Bridging the Renewable Energy Financing Gap and Whether Budget 2025 Will Provide Solutions

The upcoming budget 2025 is an opportunity to bridge the financing gap and pave the way for India’s leadership in green energy. The energy sector hopes for the much-needed support, especially for clean and renewable energy.

January 31, 2025. By News Bureau

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Juniper Green Energy

Renewable energy financings

Naresh Mansukhani

Budget 2025

Climate change

Sustainable development

Green energy

Renewable Energy Initiatives

During recent years, the global focus has shifted towards sustainable development and renewable energy as nations are dealing with the twin challenges of limiting climate change and increasing energy security. As the world's third-largest energy consumer, India's energy demand has more than doubled since 2000 and according to the Ministry of renewable energy, India’s energy requirement is projected to be at 1907.8 Billion Units (BU) in 2026-27. To mitigate risks related to over-reliance on coal and other fossil fuels, India has been diversifying its energy sources. This move is crucial as the nation indicates a continuous rise in energy consumption.

The upcoming budget 2025 is an opportunity to bridge the financing gap and pave the way for India’s leadership in green energy. The energy sector hopes for the much-needed support, especially for clean and renewable energy. This budget allocation will determine whether India can build the financial ecosystem needed to scale up renewable energy infrastructure, attract private investments, and fast-track green energy projects. India is at a pivotal moment with its ambitious goal of reaching 500 GW of renewable energy capacity by 2030. However, realising this target will necessitate substantial financial investment, policy reforms, and international cooperation.

The Current State of Renewable Energy Financing in India

India’s renewable energy sector has witnessed remarkable growth, with over 203 GW of installed capacity as of 2024, including solar, wind, and bioenergy. However, the pace of growth needs to accelerate. According to a report by the International Renewable Energy Agency (IRENA), India requires annual investments of approximately USD 30 billion to achieve its 2030 renewable energy targets. In 2023-24, India’s renewable energy sector attracted investments of approximately USD 11 billion from private equity and venture capital investors, indicating a considerable gap between what is currently being invested and what is required.

Despite significant efforts by the government, such as the introduction of the National Solar Mission, the Performance-Based Incentive scheme, and the Green Energy Corridor, the financial support for the sector remains insufficient. Private sector participation in green energy projects has been limited, often due to high upfront costs, long payback periods, and perceived risks. For India to meet its renewable energy targets, there needs to be a concerted effort to increase capital inflows into the sector, along with strong policy and regulatory support.

Role of Government in Addressing the Financing Gap

The Indian government has an important role in cultivating an investment climate for renewable energy. The Union Budget 2025, calls for a need to include policy measures that will ease the flow of finance into the renewable energy sector. One of the key steps in this direction is ensuring the continuity and expansion of incentives for green energy projects, like tax rebates, accelerated depreciation allowances, and interest subsidies, among others. Additionally, the government should also seek to increase investments in renewable energy R&D to promote new and improved energy technologies that might lower the cost and make renewable energy systems more widely adopted.

The other important area that the Budget 2025 should cover is the easing of the regulatory requirements. The whole cycle of getting approvals and licenses for projects that use renewable sources of energy is often lengthy and complicated, which may fuel the reluctance of investors. Accordingly, there are clear benefits in commencing these processes through digital platforms, eliminating regulatory barriers, and providing clear and consistent policies.

International Cooperation Plays an Important Role

India's pursuit of its renewable energy objectives cannot occur in isolation. Global cooperation is essential for bridging the financing gap and achieving the expected outcomes. The transition to sustainable energy represents a collective effort, as many developed nations are committed to enhancing the renewable energy initiatives of emerging economies. India must actively seek partnerships and investments from international green climate funds and other global financial institutions—such as the Green Climate Fund (GCF)—to access the necessary capital. However, international collaboration goes beyond simple funding. It can play a vital role in facilitating the transfer of advanced clean energy technologies and expertise. By fostering partnerships with developed nations, India stands to benefit from their knowledge of renewable energy implementation, grid management and energy storage systems. Although such collaboration promises to lower costs, it also has the potential to accelerate the widespread adoption of newer technologies, thereby making the transition to renewable energy more rapid and efficient.

- Naresh Mansukhani, CEO, Juniper Green Energy