How Budget 2024 can be a catalyst in charting India's green energy course

An aerial view of the Pavagada Solar Park on October 11, 2021 in Kyataganacharulu village, Karnataka, India. Image: Abhishek Chinnappa/Getty Images

This Union Budget for 2024-25 comes at a crucial juncture when the threat of climate change is looming large and the global push towards transitioning to clean energy systems is gaining momentum. The forthcoming budget is expected to play a pivotal role in empowering the nation to make significant strides in creating a cleaner energy system by streamlining policy measures and unlocking investments.

The budget for 2023 exhibited a noticeable shift towards promoting clean energy, outlining a path for India's pursuit of a more sustainable future. 'Green Growth' emerged as one of the seven priorities identified, with various measures announced to support this objective. These initiatives included the allocation of Rs19,700 crore to the Green Hydrogen Mission, Rs35,000 crore for priority capital investments in projects dedicated to energy transition and net-zero goals, Viability Gap Funding for 4,000 MW hours of battery storage capacity, and the Green Credit Programme, among others.

Given the country's steadily rising energy demand, the power sector hopes that Budget 2024 maintains this momentum towards sustainability. The peak power demand reached a record high of 240 GW in 2023, underscoring the urgency of transitioning from heavy dependence on coal-based power.

Capital expenditure for RE projects & self-reliance in solar panel manufacturing

One notable setback in the power sector during this fiscal year was the sluggish growth in renewable energy capacity, with only 7 GW added in the first seven months of 2023-24. Achieving an additional 33 GW of renewable energy capacity by this fiscal year poses a challenge, emphasising the need for budgetary interventions. The budget should increase capital expenditure for renewable energy projects, especially in solar and wind.

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Although India has seen significant growth in the capacity for solar PV cells and modules, surpassing 6.6 GW for cells and 38 GW for modules in 2023, the heavy dependence on solar panel imports must be addressed in Budget 2024. The budget should introduce measures incentivising local production to foster self-reliance in solar panel manufacturing, and Production-Linked Incentives (PLIs) need to be extended for module manufacturing components.

Bringing down green hydrogen cost

In the pursuit of becoming a prominent player in green hydrogen, India needs a strategic approach to reduce the costs of hydrogen production and storage. Currently priced at Rs300 per kg, efforts should be made to reduce the cost of green hydrogen to Rs82 per kg. The budget should also support domestic production of electrolysers and lower GST rates for their manufacturing from the current 18 percent.

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To optimise the availability of green hydrogen, there is an immediate need to upgrade the country's distribution systems and modernise grid infrastructure as well. The budget should introduce a Green Hydrogen Purchase Obligation to stimulate the growth of this emerging industry and facilitate a rapid rollout, instilling confidence in investors and banks by ensuring sustained demand.

Development of smart grid and energy storage

Budget 2024 should allocate resources for developing smart grids and energy storage, facilitating the seamless integration of renewable energy into the grid. This aligns with India's climate goals and has the potential to create a significant number of jobs and drive economic growth. Additionally, investments in research and development initiatives of emerging technologies are needed to strengthen India's new energy landscape and bring about systemic efficiencies.

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In conclusion, Budget 2024 is poised to serve as a catalyst, guiding India towards a cleaner and more sustainable future. The budgetary interventions will play a pivotal role in shaping the trajectory of India's sustainable energy initiatives, significantly impacting the country's standing in the global clean energy landscape. Fundamentally, Budget 2024 will serve as a testament to India's strong commitment to embracing a responsible and environmentally conscious future.

The writer is the managing director and CEO of IntelliSmart.

The thoughts and opinions shared here are of the author.