New Delhi: The Union Budget 2021-22 is going to be presented at a critical time in India’s history where the country, along with the rest of the world, is reeling under the economic and healthcare crisis caused by the COVID-19 pandemic. As Finance Minister Nirmala Sitharaman aptly described a few days ago, this Budget is expected to be a never-seen-before one.
The power sector is a critical facilitator of all economic activities and business operations. As the countdown for the Union Budget 2021-22 begins, the sector will be expecting increased financial and policy support to enhance access to reliable, clean, and sustainable energy for the last mile. Rural India has availed increased socio-economic opportunities because of the access to reliable electricity. This can be further strengthened if India, building on its past achievements, focusses strategically on mitigating energy poverty to create a resilient and sustainable socio-economic model.
In the absence of reliable grid-connected power in rural areas, alternative and localized energy models or Decentralized Renewable Energy (DRE) such as mini-grids have played a crucial role in addressing energy needs of people, especially that of the micro-enterprises that often get left out under the larger grid narrative. However, despite the contributions that the DRE sector has made it is still awaiting its due in terms of policy and financial support. The time is opportune for the sector to highlight its expectations and initiate relevant conversations recognising its criticality in achieving India’s SDG 2030 targets.
The Budget could focus on the following areas:
Easy Access to Capital: The Energy Service Providers often find it difficult to raise enough capital for their day-to-day operations, despite being a major enabler for last mile energy supply. In India, despite there being enough credit lines such as MFIs, NBFCs and commercial banks available for renewable energy projects, investor sentiments are grim. The Reserve Bank of India has also added renewable projects to its priority lending category. The COVID-19 pandemic has further aggravated the situation where in recent months, the sector has witnessed a major dip in demand for electricity, leading to a fall in their revenues.
The Union Budget 2021-22 could create relevant provisions to address the situation by providing for increased strategic fund allocation, availability of cheap capital and means of integration with DISCOMs. This will in turn improve the investor sentiment towards the sector, attract patient capital and thus, advance the government’s continued efforts to provide reliable, clean, and sustainable power to the rural communities.
Policy and Regulatory Support: An enabling policy environment that promotes and recognizes DRE sector, will help in complementing the grid-based energy supply model and advance the government’s rural electrification efforts. The existing State and Central government policies and regulations need to be streamlined into a more cohesive and unified structure to ensure support for DRE projects.
DRE sector holds immense potential to help meet India’s growing energy needs, especially for millions of rural households and enterprises. For example, under the Atmanirbhar Bharat initiative, the central government has taken steps to encourage domestic manufacturing of solar cells and modules. While this is expected to result in an increased demand for domestic solar cells, a clearly-defined roadmap backed by strong polices will help the industry benefit from the initiative and further, encourage local manufacturing and reduce India’s dependence on imports.
Improved Customer Focus: A customer-centric approach is critical to ensure the financial viability of DREs and generate adequate demand for power among rural communities. The government has already recognized the need for increased focus on customers and their rights. This is expected to serve the twin purpose of addressing the consumer grievances in a time-bound manner and helping power distributors improve the quality of power delivery. A customer-centric approach will not only improve the service provider’s financial performance but will also lead to enhanced service delivery, power reliability and demand.
The Union Budget 2021-22 needs to set apart resources to raise awareness among existing and prospective power consumers to create adequate demand. An increase in power demand and productive use will gradually help rural communities improve the standard of living and create better economic opportunities.
As the Sustainable Development Goals (SDG) 2030 stare at us, it is imperative that we make the best use of the abundant renewable energy sources available in the country to provide access to reliable, sustainable and clean power for all.
[This piece was authored by Jaideep Mukherji, CEO, Smart Power India]
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