Increase in the clean energy cess makes solar power more competitive

India: As per the Union Budget 2016-17, the Finance Minister, Arun Jaitley proposed to double the Clean Environment Cess (which was previously known as the Clean Energy Cess) from INR200 per tonne to INR400 per tonne. The Finance Minister had also proposed that the cess would be raised on coal, lignite and peat. Earlier, nearly half of this tax went to the Ministry of Water Resources for the Ganga rejuvenation project. It is expected that with the new tax structure, the entire amount collected through the new coal cess will be allocated for the development of renewable energy.

TechSci Research depicts that over the past couple of decades, consumption of fossil fuels for power generation in India has increased significantly due to increasing urbanization and industrialization. However, considering future energy requirements and concerns associated with fossil fuels, India has taken huge strides over the past three years in developing its solar potential by implementing green growth agenda along with commissioning of solar power plants in the country. Therefore, the increase in the coal cess that increases the cost of coal, will be passed on to the end-users in the form of higher electricity bills, will make the solar power more competitive.

According to released report of TechSci Research “India Solar Power Equipment Market Forecast & Opportunities, 2020”, the solar power equipment market in India is projected to surpass USD 4 billion by 2020. Increasing price of fossil fuels, constantly improving solar equipment technologies, advanced manufacturing processes for production of hi-tech equipment and anticipated decline in equipment prices is projected to further drive the solar equipment market over the next five years.