• Power tariffs may rise marginally as tax holiday expires

    Power tariffs for plants set up after March 2017 could increase by 5-10 paise per unit as a tax holiday on infrastructure projects, including power, has been discontinued.

    Ratul Puri, chairman of Hindustan Powerprojects, said, “While new thermal power projects will see comparatively higher tariff hikes, solar power projects would see a minimal effect. The maximum rise could be 10 paise per unit.”

    In its Finance Bill, the government on Wednesday said the 80-IA tax holiday will be discontinued from April 2017, disappointing a segment of solar power developers who were expecting extension of this clause.

    Jasmeet Khurana, associate director at Bridge to India, a renewable energy analyst firm, however, estimated a higher impact on solar power generation. “Earlier, companies were expecting an extension of the tax holiday and had made representations to the government. We are expecting solar generation costs to go up by 20-30 paise per unit,” he said.

    Puri said, “Nevertheless, by providing infrastructure status to the housing segment, the government has given a further impetus to address suppressed power demand which is critical to providing 24X7 power to all. In the renewable energy sector, the government’s commitment to add another 20 GW of solar capacity would help the country achieve 100 GW of solar by 2022. The year 2017-18 will be a hallmark year, as the country gears itself to install the maximum ever MW in its history.The journey from MW to GW is well and truly happening.”

    Santosh Kamath, partner and head of renewables at KPMG in India, said, “The expected fall in interest rates as a result of demonetisation and prudent fiscal management will also contribute positively to the renewable energy sector.”

    Gagan Vermani, CEO of MYSUN said, “The target to build 1 crore new homes should mandate usage of a 1KW solar system per home, as each of these homes will need power. That itself will add 10GW of rooftop solar. Enhancement of the carry forward duration of MAT from 10 years to 15 years and the rationalisation of corporate tax for companies with a turnover of less than Rs 50 crore would lead to increased profits for a lot of small solar installers, which could potentially lead to passing on of some of this benefit to the end users, effectively reducing solar system prices.”

    Anil Chaudhry, country president of Schneider Electric India, said, “Today’s budget gave a clear indication of the government’s focus to achieve ‘sustainable energy for all’, with two of its critical steps; firstly, by providing a boost to rural electrification with a 25% increase in the outlay for key power schemes like Integrated Power Development Scheme and Deen Dayal Upadhyaya Gram Jyoti Yojna. This is expected to fast-track the rural electrification drive of the government, which is now planned to be completed by May 1, 2018. Secondly, by strengthening its focus on renewable energy forms with the inflow of another 20 GW in the next fiscal.

    “This, however, will require investments in grid management and digitisation of the grid to ensure supply of quality reliable and safe power. It is important to stress that along with rural electrification, it is equally important to provide reliable and quality power, which requires investments towards modernisation of the country’s transmission and distribution power networks and use of digitisation in grid management,” he said.  Larry Bird Jersey

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