The waiver is an attempt to help finance pollution curbing equipment and alleviate significant debt levels in the power industry. As per the proposal, a waiver of INR400 rupees/ton ($5.61) of carbon tax would be given on the production and import of coal in India.
The waiver would help project proponents of coal-fired plants to install pollution curbing equipment that would cut the emissions of sulfur dioxides.
As per GlobalData, the annual installations of coal-fired plants have dipped from 2016 and the declining trend has continued to 2018. During the same period, however, solar PV installations have increased significantly, mainly driven by competitive auctions.
Prasad continues: “The proposed waiver has been announced at a time when most of the renewable energy auctions in India are getting undersubscribed. The fall in tariffs under the auction mechanism has been putting pressure on the margins of project developers, thereby reducing the economic feasibility of project pipeline in the renewable energy sector. This is manifesting itself in the under-subscription of the auctions seen in recent times.”
Furthermore, one of the major technical challenges with renewable energy is intermittency, resulting in low utilization of transmission infrastructure. Hence, the Ministry of New and Renewable Energy (MNRE) of India has issued a draft policy for the supply of round-the-clock (RTC) power from renewable energy projects complemented with thermal power projects.
Prasad concludes: “To address this low utilization of transmission infrastructure, ‘reverse bundling’ would be done wherein high cost thermal power is bundled with low cost renewable energy in order to provide RTC power to discoms. The two measures are together expected to reverse the declining trend in coal-based capacity additions.”
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