Duty drawback: Sluggish start for renewable capacity addition in FY19
The country added 1,742 MW of renewable energy-based power generation capacity in the first four months of FY19, the Ministry of New and Renewable Energy (MNRE) said on Friday. Though the capacity added is 6% higher compared with what was installed in the same period last fiscal, it will take significant speeding up to meet the 15,600 MW renewable addition target set for FY19. About 11,778 MW of renewable power was added in FY18, failing to achieve the target of 14,500 MW.
About 1,305 MW of solar capacity and 257 MW of wind plants were added the April-July period. MNRE’s FY19 target is 10,000 MW and 4,000 MW for wind and solar, respectively. The proposal of imposing the safeguard duty on solar cell import is seen as a major impediment towards adding solar power plants. The finance ministry on August 13 temporarily suspended the implementation of a safeguard duty on imported solar cells, which it had imposed the previous week.
The ministry had levied a 25% safeguard duty on import of solar cells — the basic ingredient needed to manufacture solar panels — for a year ending July 19, 2019. The duty would have been 20% for the next six months till January 29, 2020, and 15% in the subsequent six months.
Research agency Crisil expects some delay in solar project implementation on account of the safeguard duty as the ‘change in law’ clause is expected to be sought for about 12,000 MW of under-construction projects. This could cause some procedural delays as developers would have to approach the electricity regulatory commissions to approve new tariffs with pass-through of costs, the firm noted.
The capacity of wind power projects offered in the upcoming tranche of competitive bidding has been slashed to 1,200 MW from the original proposal of 2,500 MW, soon after Solar Energy Corporation of India (SECI) cancelled 2,000 MW wind tenders due to a tepid response from developers in the wake of wind power projects not being able to find channels to evacuate power.
The MNRE had charted an auction trajectory for 10,000 MW wind power capacities in FY19. Currently, the total installed renewable power capacity is 72,623 MW. The country has set a target of having 1,75,000 MW of renewable power by 2022.