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FEB 18 2015

Solar power: New government can begin with big business set-ups

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 18th FEB 2015

PM Narendra Modi may have taken a dig at AAP over its free electricity promise, but one sector where both the Arvind Kejriwal government and the Centre are focused on is solar power. While AAP's poll manifesto has details about its plan to make Delhi a "solar city", BJP had also promised to expand and strengthen the national solar mission ahead of the 2014 Lok Sabha elections.

AAP's aim is to ensure that 20% of Delhi's energy needs are met by solar power by 2025. Experts say the new government can easily deliver on this by targeting large "energy guzzling" consumers first, such as malls, hotels, office buildings in Delhi.

As far as waiving taxes is concerned, the new government can do away with value added tax (VAT) on solar devices and batteries which will cut their costs by about 5% to 7%. "A target of meeting 20% of energy needs by 2025 is an indicative number but not an absolute one. I think the power department will have to come up with a figure of exactly how much they want to generate through solar power," said Abhishek Pratap, senior campaigner (renewable energy), Greenpeace India.

"As far as waivers are concerned, I think they can look at a VAT waiver for five years and a waiver on entry tax which is mainly a tax on transporting solar devices into the city. The entry tax has already been waived in Karnataka and Bihar, for instance. It's only a 1% waiver. But these waivers should be for a specified time like five years or it will only boomerang in the form of taxes on consumers in the long run," added Pratap.

Though there is already a 30% subsidy from ministry of new and renewable energy (MNRE) on solar rooftop projects, but recently it had issued a statement, saying that the subsidy might be revoked soon due to lack of funds. But with the new state government announcing a subsidy on home units, the initial cost of installation will come down.

Meanwhile, manufacturers and traders of solar units are excited. "We hope that the government waives the 5% VAT. Rajasthan has done this. In Kerala, VAT is only 1%. Since pricing is the main problem, so any financial incentive will be good," said Jose George, a Dwarka-based manufacturer and trader.

But some experts believe giving a subsidy to commercial users does not make sense. They feel decline in solar equipment prices over the years has already encouraged commercial and residential consumers with high electricity consumption to switch to solar mode. Subsidies won't allow the solar power industry to grow, they say.

Tags

Delhi Himachal Pradesh Rajasthan Bihar Karnataka Kerala Renewable Energy Ministry of New and Renewable Energy Energy National Solar Mission Tax Power Power Industry Electricity India solar power Solar

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