Karnataka Budget 2018-19: What’s in it for the Renewable Sector

The Chief Minister of Karnataka, H.D. Kumaraswamy, presented the state budget for financial year (FY) 2018-19. The budget seems to have paid little heed to the expansion of renewable energy sector, given the impressive strides taken by the state in the field of renewable energy in the past few years.  According to Mercom’s India Solar Project Tracker, Karnataka is the top solar state in the country with installed large-scale solar capacity of over 5.1 GW and has a development pipeline of ~1.6 GW.

In his budget speech, the chief minister said, “Encouragement is being given for generation of more electricity through renewable energy resources along with the conventional source of energy. For this, a solar energy policy has been formulated and 2,300 MW electricity is being generated. Around 600 MW of electricity is generated in Pavagada Solar Energy Production Unit which is the biggest in Asia. In the coming days, the production capacity will be increased to 2,000 MW.”

Kalaburagi district will be developed as Bharath Solar District, Kumaraswamy announced. The solar panel, inverters, capacitors, and laminators required for the production of solar power will be produced only in Kalaburagi district.

In his speech, Kumaraswamy also said that during the year 2018-19, 35 electrical sub centers will be established through Karnataka Electricity Transmission Corporation to enhance the transmission system and 75 sub centers will be upgraded.

The budget has taken into consideration Karnataka’s growing eminence in the electric vehicles (EV) sector. The budget has the proposal to establish 100 charging units at a cost of ₹40 million to encourage usage of electric vehicles in order to control increasing air pollution in the capital city Bengaluru.

Transport corporations intend to purchase 4,236 new buses for public use. Out of this, with a view to use electric buses under the Karnataka Government Electric Vehicle Policy – 2017, 80 electric buses will be operated through Bengaluru Metropolitan Transport Corporation.

The budget has also increased the burden of power on citizens residing in Karnataka. The taxation on consumption of electricity is proposed to be increased from existing 6 percent to 9 percent. The rate of taxation on consumption of captive energy is proposed to be increased from 10 paise/unit to 20 paise/unit.

There was no mention of wind and other renewable energy generating sources. This budget has not laid down any set grants or funds for furtherance of renewable energy in the state. Even the tariffs to be paid by renewable energy generators were recently hiked in Karnataka.

Bolstering transmission infrastructure will help in the growth of renewables, but in Karnataka, of late, a spate of Karnataka Electricity Regulatory Commission (KERC) orders has made the ecosystem a tad bit unfavorable for renewables.

There has been a five-fold increase in wheeling charges in Karnataka to 25 percent of the normal transmission charges for open access consumers in the state. Benchmark tariffs for solar and wind projects have been reduced in the state. In such a scenario, the sector was looking at budget to provide some respite but has been left wanting.

Image credit: By Bikashrd [CC BY-SA 4.0], from Wikimedia Commons