In line with its green energy commitments and target to achieve net zero by 2070, the government announced several new measures promoting sustainable energy and electric mobility in the interim budget 2024-25. Two noteworthy announcements were the proposed solarisation of 10 million households through rooftop solar installations, and viability gap funding (VGF) for offshore wind projects with a combined capacity of 1,000 MW. New schemes were also announced for the bioenergy segment. A quick round-up of the key budget announcements and highlights for the power sector…
Budgetary allocation
For 2024-25, the Ministry of Power has received an allocation of Rs 205.02 billion, which is 0.81 per cent lower than the allocation of Rs 206.71 billion in the previous year.
A total investment of Rs 672.86 billion has been proposed by the eight state-owned power companies for 2024-25 (as against Rs 608.05 billion budgeted in 2023-24). NTPC Limited has budgeted investments of Rs 227 billion, followed by NHPC Limited at Rs 117.6 billion, SJVN Limited at Rs 120 billion, Power Grid Cor¬poration of India Limited at Rs 122.5 billion, Damodar Valley Corporation at Rs 32.6 billion, North Eastern Electric Power Corporation at Rs 18.4 billion, THDC India Limited at Rs 34.4 billion, and Power System Operation Corporation Limited at Rs 0.3 billion.
The budgetary allocation for the Ministry of New and Renewable Energy (MNRE) has increased by 25.71 per cent to Rs 128.5 billion in 2024-25 from Rs 102.22 billion in 2023-24. Meanwhile, the budgetary allocation for the Department of Atomic Energy has slightly decreased by 0.43 per cent to Rs 249.69 billion in 2024-25, while the allocation for the Ministry of Coal stands at Rs 1.93 billion. Nuclear Power Corporation of India Limited has received an allocation of Rs 75.98 billion for 2024-25.
The budget also witnessed revisions in the costs for several programmes, including an increase in the allocation for on-grid solar power from Rs 49.7 billion to Rs 85 billion, the National Green Hydrogen Mission from Rs 2.97 billion to Rs 6 billion, and the Green Energy Corridor programme from Rs 5 billion to Rs 6 billion. However, the adjustments have resulted in a decrease in the budget estimate allocation for on-grid wind power from Rs 12.14 billion to Rs 8 billion and for the Faster Adoption and Manufacturing of Hybrid and Electric Vehicle in India (FAME India) programme from Rs 51.72 billion to Rs 26.71 billion.
Key announcements
In a big push for rooftop solar, the budget has proposed to solarise 10 million households by installing rooftop solar plants, enabling them to get 300 units of free electricity per month. As per industry estimates, this measure is expected to support around 30 GW of rooftop solar capacity. The announcement comes in the wake of the recently announced Pradhan Mantri Suryodaya Yojana initiative. The finance minister has stated that the initiative will enable households to save between Rs 15,000 to Rs 18,000 per year through the opportunity to sell excess power to distribution companies.
The budget has also approved the VGF for offshore wind projects with a combined capacity of 1,000 MW in an effort to maximise the potential of offshore wind energy. It is anticipated that this financial assistance will mobilise investments for the construction of offshore wind projects, supporting India’s objectives for 500 GW of non-fossil fuel energy by 2030.
Another key announcement was the government’s focus on broadening the electric vehicle (EV) ecosystem by providing assistance for EV manufacturing and charging infrastructure. To this end, the budget witnessed an allocation of Rs 26.71 billion under the FAME India scheme. The emphasis will be on encouraging increased adoption of electric buses in public transportation networks by implementing a reliable payment security mechanism. This initiative is anticipated to improve public transportation systems, fostering a more sustainable and environmentally friendly urban mobility environment.
A significant step toward sustainable fuel sources involves mandating the blending of compressed biogas with compressed natural gas and piped natural gas for transportation. This measure is in line with the government’s dedication to encouraging cleaner and more environmentally friendly alternatives in the transportation industry. The government is gearing up to introduce the Biomanufacturing and Bio Foundry Programme, an initiative focused on offering eco-friendly alternatives for the production of biodegradable materials.
According to KPMG, the focus on setting up bio-manufacturing units and bio-foundries will pave the way for domestic and international private industrial developers to establish eco-industrial parks (EIPs) in India. These EIPs could set a benchmark for new industrial infrastructure, providing the dual benefits of biomanufacturing and sustainable growth.
Another key announcement was the setting up of coal gasification and liquefaction capacity of 100 mt by 2030. This will help in reducing natural gas, methanol and ammonia imports. In the gasification process, coal is converted into liquid fuel called syngas, which is used as fuel for steel production. The move is in line with the objective of Aatmanirbhar Bharat.
To promote research and development, a corpus of Rs 1 trillion will be established, offering a 50-year interest free loan. The corpus will provide long-term financing or refinancing with extended tenors and minimal or no interest rates. This will encourage the private sector to significantly scale up research and innovation in sunrise domains.
Conclusion
To conclude, the interim budget 2024-25 reflects a nuanced approach towards the power and renewable energy sectors, with notable allocations and initiatives aimed at bolstering India’s energy security and sustainability. The substantial increase in budgetary allocation for the MNRE underscores the government’s prioritisation of clean energy initiatives, particularly highlighted by the ambitious plan to solarise 10 million households through rooftop solar plants. Additionally, the emphasis on offshore wind projects, EVs and biodegradable materials reflects a proactive stance towards environmental conservation and technological advancement. While certain budget revisions reflect strategic adjustments, overall, the budget outlines a comprehensive framework for driving innovation, promoting renewable energy adoption and fostering sustainable growth in India’s energy landscape.