subsidies offered by govt

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

http://www.powermin.nic.in/indian_electricity_scenario/introduction.htm

“ 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


Sectoral shares, all state subsidies


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


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,


Effects Of Subsidies

• Allocative effects• Redistributive effects• Fiscal effects• Trade effects


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


Energy Project Subsidies


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


Contd..

• Indian Renewable Energy Development Agency has subsidized solar power plants to the amount of 12 rupees (30 cents) per kilowatt hour.


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


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


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.


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


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.


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


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 % .


SMALL HYDRO POWER


Contd..


Biomass project


Contd…..


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)


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


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


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)


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


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.


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/


http://renewenergy.wordpress.com/2008/01/07/india-to-provide-subsidy-for-solar-power-plants/

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.renewableenergyworld.com/rea/news/article/2006/07/q-a-opportunities-in-indias-renewable-energy-market-45575

Thank You!


subsidies offered by govt

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