The Central government has continued its support to the renewable energy sector with a focus on storage systems in the Budget 2024.
While presenting the budget, Finance Minister Nirmala Sitharaman announced that the government would bring out a policy for promoting pump storage projects to help with electricity storage for round-the-clock power supply.
Additionally, the minister said the government would further promote the PM Solar scheme, considering the scheme generated “remarkable response.”
The minister also expanded the list of exempted capital goods for use in the manufacture of solar cells and panels in the country, to support domestic manufacturing.
The renewables sector had sought continued focus on green energy with higher allocations for projects and incentives to boost the supply chain in the sector.
With India’s aim of achieving 50 percent cumulative installed power generation capacity from non-fossil fuel sources by 2030, the government has been inclined towards increased spending in the renewables sector. To achieve the set target, the country needs to add about 50 gigawatts (GW) per annum of renewable energy capacity for the next five years, starting in 2024. So far, India has been able to add only about 15 GW each year.
“The Finance Minister reiterated the government's vision of establishing a fully functional 'solar power value chain' within the country. To that extent, the careful use of duties and exemptions on raw materials and capital goods needed for the manufacturing of solar cells and panels is indeed welcome. The previously announced 'PM Suryaghar Muft Bijli Yojana' to install rooftop solar panels also appears to have seen significant uptake,” said Ashwin Jacob, Partner & Industry Leader, Energy, Resources & Industrials, Deloitte India.
In the interim Budget 2024, presented by Sitharaman on February 1, renewable energy schemes (under MNRE) were allocated Rs 12,491 crore, up 65 percent from Rs 7,586 crore in RE 2023-24.
The industry has asked for announcements aiming to boost use of green hydrogen, solar and wind energy in the country along with a focus on battery energy storage systems (BESS). Solar energy and battery storage systems found a significant place in the budget.
“The exemption of BCD on capital equipment for solar manufacturing and the withdrawal of duty exemption on solar glass will provide support for more investments in domestic supply chain and manufacturing job creation in India,” said Sujoy Ghosh, Vice President & Country Managing Director of First Solar.
Story so far
As India progresses towards its pledge of becoming a net-zero emissions nation by 2070, the government has launched several initiatives to boost green energy consumption including the National Green Hydrogen Mission (NGHM) and PM Solar scheme or PM Surya Ghar: Muft Bijli Yojana.
Launched in February, PM Solar scheme aims to install rooftop solar panels in 1 crore houses in India. The government announced an investment of over Rs 75,000 crore, which would provide up to 300 units of free electricity every month. Similarly, budgetary allocation for NGHM—which was launched on January 4, 2023—was increased to Rs 600 crore from Rs 100 crore in the revised estimate for 2023-24.
The government has also introduced viability gap funding (VGF) for offshore wind energy projects in June.
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