, alone solar PV chain providing more than half of energy production.
Industry scenario
India recorded the renewable energy capacity increased by 1,522.35 MW (megawatt) in October 2021. It was till September 2021; India had 101.53 GW of renewable energy manufacturing capacity and represents ~38% of the overall installed power capacity. In 2020 it had increased energy production from renewable sources stated as 127.01 billion units. So, it seems, in the next year renewable may change more than 90% energy production.
- Solar power: 41.09
- Wind power: 39.44 GW
- Biopower: 10.34 GW
- Small hydro power: 4.79 GW
Changes happened in last 5 years in renewable sources
Solar power capacity increased by more than 5 times, from 6.7 GW to 40 GW & expected to touch 450 GW of energy production from this source by 2030.
2nd largest energy production from renewable source is Wind energy, It’s capacity increased by 2.3 time since 2019.
42 solar parks with aggregate capacity of 23,499 MW have been approved by 17 states up to march 2019, this number keep increasing by witnessing the demand
The World’s largest solar-wind hybrid power plant is under installation in Gujarat, apart from this some other solar plants installed and some under process of installation in Gujarat itself.
States like Maharashtra, Karnataka, Madhya Pradesh, Uttar Pradesh, Odisha, Tamandu looking to grab the opportunity.
Governments step to increase Indigenous solar energy production
Solar and wind tariffs for renewable energy devices and parts imported have been negatively impacted by the increase in (GST) to 12 per cent from 5 per cent on specified, from post October 2021. This implies push for renewable energy production through domestic players.
This will help to reduce fiscal & current deficit and approach domestic players to increase the energy production capacity to a large extent.
Production-linked incentive (PLI) scheme is increasing its support for renewable energy opportunity, including battery manufacturing to boost domestic manufacturing, greening of the Indian railways, & other priority sector getting solar projects, so providing additional capital to the Solar Energy Corporation of India and the Indian Renewable Energy Development Agency.
Renewable Energy plant setup may be costlier at initial stage but it is more cost-competitive than energy production from natural sources like fossil, natural gas etc.
How MSMEs can be benefited in renewable energy sector
- Shri Nitin Gadkari, minister of MSMEs said “the Government is committed to promote renewable energy resources in the country, especially in the MSME sector.”
- MSMEs with good track record are now being encouraged for capital support & there is a huge opportunity for investment in scrapping policy.
- Tremendous potential and capacity for electricity generation.
- Union minister confident that within five years, India will be top manufacturing hub for automobile in the world by making solar energy available and we will create big market for electric vehicles.
- MSMEs Manufacturing wafers and cells which are made into modules; however, these only contribute 50% of the total bill of materials.
- The rest of the value is added by the components industry that largely hinges on MSMEs producing several allied components. Currently, Indian manufacturers don’t just import cells but rely heavily on imports for other non-cell components like solar glass, ribbon, EVA sheet, and others which constitute 30 to 35% of the total module costs. Here a great opportunity for MSMEs to produce it in India.
Growth Drivers
Government commitments– Proposed to diminish the emission of green gas and other non-eco-friendly gas and materials by increasing renewable energy sources
Proposed solar cities– 60 solar cities approved with an allocation of 1.3 billion dollars for setting up 50 solar parks capacity of 40 GW energy
New area of opportunities- Wind-solar hybrid plant, Off-shore wind energy, Floating PV projects, Bio power energy, Green-Hydrogen power energy production etc.
Opportunities for year ahead
In Union budget 2022 it is announced that to facilitate domestic manufacturing of 280 gigawatts of installed solar capacity by 2030, an additional allocation of Rs 19,500 crore for PLI for manufacturing of high-efficiency solar PV modules.
- Battery swapping policy announced for EV charging stations for automobiles.
- Gov. providing fiscal support to private players to create sustainable and innovative business models for battery and energy as a service, improving the efficiency in the EV ecosystem.
- Low carbon development strategy opens up employment opportunity.
- Energy transition and action on climate to be major priority for government.
Indian Government Promoting a robust domestic manufacturing ecosystem through a mix of:
a) subsidies for setting up R&D infrastructure
b) Interest subvention on term loans and working capitals
c) Tax holidays
Budgetary allocation helps to boost indigenous manufacturing of Hydrogen Electrolysers, Fuel cells, batteries and solar value system.
- Additional allocation of INR 19,500 crores for solar PLI schemes.
- Introduction of sovereign green bonds in public sector projects.
- 5-7% biomass pellets to be co-fired in the thermal power plants saving 38MMT of carbon dioxide annually.
We have seen the upper circuit of India’s energy demand can be met with renewable energy. So a lot of support & assistance coming from each direction like Union Budget 2022 from Gov. & overseas investors also. The country is confident enough to increase potentially its share of renewable power generation over the coming years.
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