Solar Power in 2019-20, ft. the Union budget

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Written by Anusha Nair

July 7, 2019 • 3 min read


Solar energy projects have been allocated a total of Rs 3,004.90 crores, in the Union Budget of 2019-20. The government aims at emphasising the ‘Make in India‘ program and is expected to act as a catalyst to the growth of the solar power industry.

The government has proposed to set up mega manufacturing plants for solar cells, solar charging infrastructure and batteries. They will provide investment linked income tax exemption under 35AD of the Income-tax Act, including other indirect tax benefits which state that: “an assessee shall be allowed a deduction in respect to the expenditure of capital incurred.”

The move by the government to implement ‘One Nation, One Power Grid‘, will ensure power availability to families, at affordable rates by 2020 and make sure that processes such as installing solar roofing systems to generate energy will be implemented instead of continuing with traditional practices.

The government has also planned to launch a scheme which will invite global companies to set up manufacturing plants in through transparent bidding, which is a positive step taken by the government to safeguard the efforts made by the local companies.

The renewable energy industry, despite its slow growth in the past year, expected that the 2019 budget would provide them with some incentive to revive the industry, but this wasn’t the case. It had also expected the availability of cheap and adequate credit and a reduction in Goods and Services Tax, especially for solar projects.

One of the shortcomings of the solar power industry is the inadequate domestic manufacturing capacity of solar equipment. Only 1.9 GW of solar has been installed till date, from an actual target of 40 GW to be achieved by 2022.

A significant push is required to promote investments, especially in the roof-top solar power sector. In the union budget of 2019, there were expectations for policies that would help initiate rapid growth, but no such initiatives saw the light of the day.

Despite being ranked 5th, globally, in solar power, not much importance hasn’t been given to the solar industry, even though it is one of the foundational pillars of clean energy.

However, efforts have been made in order to promote the use of solar battery chargers and stoves, which are expected to create a huge demand and provide employment opportunities. This move will help promote sustainable energy and also improve power reliability and quality, especially in rural areas.

union budget 2019 summary
Source: OPIndia

In comparison to the Union Budget of 2018-19, the focus has shifted towards promoting the purchase and manufacturing of electric vehicles (EVs). For instance, the budget allocation for solar energy projects has dropped by over 60% (from over Rs.10,000 crores to 3004.90 crores). Meanwhile, fuel prices have been hiked along with a reduction in GST and increase in tax rebate for the purchase of EVs.

However, if the adoption of EVs is to increase not only must reliable charging infrastructure be in place but also meet the increased demand for electricity. The question of where this excess energy will come from looms at large.

Scaling-up of EVs and renewables need to go hand-in-hand; for the impact of clean technology to be realised. Right now, central the vision for renewables, and in particular solar power seems to be limited.

For the urban population, there is the conundrum of owning an EV in the context of high electricity tariffs. Solar energy can help solve that. Along with the lack of regulation on the quality of solar products makes for a potential customer who is confused and misled – and eventually decides against using cleaner technology. In turn, the targets for solar energy installation get ever so more out of reach.

For a union cabinet that comprised of 3 people in the world’s 100 most influential people – including the energy minister – the Union Budget 2018-19 has been a sore one to deal with for the solar energy sector in India.

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