Home / Industry / Energy /  Budget 2018 on Renewable Energy: Incentives for farmers to switch to clean power

New Delhi: In a move that will help reduce dependence on diesel pumps to irrigate crops, the National Democratic Alliance (NDA) government plans to offer incentives to farmers to shift to solar power pumps.

Surplus electricity generated by the farmers will be bought by state electricity distribution companies (discoms) and will help boost India’s emerging green economy.

Mint reported on 25 November about the government working on a plan targeted at farmers to generate 20 gigawatts (GW) of solar power. This involves setting up small solar projects of 1-2 megawatt (MW) size on fallow land and solarizing water pumps.

“Many farmers are installing solar water pumps to irrigate their fields... Government of India will take necessary measures and encourage state governments to put in place a mechanism that their surplus solar power is purchased by the distribution companies or licensees at reasonably remunerative rates," finance minister Arun Jaitley said in his budget speech on Thursday.

This comes at a time when the International Solar Alliance is working to aggregate the demand for solar-powered agricultural pumps from member-nations and then call for tenders to bring down costs. The government is also betting on the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) to provide the architecture through which it will seek to reduce import of fossil fuels, boost underutilized power plants and meet its climate change commitments.

“Think about those women and children whose houses will not get electricity. Their life is going to change because of Pradhan Mantri Saubhagya Yojana," Jaitley said.

Prime Minister Narendra Modi launched the Rs16,320 crore scheme last year to provide electricity connections to more than 40 million families in rural and urban areas by December 2018, and help achieve universal electricity access. Mint reported on Wednesday that the budget speech is expected to extol the benefits of the marquee scheme. India’s clean energy industry welcomed the solar push.

“In the budget, government has also taken appropriate measures to encourage the initiative and has announced that the state governments will formulate a mechanism where the distribution companies or licensees will purchase the farmers’ surplus solar power at reasonable remunerative rate," said Anmol Singh Jaggi, director at Gensol Group, a solar advisory firm.

In another announcement that will benefit domestic solar equipment makers, the budget eliminated the 5% customs duty on solar tempered glass used for manufacturing cells, panels and modules.

“With the elimination of customs duty on solar tempered glass, manufacturing solar panels will become relatively cheaper," said Hitesh Doshi, chairman and managing director, Waaree Group, a solar module manufacturer.

Modules account for nearly 60% of a solar power project’s total cost. Of India’s ambitious target of putting in place 175GW of clean energy capacity by 2022, 100GW is to come from solar projects. The budget also made an attempt to contain the annual air pollution crisis in north India caused by crop stubble burning.

“Air pollution in the Delhi-NCR region has been a cause of concern. A special scheme will be implemented to support the efforts of the governments of Haryana, Punjab, Uttar Pradesh and the NCT of Delhi to address air pollution and to subsidize machinery required for in situ management of crop residue," Jaitley said. NCR is short for National Capital Region. The spike in pollution in Delhi, caused by stubble burning in Punjab and Haryana, has become the subject of a political squabble between the Aam Aadmi Party, Bharatiya Janata Party and the Congress. The government is working on a plan that would involve thermal power generation plants buying hay pellets and mixing them with coal to generate electricity, power minister Raj Kumar Singh has said.

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