Budget 2024 on Green Energy: Rooftop solar, offshore wind, coal gasification, biomass get boost

Budget

Green energy received additional impetus in the Interim Budget 2024 on February 1, as Finance Minister Nirmala Sitharaman announced financial incentives for various sectors. These incentives include support for domestic rooftop solar, offshore wind, coal gasification, and machinery for biomass collection.

Moneycontrol gives you a wrap of the takeaways on green energy from Interim Budget.

Rooftop Solar

In her Budget speech, the FM said solar power installations will be done in one crore households through the 'Pradhan Mantri Suryoday Yojna', which will result in savings of about 300 units of electricity per month for such homes.

On an annual basis, Sitharaman said the scheme could result in savings of Rs 15,000-18,000 annually for households that install rooftop solar systems.

The FM said the scheme will offer entrepreneurship opportunities for a large number of vendors for supply and installation. It will also provide employment opportunities for the youth with technical skills in manufacturing, installation and maintenance, she said.

Offshore Wind

Finance Minister Nirmala Sitharaman announced a viability gap funding (VGF) for offshore wind projects as well. However, she did not specify the budget allocation planned for the same.

"Towards meeting our commitment for ‘net-zero’ by 2070... a viability gap funding will be provided for harnessing offshore wind energy potential for an initial capacity of one gigawatt (GW)," Sitharaman said in her Budget speech.

The Finance Minister's announcement holds substantial importance, especially in the context of the current scenario where India lacks offshore wind projects. Currently, the country heavily relies on land-based wind farms, collectively contributing to a capacity of 44,089.68 MW.

Senior officials told Moneycontrol, the VGF could range between Rs 6,000-6,800 crore.

Coal Gasification

As another step to achieve India's net zero goal by 2070, the FM also talked about the government's recently approved coal gasification initiative.

"Coal gasification and liquefaction capacity of 100 MT will be set up by 2030. This will also help in reducing imports of natural gas, methanol, and ammonia," Sitharaman said.

On January 24, the Union Cabinet gave its nod to the Ministry of Coal's proposal of rolling out the ambitious coal and lignite gasification programme, under which viability gap funding (VGF) worth Rs 8,500 crore will be offered to the public and private sectors.

Coal Gasification is a thermo-chemical process that converts coal into simple molecules, primarily carbon monoxide and hydrogen, called synthesis gas or syngas. The combustion of this gas is cleaner and more efficient than combustion of coal since emissions are trapped at the stage of gasification.

Biomass and Biogas Blending

The FM said the government would provide financial assistance for the procurement of machinery to help in biomass collection. She, however, did not specify the allocation.

While presenting the Interim Budget, Sitharaman said blending of compressed biogas in compressed natural gas (CNG) and piped natural gas (PNG) would be mandated. “Phased mandatory blending of compressed biogas in compressed natural gas for transport and piped natural gas for domestic purposes will be mandated,” she said.

In November 2023, the government announced mandatory blending of compressed biogas in CNG and PNG in a phased manner to promote consumption of biogas in the country. The government expects that the move would also help reduce the country’s reliance on imports of crude oil.