But solar thermal project developers happy
Finance minister Pranab Mukherjee’s budget goodibag had very little to give to renewable energy. Exemptions were announced only for solar thermal plant, leaving sectors like solar PV, wind and biomass completely untouched.
Project developers of solar thermal projects are happy because exemption of countervailing duty will help bring down the capital cost of setting up a plant. “Any custom duty exemption is positive. As domestic industry is nascent, some 50 per cent equipment need to be imported, such as turbines, vacuum tubes and good heat-exchangers,” said Vimal Kumar, president of Cargo Power and Infrastructure. The project developer is setting up a 25-MW solar thermal plant in Gujarat and a production unit for making parabolic mirrors for the plants. “It is a welcome move because while the cost of photovoltaic projects has reduced sharply, there has been no cost reduction in solar thermal projects,” said Ashish Sethi, general manager of Acme Tele Power Limited. The company’s 2.5-MW solar thermal plant is operational in Bikaner.
According to Vijay Lakhanpal, chief operating officer of Forum For Advancement of Solar Thermal (FAST), the overall reduction in capital cost would not be more than 1-2 per cent if the countervailing duties are exempted on different imported equipment. FAST is a Gurgaon-based consortium of companies involved in developing solar thermal projects.
Some project developers say that even this 1-2 per cent reduction in the capital cost will become huge when taken in absolute numbers. “Roughly, the construction cost is between Rs 15 crore and 20 crore per MW. So, if somebody is manufacturing a 15 MW plant, it would cost around Rs 225 crore. By reduction of 2 per cent in the capital cost, he would save a good Rs 4.5 crores,” said Sethi.
However, the move may prove counter-productive for the domestic industry as imports would become cheaper due to exemption of countervailing duties, said Lakhanpal. It would then become difficult to produce domestic products, he added. Under Jawaharlal Nehru National Solar Mission, project developers have to use 30 per cent of the domestic content in solar thermal plants.
Some developers are happy that no policy reversal was done by the finance minister in the budget presented today. "We weren’t expecting any major announcements in the solar sector and the finance minister has not given us any surprises. Last year, Clean Energy Fund was set up to help in research and development for better technologies and customs duty was waived in for solar panels. This was a good move by the Central government. The measures of last year were favourable, and we are glad that there has been no reversal of policy this year," says Inderpreet Wadhwa, CEO and Founder, Azure Power.
"Renewable energy policy analysts say that besides solar energy other renewable energy technologies like wind and biomass were not even mentioned. "It would have been good if any grant was given for developing power evacuation infrastructure from wind and solar power plants," says Ashwin Gambhir, senior researcher with Prayas, a non-profit based in Pune.
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