Impact of budget 2014-15 on Solar

union-budget-of-india-2014-15“₹500 crore provided for ultra modern solar power plants in Rajasthan, Tamil Nadu and Ladakh in Jammu and Kashmir.” ~says Finance Minister Mr. Arun Jaitley while presenting Union Budget of India 2014

From our CEO’s desk:

So, what is the impact of budget 2014-15 on Solar?

Everyone is talking about

  1. Rs. 500 crores for MW scale power plants in Rajasthan, Tamil Nadu and Ladakh.
  2. Rs. 100 crores for the Narmada Canal like MW scale power plants and excise duty cuts.

That is just a surface look. I decided to dig deep.

Tobias’s article at the budget allocation numbers last year interested me and I decided to analyse the equivalent numbers this year.

Let’s try to understand:

Grid Interactive and Distributed Renewable Power gets Rs. 1949 crores. If the above 600 crores gets deducted from this remaining would be Rs. 1349 crores. (Note: There is a separate allocation in the budget for rural agricultural pumping of Rs. 500 crores. That does not have equivalent provision in the head of “Renewable Energy for Rural Applications” in the budget – which is only Rs. 132.50 crores).

We have many reports that say that the subsidy bill pending itself is Rs. 1000 crores for off-grid projects. If the total allocation is only 1349 crores, that means, new off-grid projects will only get 349 crores. If 500 crores pumping budget is included in the above, then, we have a deficit even for meeting past commitments, and what new commitments can be taken?

So, probability of getting subsidies in off-grid schemes will remain like right now? Like sub-50%?

Specifically about Aspiration Energy:

I am confused on how this earlier NCEF funds for solar thermal applications is accounted: MNRE Solar Thermal Group

This had a separate allocation of Rs 108 crores for solar heating in the industries alone. Is that mentioned in the budget somewhere? I am not able to see it.

I never expected that reading the budget can be so difficult. Can someone understand these things better?

Source: http://indiabudget.nic.in/ub2014-15/eb/sbe69.pdf

My conclusion:

We will continue to focus more on off-grid industrial heating and the market that treats subsidies as bonus and not as an essential part for economic justification.

Is it all doom?

No. Voila!

Why am I looking at the MNRE budget?

What are we replacing? Mostly diesel and Natural Gas, right? Where is that headed?

Link 1: http://www.naturalgasasia.com/india-defers-decision-to-hike-gas-prices-12818

Link 2: http://articles.economictimes.indiatimes.com/2014-07-10/news/51301153_1_diesel-prices-petrol-and-diesel-oil-ministry-data

I am happy that most of our prospective customers see the crisis of impending price rise and understand the value of “hedge” protection that solar provides against the impending fuel price rises for long years.

So, we will focus more on replacements and not worry about subsidies but treat subsidies as bonus!

Subscribe To Our Newsletter

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!