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Subsidies offered by Govt. across Energy Projects
Presented By:Anoop Nuatiyal (09020243009)Mangesh Khobragade (09020243017)Ravi Raj Ranjan (09020243020)
11/04/23 SIIB - MBA Energy & Environment 1
Current Energy Scenario
Source:http://www.powermin.nic.in/indian_electricity_scenario/introduction.htm11/04/23 SIIB - MBA Energy & Environment 2
“ Measures that keep prices for consumers below market levels or for producers above market levels, or reduce costs for consumers and producers.”
Energy subsidies may be direct cash transfers to producers, consumers or related bodies, as well as indirect support mechanisms, as tax exemptions and rebates, price controls, trade restrictions, planning consent and limits on market access. They may include also energy conservation subsidies.
Subsidies
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Sectoral shares, all state subsidies
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In India subsidies can be classified in two categories
Economic Subsidies
Agriculture &Cooperation
(16.4)
Irrigation&
Flood Control(10.8)
Power &
Energy(7.6)
Industry(11.5)
Transport(7.3)
Communication & others
(2.4)
Social Subsidies
Education(22%)
Health(9%)
Water Supply&
Sanitation(5%)
Rural Housing and others
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Amount as Subsidies
Year Amount
2002-03 1,04,913cr
2003-04 1,14,824cr
2004-05 1,25,678cr
2005-06 1,30,780cr
2006-07 1,38,880cr
Source: Report by national institute of public finance and policy 200711/04/23 SIIB - MBA Energy & Environment 6
Overview
Main arguments for energy subsidies are:1.) Security of supply ,2.)Environmental improvement ,3.)Economic benefits ,4.)Employment and social benefits,
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Effects Of Subsidies
• Allocative effects• Redistributive effects• Fiscal effects• Trade effects
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Types of energy subsidies are:
• Direct financial transfers• Preferential tax treatments• Trade restrictions• Energy-related services• Regulation of the energy sector• Failure to impose external costs• Depletion Allowance
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Energy Project Subsidies
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Solar subsidies
• 30% subsidy to all homeowners who opt to install solar panels on their rooftops.
• 100% depreciation in the first year of installation of the systems
• No excise duty for manufacturers • Low import tariff for several raw materials and
components • Soft loans to users, intermediaries and manufacturers• World’s Largest Solar Steam Cooking System at
Tirumala, Andhra Pradesh
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Contd..
• Indian Renewable Energy Development Agency has subsidized solar power plants to the amount of 12 rupees (30 cents) per kilowatt hour.
11/04/23 SIIB - MBA Energy & Environment 12
SOLAR PHOTOVOLTAICSr. no Spv. system Central subsidy
1 Solar Lantern Loan up to 85% of cost with 5% interest ratefrom IREDA
2 Home LightingSystems / Solar HomeSystem
Rs. 2400/- to Rs 9840/- or 50 % of exworkscost, which ever is less
3 Street LightingSystem
Rs.9100 to Rs 10660 or 50 % of ex-workscost, which ever is less
4 Power Plants & Othersystems
Rs. 119000 to Rs 139000/- per kWh of PVArray Capacity or 50 % of the ex-workscost of the project, which ever is less.
5 Building IntegratedPhotovoltaic (BIPV)
80% of cost with 5% interest rate is fromIREDA
11/04/23 SIIB - MBA Energy & Environment 13
SOLAR THERMAL SYSTEMSSr. no Scheme Amount of subsidy
1 Demonstration Programme on SolarWater Heating Systems-For NE, Islands, J&K and SikkimSpecial Demonstration Programme
Rs.4000/- per sq. m. of installedcollector area
2 Aditya Solar ShopsEstablishment of shops owned byState Govt./Agencies
Financial assistance:• Rs..50 lakh Publicity per shopper year
11/04/23 SIIB - MBA Energy & Environment 14
Wind Power Technologies• Concessional import duty on specified wind turbine parts
• 80% depreciation in the first year
• Relief on Sales Tax
• Exemption on Excise Duty
• Five year Income tax holiday Loans through IREDA
• Rs3.8 billion in generation-based subsidies for wind power projects contributing power into the national grid until 2012.
11/04/23 SIIB - MBA Energy & Environment 15
FINANCIAL ASSISTANCE /INCENTIVES FOR SETTING UP OF WIND POWER
Programme Central Programme Financial Assistance
Wind Monitoring Station Cost of Wind monitoring stations is shared byMNES and state nodal agencies80% - MNES 20% - State
R& D Projects R&D projects related to wind machines are directlysponsored by MNES to R&D Institutions
Land based Demonstrationprojects
60% of cost of wind generators on benchmark costof Rs 3.5 crores per MW
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Contd….Off shore demonstrationproject
MNES shall provide grant in aid for feasibility studyand establishment wind power projects
Small wind energy systemsand hybrid system
For community use - 75% of ex-works cost/ uptoRs2.0 lakhs per KWFor individual , industrial users and R&D institutes– 50% ex-works cost / upto Rs 1.25 lakhs per KW
Wind Pumps: Rs. 24,000-32,000 per Wind Mill depending ondesign of Wind Mill.
11/04/23 SIIB - MBA Energy & Environment 17
FINANCIALASSISTANCE /INCENTIVES FOR SETTING UP OF WIND POWER
• Rs. 24,000-32,000 per Wind Mill depending on design of Wind Mill.
• Wind Pumps:
• For community use - 75% of ex-works cost/ up to Rs2.0 lakhs per KW• For individual , industrial users and R&D
institutes 50% ex-works cost / up to Rs 1.25 lakhs per KW
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Hydro power• 10 year income tax exemption
• 80% accelerated depreciation
• Sales tax and excise duty exemption
• Capital Subsidy will be 45% of Project cost limited to Rs 2.25 Crores + 37.50 Lacks per MW extra or the Project may get Interest subsidy, ie:1 Mw gets 7.5 % .
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SMALL HYDRO POWER
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Contd..
11/04/23 SIIB - MBA Energy & Environment 21
Biomass project
11/04/23 SIIB - MBA Energy & Environment 22
Contd…..
11/04/23 SIIB - MBA Energy & Environment 23
ENERGY FROM URBAN, MUNICIPALAND INDUSTRIAL WASTES
Programme/Scheme Amount of Subsidy
Interest Subsidy for projects based onindustrial waste
For reducing rate of interest to 6% (4% tospecial category states) on the loan availedfrom IREDA or other financial institutes
Incentive to State Nodal Agencies fortheir coordinated actions/ monitoring etc
Rs. 5.00 lakhs per MW for projects relatedto waste to powerRs.2.5 lakhs per MW for projects related toWaste to Biogas or Biogas to Power
Interest Subsidy projects based onUrban and Municipal waste
IREDA provides term loans upto 70% ofproject cost at 12% (Upto 3MW) and 12.5%(Above 3 MW and Upto 6 MW)
11/04/23 SIIB - MBA Energy & Environment 24
MEGA POWER PROJECTSFiscal concessions/benefits:– Eligible Projects:• an inter-state thermal power plant of a capacity of
750/1000 MW or more,• an inter-state hydel power plant of a capacity of
350/500 MW or more,
– Benefits Available:• Zero Customs Duty• Deemed Export Benefits• Pre-conditions for availing the benefits• Price preference to domestic PSUs bidders• Income Tax benefits:11/04/23 SIIB - MBA Energy & Environment 25
11/04/23 SIIB - MBA Energy & Environment 26
Energy Efficiency Project
• Energy efficiency is one of the important sources of new energy.
• To use less energy to produce the same amount of output, with desired quality and performance.
• Can be Achieved by:– New Installation– Technological Up gradation
• Institutional Set up– MSME, SIDBI, IREDA, NSIC, BEE, MNRE
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National Level Schemes1. 80% depreciation in the first year for specified energy efficiency
equipment 2. Concessions on excise and customs duty on notified energy
conservation equipment to promote energy efficiency. 3. Financing through IREDA. a. 80 % of energy efficiency equipment costs, including soft-cost items such
as energy auditing and detailed project report preparation b. Tenure: 6 – 10 years c. Interest Rate: 8 – 11.5% (Rebate of 1 – 1.5% provided against Bank
Guarantee) 4. Financing Through SIDBI. (Covered in the next slide) 5. Financing through MEDA. (MEDA is doing a lot to improve energy
efficiency of buildings through implementation of ECBC but offers no incentives on purchase of energy efficiency equipment's)
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Financing through SIDBI• JICA and SIDBI joint for financing Energy Saving Projects in
MSME Sector.– JICA raised Rs. 1500 crore for Indian EE Projects
• The project is expected to encourage– reduce energy consumption, – enhance energy efficiency, – reduce CO2 emission – improve profitability in long run.
• Technical assistance for FIs and MSMEs for – dissemination of information and – successful implementation
11/04/23 SIIB - MBA Energy & Environment 29
Contd..
Conclusion
• Fully functional independent markets for RE technologies are a myth!
• Is India's slow growth in this sector due to lack of finances or of policy?
• Though Indian private sector contribution is amiable- we need reforms.
• Government support to re will be needed until it can grow to better cost competitiveness.
11/04/23 SIIB - MBA Energy & Environment 30
Refrences• http://renewenergy.wordpress.com/2008/01/07/india-to-provide-subsidy-for-solar-power-plants/
• http://www.mnre.gov.in/• http://en.wikipedia.org/wiki/Wind_power_in_India• http://www.renewableenergyworld.com/rea/news/article/2006/07/q-a-opportunities-in-indias-renewable-energy-market-45575
• http://www.isesco.org.ma/ISESCO_Technology_Vision/NUM01/Pradeep%20Chaturvedi/Pradeep%20Chaturvedi.pdf
• http://www.alternative-energy-news.info/future-renewable-energy-india/• http://en.wikipedia.org/wiki/Energy_subsidies• http://www.unep.org/pdf/pressreleases/reforming_energy_subsidies.pdf• http://www.worldbank.org/html/fpd/esmap/energy_report2000/ch7.pdf• http://rru.worldbank.org/documents/publicpolicyjournal/244Monar-042402.pdf• http://en.wikipedia.org/wiki/Energy_policy_of_India• http://www.mdpi.com/2071-1050/2/2/475/pdf• http://www.powermin.nic.in/• http://www.mahaurja.com/• http://www.sidbi.com/
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Thank You!
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