The emphasis of Budget 2022 on promoting a circular economy is a welcome step. The Government is focused on encouraging domestic manufacturing of the solar modules and an overall increase in RE capacity. An upward revision of funds for the product linked incentive (PLI) scheme is a positive initiative.
A clarification with respect to the implementation of the scheme, considering that the bucket filling criteria stands altered from ? 4,500 crore to ? 19500 crore, would be instrumental so far as re-participation of bidders and clearing of waiting list is concerned. The Government ought to ensure maximum participation. In addition, domestic manufacturing of other equipment like glass, cable, batteries etc. must also be fostered.
A significant concern related to solar module manufacture and increasing solar RE capacity in the country (foreseen to be 280 GW by 2030), is also the impending threat of solar PV waste generation. At present, not much impetus is given to the methods of dealing with e-waste (possibly a billion tonnes) that will be generated from solar PV systems.
Currently, the solar recycling facility is cost intensive. However, solar cell and panel waste at the end of the plant life, will pose substantial environmental risks. It is imperative that timely steps towards development of solar recycling technology are taken. Not only will this prevent a possible environmental hazard but it may also improve resource efficiency considering the heavy cost of rare earth metals used in the manufacturing of solar cells.
Further, in order to make RE an intermittent source of power, energy storage concerns need to be appropriately tackled. It is popular knowledge that RE sources are often far from the wholescale demand of electricity. RE power faces many issues of interruptions and distortion due to natural factors, lack of stability for transient power generation, and frequency deviation etc. These issues affect the grid stability and always pose a hindrance towards demand compliance.
To solve these issues, energy storage is the emerging concern that needs to be confronted properly besides domestic manufacturing. However, expected support for promotion of green hydrogen technologies including PLI for domestic electrolyser manufacturing, was notably absent in Budget 2022.
Nevertheless, sovereign green bonds scheme is a big thumbs up and will hopefully cater to hydrogen technology development in the Country. An expedient and equal stimulus to energy storage coupled with a push to in house manufacturing of RE technology, is what is required to wean the Country off its dependency of fossil fuel.
As far as RE technology is concerned, waste to energy seems like a relatively neglected sector in the Country at present. Budget 2022 has however proposed to offer an assemble of policies to promote the circular economy, spanning in ten sectors such as electronic waste, end-of-life (EOL) vehicles, used oil waste, and toxic and hazardous industrial waste.
It is though yet to be ascertained what policy measures will be taken to address issues of infrastructure, logistics and technology upgradation as pointed out in the speech. Budget 2022 only affirmed a direction made by Union government’s Commission for Air Quality Management for usage/co-firing of 5-7% biomass pellets with thermal power plants.
There is an exigency for treating other types of waste like, municipal solid waste (MSW), industrial non-hazardous waste and other solid waste, in the country in a manner of devising measures for co-processing such waste to generate electricity.
For now, Budget 2022 only focuses on one type of transition fuel i.e. co-firing of biomass with thermal. Policy directives on other hybrid models of power generation like blending of different kinds of waste as fuel, having robust storage facilities along with the RE capacity, combining solar/wind/waste RE capacities with stranded gas-based plants, is a critical requirement in the interest of environmental and public health, especially in furtherance of objectives under the Swacch Bharat and Namami Gange Mission.
Lastly, Budget 2022 also failed to address the elephant in the room i.e. concerns related to dishonoring of contracts of power producers after carrying out competitive bidding by the state governments. There is major uncertainty which comes with DISCOMs attempting to wriggle out of long term power purchase agreements by delaying its execution or approval after conducting the bid process.
The delay is caused due to falling tariffs resulting in DISCOMs feeling disincentivized. However, this myopic view of lower tariff undermines the confidence of the tendering process and possible long term capital infusion by investors in the RE sector. A balance between public interest and power producers need to be clearly carved out to prevent such misadventures of topsy turvy commitment on part of the DISCOMs. At the same time, while addressing these concerns, the subsisting issue of financial challenges faced by the DISCOMs having high receivables, also needs to be born in mind.
