Bloomberg News

Indian Budget Cut Risks Hindering Effort to Expand Rooftop Solar

March 18, 2014

Indian cuts in its renewable energy ministry’s budget by more than two-thirds risk hindering efforts to shield against blackouts by expanding rooftop solar projects, according to consultant Bridge to India Energy Pvt.

The Ministry of New and Renewable Energy has been allocated 4.41 billion rupees ($72 million) in the financial year starting April, down from 15 billion rupees this year.

“This is likely to have a negative impact on the rooftop solar market in India,” New Delhi-based Bridge to India told clients today by e-mail. States such as Kerala, Andhra Pradesh, Tamil Nadu and Uttarakhand may shelve rooftop incentives as they depend on the ministry to fund part of the programs, it said.

India has built more than 2,000 megawatts of solar capacity in two years, mostly large desert farms that feed power into an archaic grid. It’s seeking to diversify by spurring businesses and households to generate power from rooftop panels to combat blackouts and reduce the burden on the transmission system.

The renewable ministry disbursed less than 30 percent of last year’s 15 billion rupees as India’s current-account rose to a record, Bridge to India said. That brought the rooftop solar market to a “grinding halt” as companies weren’t able to collect subsidies from the government for projects, it said.

India is using money from a carbon tax on coal intended to fund renewable research to fill a gap in ministry finances, said K.P. Ramalingam, an upper-house lawmaker and member of Climate Parliament, a global group of legislators promoting green power.

“Using the National Clean Energy Fund as source for meeting the budgetary deficits of Ministry of New and Renewable Energy does not seem suitable,” he said this month.

To contact the reporter on this story: Natalie Obiko Pearson in New Delhi at npearson7@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Tony Barrett, Amanda Jordan


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