New Delhi: Through a budget speech that was awash with words like 'clean energy' and 'clean tech,' Finance Minister Nirmala Sitharaman has clearly placed big focus in the Union Budget 2022-23 on enabling energy transition through policy support, increasing public spending on clean energy sector and on production-linked incentive (PLI) scheme to boost domestic manufacturing of solar power equipment. The major takeaways for the energy sector from the Budget 2022-23 include a three-fold increase in allocation under FAME (Faster Adoption and Manufacturing of Hybrid and Electric vehicle) scheme, an EV policy laying down interoperability standards, an increase in allocation for solar PV manufacturing PLI scheme and issuance of sovereign green bonds.
According to the Budget 2022-23 fine print, the government has increased the allocation for FAME scheme by a whopping 263.5 percent for FY23 at Rs 2,908 crore, which makes for a big boost for the e-mobility sector. The revised estimates for the scheme for FY22 was Rs 800 crore. The government approved the Phase-II of FAME scheme with an outlay of Rs 10,000 crore for a period of 3 years, commencing from April 1, 2019. This phase aims to generate demand by way of supporting 7,000 e-buses, 5 lakh e-three wheelers, 55,000 e-four wheeler passenger cars and 10 lakh e-two wheelers.
The Finance Minister has also announced an additional allocation of Rs 19,500 crore for PLI scheme for manufacturing of high-efficiency solar modules. "In order to facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of Rs 19,500 crore 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," said Sitharaman.
"Considering the constraint of space in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and inter-operability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for 'Battery or Energy as a Service'. This will improve efficiency in the EV eco-system," said the Finance Minister.
In addition, the minister also included energy storage in the Harmonised List of Infrastructure. Commenting on the announcement, ratings agency CRISIL said, "The inclusion of energy storage in the Harmonised List of Infrastructure will facilitate quick and cheaper finance to electric vehicle (EV) battery makers. Consequently, the share of domestic battery makers in total EV battery sales could rise to 35-40 percent by fiscal 2030 from <10 percent now."
The government also announced the issuance of sovereign green bonds for mobilising resources for setting up green infrastructure projects in the public sector. The inclusion of energy storage in the Harmonised List of Infrastructure and the sovereign green bonds will facilitate funding for clean energy projects.
To facilitate clean utilisation of coal, co-firing of five to seven percent biomass pellets in thermal power plants has been proposed by the Finance Minister which will result in CO2 savings of 38 MMT annually. This will also provide extra income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields, said the government.
In addition, four pilot projects for coal gasification and conversion of coal into chemicals required for the industry have also been proposed to evolve technical and financial viability.
The government has also announced its intention to promote energy efficiency and saving measures through setting up of Energy Service Company (ESCO) business model in large commercial buildings, "which will also facilitate capacity building and awareness for energy audits, performance contracts, and common measurement and verification protocol."
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)