Giving a major boost to the government’s plans to make India energy surplus by 2019 and to provide electricity to each household by 2022, the government proposed five new Ultra Mega Power Projects (UMPPs), each of 4,000 MW which will come up in the plug-and-play mode enabling investors to start these plants without much delay.
Out of the 4 UMPPs announced earlier, two (Mundra and Sasan) are operational now.
Presenting the Union budget, Finance Minister Arun Jaitley said all clearances and linkages would be in place for these five new UMPPs before the projects are awarded through a transparent auction system.
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“This would unlock investments of Rs. 1 lakh crore,” he said.
He also said the second unit of Kudankulam Nuclear Power Station would be commissioned in 2015-2016. Apart from this the budget has also made several provisions for the growth of Renewable Energy sector in the country.
By 2022, the government announced plans to have 1,75,000 MW of renewable energy generation (100000 MW solar, 60,000 wind and 15,000 MW other technology). Solar energy will get the biggest in capacity from 3,500 MW now to 1,00,000 in 7 years.
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According to experts the government’s intention to drive new investment in power generation is a welcome and necessary move, but to continue to attract investors, the government must revive the distribution sector.
The government has decided to increase clean energy cess on coal from Rs 100/tonnes to Rs 200/tonnes which will help mobilise funds for clean energy initiates.
“The increase in cess and service tax will increase cost of coal by 4 to 6 paise per kWh and comes on top of increase in rail freight earlier this week. This has been a recurring feature and should spur investments in coal washeries and in renovation of old power plants,” said Kameswara Rao, Leader Energy, Utilities and Mining PwC India.
According to Tulsi Tanti, Chairman, Suzlon Group the government’s thrust on renewable energy would enable India to achieve its target.
“India in the last 25 years has done 34,000 MW of renewable energy and in the next 7 years we have a target of 1,75,000 MW, which is an ambitious one for the industry,” he said.