A reasonably welcome announcement is that of a policy on battery swapping, which should result in an uplift in the battery vehicle segment with the corresponding increase in demand in the power sector, which then can be met by RE.
‘Promoting technology-enabled development, energy transition and climate action’ is one of the three goals of the Amrit Kaal for the next 25 years and ‘Productivity Enhancement and Investment, Sunrise Opportunities, Energy Transition and Climate Action’ happens to be one of the four priorities in the Budget 2022-23, tabled by the Finance & Corporate Affairs, Nirmala Sitharaman, in Parliament today.
However, it seems that less than expected attention has been given to renewable energy (RE). This may change on closer scrutiny and there may be indirect impacts on RE from capital goods lists of customs exemptions, etc.
A reasonably welcome announcement is that of a policy on battery swapping, which should result in an uplift in the battery vehicle segment with the corresponding increase in demand in the power sector, which then can be met by RE.
Under the Production Linked Incentive (PLI) scheme for solar manufacturing, an allocation of Rs 19,500 crore has been announced and this it is believed will result in 280 GW of solar capacity addition. Similarly, the announcement on green bonds will have some impact on RE, but the extent of it remains to be seen.
Why this singular emphasis on solar and not on other resources such as wind energy and offshore wind energy as well as other green energies? While there has been a massive capacity addition in PV based solar systems, which is nearly 50 GW capacity, wind energy that initially catalysed the RE revolution (in the making)has taken a back seat. A great resource both in magnitude and ease of scaling it up is offshore wind power, which is an area in need of the government’s immediate attention. Wind energy, onshore and offshore, has been assessed to have a potential in excess of 2,000 GW and can thus be a major contributor to the 500 GW target.
Having said this, one finds a broad thrust such as that on multi-modal connectivity and the transport sector is somewhat missing for the RE sector. This is a bit surprising as the budget announces upfront ‘energy transition’ as one of the main pillars.
Perhaps there will be clarifications, insights and amendments to enable a broad thrust on the energy sector as well. It is important to keep in mind that the energy sector is not just a sector by itself, but it is intertwined with every other sector of the economy. It has linkages with each and every other sector, be it health, education or industry. We cannot expect economic growth without the right kind of emphasis on energy. That is why, given that power and the RE sectors are the lifelines of the economy, a thrust of the Budget was expected in this area.
It is worthwhile to look into the importance of RE in the total scheme of things. If we look at the announcement with regard to battery swapping, we are going to access electricity from the grid and it makes sense only if the grid is mainly powered by RE. If not, then we are just moving from one polluting source to another. Thus the entire strategy of the battery swapping would work only if there is an equally strong emphasis on RE.
At COP26 in Glasgow last year, India committed itself to building 500 GW of renewable-based generation capacity by 2030. An earlier target of 175 GW by 2022 is not likely to be achieved and, therefore, 500 GW is going to be an uphill task after 2030, we still need more capacity to arrive at the net-zero point.
A major barrier to RE development today is the electricity transmission infrastructure. The existing transmission development plan as laid out in the National Electricity Plan (NEP) of the Central Electricity Authority (CEA) was developed when 100 GW of RE was not in place and it does not at all consider the possibility of offshore wind farms. Therefore, even adding a few GW of offshore wind farms along the coast will be problematic and further scale up with land-based wind farms will hit this roadblock soon. Therefore, one would also expect a broad thrust on a futuristic transmission corridor system that would fetch electricity from high resource areas such as the coastal areas to the load centres.
More RE needs more skilled, trained and experienced people and, therefore, a major initiative of capacity building is required to train and orient conventional engineers and students on RE. Existing institutions, both from an R&D and capacity building perspective, are inadequate. The capacities and skills within the concerned government agencies and ministries should also be scaled up. The practice normally followed by the government is to position officers of IAS as senior officials in ministries for 2- 3 years and then they are moved on to other ministries.
The complexity of renewable energies in terms of technology, market and industry is such that an understanding of 2-3 years is quite inadequate in providing a meaningful direction and impetus to governments programmes. A better approach would be to develop in-house technical, market, and policy-related capacities within the ministries.
From the budget perspective, there should be a much more scaled up allocation as well as tax benefits to industry towards R&D on large wind turbine systems and support to domestic manufacturers. The government should keep in mind the massive scale-up needed, and therefore, rather than having just a price and cost centric auctions approach, the market should be opened up to MSMEs.
The budgetary allocation is required and new institutions are needed for capacity building and R&D to be taken up in collaboration with industry and academia. The so-called PLI, which is applicable to solar manufacturing, should also be available to wind turbine manufacturers, EVs, and battery production facilities. A new transmission plan, keeping in view offshore wind farms and new land-based wind farms and solar parks should be developed. It is important that while these facilities are made available, the need for scalability is kept in mind.
In conclusion, till further scrutiny, it appears that the budget is a bit of a dampener for the RE sector other than battery and solar manufacturing sub-segments.
(The author is the Vice President of World Wind Energy Association)