"Green growth" is likely to gain further momentum in the Interim Budget 2024 to be presented by Union Finance Minister Nirmala Sitharaman on February 1.
In the 2023 Union Budget, Sitharaman said “green growth” will be one of the seven priority sectors (“Saptarishi”) of the government. In her last budget speech, she explained that the “green growth” priority sector will include multiple programmes on green fuel, green energy, green farming, green mobility, green buildings and green equipment. This will also include policies for efficient use of energy across various sectors, Sitharaman said.
The other priority sectors under “Saptarishi” were inclusive development (focusing on equitable growth); reaching the last mile (extending essential services to remote areas); infrastructure and investment (driving economic growth); unleashing potential (removing barriers to individual and collective progress); youth power (harnessing the energy of the youth); and financial sector (ensuring stability).
Now in the Budget 2024, specifics of India's energy transition narrative are likely to be tackled. After interacting with senior officials in the ministries of power and new and renewable energy; and with industry stakeholders, Moneycontrol brings you the probable keywords around which announcements could be made in the Interim Budget 2024.
Rooftop Solar
The interim Budget is likely to include a budget allocation for the recently introduced rooftop solar scheme for households, known as the Pradhan Mantri Suryoday Yojna. It is expected that the budget will unveil enhanced subsidies as part of the scheme.
The allocation in the Interim Budget for the scheme is likely to be at least Rs 20,000 crore, two officials involved with the programme told Moneycontrol on condition of anonymity.
On January 22, Prime Minister Narendra Modi announced that his first decision after returning from Ayodhya following the consecration ceremony at the Ram temple was to launch the Pradhan Mantri Suryoday Yojnain in one crore houses.
While distributed renewable energy capacities will be a focus, the government is also likely to bring back the Approved List of Models and Manufacturers (ALMM) to infuse competitiveness and innovation in the solar industry.
Green Hydrogen
The ministries of power and new and renewable energy have urged the finance ministry to allocate more funds for the sector and additional incentives for the National Green Hydrogen Mission (NGHM) in the Interim Budget.
Answering questions at Moneycontrol's Policy Next summit on January 18, Union Minister for Power and New and Renewable Energy RK Singh said that even though his departments have put up multiple asks for the interim budget, the final call will be taken by the finance ministry.
"I want more finance and more incentives for green hydrogen from the interim budget. But that’s between Union Finance Minister Nirmala Sitharaman and me," Singh said while discussing the ministry's expectations from the Interim Budget.
Industry stakeholders demanded the implementation of the long-awaited green hydrogen-blending mandate for identified industries like refineries, fertilisers, and manufacturing. They have also urged the government to reduce the GST rate for electrolyser manufacturing from the current 18 percent is important for the growth of the sector.
Energy Efficiency
The FM's speech may also include energy efficiency-related programmes.
On November 2, 2023, the Union government through its subsidiary Energy Efficiency Services Limited (EESL) launched initiatives aimed at revolutionising cooking practices in India and the usage of energy-efficient fans. As part of these programmes, EESL plans to distribute 1 crore energy-efficient BLDC fans and 20 Lakh energy-efficient induction cook stoves nationwide.
Offshore Wind
Senior officials in the Ministry of New and Renewable Energy (MNRE) said one of the asks for the interim budget also includes a provision for a viability gap funding (VGF) scheme for offshore wind with an outlay of at least Rs 6,000 crore.
On June 13, 2023, Moneycontrol first reported that the government is likely to announce a VGF of around Rs 6,800 crore to promote offshore wind projects in India. The VGF will be provided to projects with a total capacity of 1 gigawatt (GW).
Green Energy Corridors
Green energy corridors or laying transmission lines for the evacuation of renewable energy is going to be a significant part of India's energy transition. This is because India aims to achieve 50 percent cumulative installed power generation capacity from non-fossil fuel sources by 2030.
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For this, the country needs to add about 50 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.
Green Energy Corridors are now needed to transmit the green energy produced at renewable energy parks to other parts of the country to meet India's burgeoning power demand.
Energy Storage Systems
The Union Cabinet had, on September 6, 2023, approved the Ministry of Power's proposal to offer a viability gap funding (VGF) of Rs 3,760 crore for building battery energy storage systems (BESS), with a total capacity of 4,000 megawatt hours (MWh). But the same is yet to be implemented.
While this is likely to be included in the Budget, industry stakeholders demanded a revision in the taxes and duties levied on BESS.
They also demanded further incentives for large grid-scale energy storage systems and an impetus to foray into using green ammonia or green hydrogen as energy storage systems.
Coal Gasification
The industry anticipates that the Union government's plan to offer viability gap funding (VGF) worth Rs 8,500 crore to the public and private sectors for coal gasification will be included in the Interim Budget.
The Union Cabinet has given its nod to the Ministry of Coal's proposal of rolling out the ambitious coal and lignite gasification programme with the VGF.
The Indian government wants 100 MT of coal gasification by 2030, with investments worth over Rs 4 lakh crore.
Funds for power sector
In the power sector, Union Minister for Power and New and Renewable Energy RK Singh had previously told Moneycontrol that his ministry is also seeking more funds under the Centre's Revamped Distribution Sector Scheme (RDSS) to further reduce technical losses of distribution companies through transition financing of their required capital expenditure.
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