A study by the Institute of Energy Economics and Financial Analysis (IEEFA) and JMK Research has listed out a series of recommendations for the country to reach its target of 500 gigawatts (GW) of renewable energy capacity by 2030.
A slash in Goods and Services Tax (GST) on hydropower and wind projects features among the top suggestions to ease the strain on developers' balance sheets and increase affordability.
It suggests that GST applicable on hydropower project components should be lowered to 12 percent from 18-28 percent levied at present and the GST on wind projects should be reduced from 12 percent to 5 percent.
It has also asked to maintain the tax rate on the energy storage sector below 5 percent for the next five years. "A 5 percent lower GST rate should be applied to the sale of Battery Energy Storage Systems (BESS) integrated systems and BESS components—batteries and cell modules—for the next five years," it said.
The report has spelt out additions and alterations in the green power sector, including solar photovoltaic (PV) supply chain, utility scale renewable energy and rooftop solar.
In the fiscal year 2023-24, India added only a little over 18 giga watts (GW) of renewable energy capacity. Investments into the sector also declined marginally from $11.7 billion in FY2022-23 to $11.4 billion in FY2023-24, according to the report.
"Consequently, the country must accelerate its efforts, requiring more than 2.5 times the installation compared to the previous fiscal year," it said.
Other recommendations include extension of 100 percent exemption in 'inter-state transmission system' (ISTS) charges until 2030, scrapping reverse auctions for wind tenders, and financing structures, such as an InvIT to address challenges related to financing in open access.
It has also advised the Ministry of Power to consider a pilot power exchange-based Contract for Difference (CfD) project for a small renewable energy capacity to demonstrate as a use case, to tackle underutilised power exchange market.
Separately, it has suggested the government to expedite the visa approval
process so that the expansion plans of Indian manufacturers to set up solar manufacturing plants do not get hampered. Acquiring visas for skilled Chinese technicians is challenging due to ongoing socio-political tensions between China and India, the report said.
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