India could add 25GW of solar power with railway installations

Implementation could depend on location feasibility, power evacuation, and maintenance challenges.

As part of nationwide measures to boost renewable energy capacity, India will install solar projects along railway tracks, according to finance minister Nirmala Sitharaman in her Budget speech for 2020.

According to a note by CRISIL Research, installing solar projects along tracks will translate to a potential 22-25GW solar capacity addition (given 0.52 lakh hectare of vacant land with the Railways).

“The implementation will depend on location feasibility, power evacuation, and operation and maintenance-related challenges in the projects,” CRISIL Research said.

Budget measures for power
Other power-related measures introduced in the Budget include the levying of the 20% basic custom duty (BCD) on solar modules and cells that will replace the existing safeguard duty of 15%. “The on-year decline in module prices means the impact on capital costs and tariffs for solar projects will be slight,” CRISIL Research said.

New power generation companies, on the other hand, could enjoy a corporate tax cut, adding to the earlier reduction in Minimum Alternate Tax. “We expect 80-100 basis points (bps) improvement in the equity IRRs (internal rate of return) of renewable companies and a 50-60 bps rise for conventional projects (for setting up of new capacities),” CRISIL Research said.

Smart metering and prepaid meters will be implemented across states by utilities. According to CRISIL Research, this would improve billing and collection efficiency, leading to a reduction in aggregate technical and commercial losses from the current ~21%. This would also boost grid management and reduce the manpower requirement owing to digitalisation, helping discoms lower the operating costs.

In an effort to curb usage of traditional power sources, thermal plants not meeting emission norms will also be shut down. “Based on CEA data, ~10 GW of thermal power plants could be impacted by this. This will help ease overcapacity in the sector to an extent,” CRISIL Research commented.