Wind Energy and Budget 2018

The Ministry of Finance has recently announced the budget allocation for all sectors for the financial year 2018-19 which will have a positive impact on the renewable power sector. India has committed to tackle the climate change issues and to reduce its domestic pollution by actively investing in greener alternatives in electricity generation. Under the “Grid-interactive renewable power projects” by the Ministry of New and Renewable Energy, Rs 2045 Crore have been allocated to solar power and Rs 750 Crore has been allocated to Windpower. The capacity of 4 GW is likely to be installed in 2018-19 as per the budget documents; the provision of Rs 750 Crore will be utilized to incentivize these projects.

After missing yearly renewable expansion targets since 2016, India is struggling to chase its target of 175 GW of renewable power capacity by 2022. This is mainly due to the recent change in the process of determining wind-power tariffs in India form a fixed feed-in tariff to an auction-based tariff. One efficient way to boost India’s Renewable Energy output, despite the changing scenario is to move towards closed-envelope bidding which is practiced worldwide for this purpose. 

If we compare Renewable Energy with Fossil Fuels, we witness that energy subsidiaries favor Fossil Fuels much more than Renewable Energy, merely 6.9% of India’s Rs 1.35 lakh crore energy subsidies go to Renewable Energy. This is the reason why Fossil Fuels provides 92 % of the country’s electricity and creates a massive amount of air pollution. Energy subsidiaries determine not only a country’s energy choices but also its future pollution trends. 

In 2010-11, a “National Clean Energy Fund” (NCEF) was created that charged the coal producers and importers a clean-energy cess to fund clean-energy initiatives in the country. Over the period of next six years (till 2016-17) Rs 53,967.23 Crore were collected, out of which only 15,483.21 Crore had been transferred to the NCEF, as given by the 2017’s audit report by the government’s Controller and Auditor General. The balance funds are being diverted for other purposes, for instance - Rs 56,700 Crore of unspent NCEF funds have been diverted to make up for losses incurred during the GST rollout in 2017, as per the government’s response on an RTI filed on July 2107. The Ministry of New and Renewable Energy gets a large chunk of its funding from NCEF; in 2017-18, 97.6% of the MNRE’s budget came from the NCEEF. India’s Renewable Energy drive highly depends on the funds from NCEF, it is crucial that they are utilized for the right purpose.

Wind energy is a highly matured sector and the established players present in the Indian market are here for almost the past two decades. While targets of 10 – 12 GW per annum are challenging, they are certainly achievable. Manufacturers from the wind energy sector need proper visibility to achieve this grand target. There are more than 4000 vendors and service providers, most of them are small and medium enterprises that need continuous manufacturing orders and job security which can easily be provided by the volume of 10 GW per annum.  

India has the potential to export about 3-5 GW per annum, given the presence of the right policy framework and ecosystem. The key to a sustainable and thriving future is India’s “Make in India” movement by the means of wind power. This will enhance the acceptance of Indian products in the overseas market. 2017 was a year of major reform in the wind power industry due to the introduction of competitive bidding and GST rollout, but the coming years will be more predictable and hence, more suitable for upgrading the sector further.
This information is provided for guidance and informational purposes only. This website and information are not intended to provide investment, laboratory or manufacturing process advice.
The information contained herein has been compiled from sources deemed reliable and it is accurate to the best of our knowledge and belief. However, Castrol cannot guarantee its accuracy, completeness, and validity and cannot be held liable for any errors or omissions, as the results change depending on the working condition/environment.  Changes are periodically made to this information and may be made at any time.
All information contained herein should be independently verified and confirmed.