Not enough resources have been allocated to the clean energy sector in the last budget of the Bharatiya Janata Party-led government before elections in 2019, said experts. With this level of support, it will not be possible for the country to meet its goal of tripling the clean energy capacity by 2022.

Finance minister Arun Jaitley has allocated Rs 750 crore for the development of grid interactive wind energy in 2018-19, 87.5% up from last year's Rs 400 crore. For the development of grid interactive solar power capacity, Rs 2,054 crore has been allotted, 23% up from last year's budget.

But this will not be enough given that India is behind target on generation of sustainable energy. It fell short of its wind capacity target by 88%, adding only 0.46 GW instead of 4 GW in 2017-18. Similarly, the country added 5.52 GW--the largest ever increase--of solar-power capacity in 2017-18, but still missed its target of 10 GW by 44.8%.

“Budget allocations for grid interactive wind and solar have increased but it is not sufficient to meet the target,” said Vibhuti Garg, associate, International Institute of Sustainable Development (IISD), a think-tank. “Moreover, what was also expected was tax reforms as renewable energy still attracts higher taxes vis-a-vis other fossil fuels under GST.”

By 2022, India wants to install 175 gigawatt (GW) of renewables power capacity. This is enough to replace 175 coal-fired power plants of 1,000 MW and reduce India’s dependence on fossil fuels. Fossil fuels are the source of 92% of India’s electricity and they produce greenhouse gases that hasten global warming.

Of India’s 2022 renewables target, 100 GW was supposed to come from solar and 60 GW from wind power, according to government data. India installed 62 GW renewable power capacity by November 2017, of which 27 GW, or 43.5%, was installed over four years from May 2014.

At a time when India is already slipping to meet the renewable targets, overall allocations to the nodal ministry of renewable, ministry of new and renewable energy (MNRE), have declined by Rs 326 crore or 6% from last year’s Rs 5,473 crore.

Also, the revised estimates of the last year’s budget show that the ministry could only spend 74% of allotted Rs 5,473 crore.

Allocations For Ministry Of New & Renewable Energy
Year Allocation (In Rs crore)
2017-18 (Budget Estimate) 5,473
2017-18 (Revised Estimate) 4,080
2018-19 (Budget Estimate) 5,146.63

Source: Union Budget 2018-19

For next year, Rs 849 crore have been allotted for the promotion of solar off-grid/distributed and decentralized renewable energy, 21% up from 700 crore in 2017-18. This includes solar rooftops, mini grids and solar lamps.

Rooftop solar projects--most important arm of solar off-grid--are supposed to provide 40% (40 GW) of India's solar target of 100 GW by 2022. No more than 0.86 GW capacity was installed in 2017. At this rate, it will take up to 2064 to meet the 2022 target IndiaSpend reported on January 25, 2018.

“Under off-grid (solutions), only solar rooftop gets attention. Others like solar lighting system and mini grids for rural areas have been neglected. Budget allocation for Decentralised Renewable Energy (DRE) should be higher,” said Garg.

Flexible, quality decentralized renewable energy (DRE) solutions like home solar and mini-grids are essential for offering universal access to power for India’s 300 million people still living without electricity.

Despite that, DRE has been given just 0.8% of India’s electricity subsidies----financial benefits provided to boost electricity production and consumption--or Rs 1,000 crore while coal, oil and gas (O&G) and transmission and distribution (T&D) got Rs 1.26 lakh crore ($19.8 billion) in 2016, according to a study by IISD.

Annual subsidies provided for coal alone are enough to buy 114 million solar lamps, according to the study.

(Tripathi is a principal correspondent with IndiaSpend.)

Bhasker Tripathi