Hits and Misses of the Union Budget 2024 for India's Energy Sector and Net Zero Strategy

Overall, the Union Budget 2024-25 reflects a strong commitment to advancing India's renewable energy capabilities and fostering a culture of sustainability.

August 05, 2024. By News Bureau

Tags:

articles

Union Budget 2024

India Energy Sector

Mynzo Carbon and SolarArise

Renewable energy

Sustainable future

Offshore wind energy

Pumped Storage Policy

Domestic Solar Manufacturing

Electric Vehicles

Net Zero Strategy

Tanya Singhal

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, laid out significant plans for India's energy sector and its ambitious net zero strategy. As the country strides towards a sustainable future, the budget reflects both commendable initiatives and notable gaps.

| Some Hits |

Increased Allocation for Renewable Energy | The budget saw a 46% increase in funding for the Ministry of New and Renewable Energy (MNRE), from Rs 10,222 crore in Budget FY 23-24 to now Rs 19,100 crore. Solar has a whooping ~86% of the total allocation (with Rs 16,394 crore). The rooftop solar scheme, with over 1.28 crore registrations and 14 lakh applications, shows how the masses are also getting ready to adopt renewable. Viability gap funding (VGF) for 1 GW of offshore wind energy will help build wind-solar hybrid plants. Allocation of funds for R&D in Green Hydrogen will help recognize the potential of Green H2 as a clean fuel. Thus, this allocation will help to inch closer to the goal of 500 GW of non-fossil fuel capacity by 2030.

Pumped Storage Policy | Introducing a policy to promote pumped storage projects is a crucial development. This policy will facilitate the smooth integration of renewable energy sources into the grid, addressing the intermittency issues associated with solar and wind power. Again, the devil lies in the details, eagerly awaiting the full policy.

Promotion of Domestic Solar Manufacturing | Expanding the list of exempted capital goods for use in manufacturing solar cells and panels in India will further enhance domestic module manufacturing capabilities and reduce the cost of domestic modules, thus driving growth and reducing dependency on imports. Also, establishing a Critical Mineral Mission aims to secure domestic production, recycling, and overseas acquisition of critical minerals like lithium, cobalt, and rare earth elements. These are vital for the energy transition and reducing dependency on imports from geopolitical rivals.

Taxonomy for Climate Finance | The proposed taxonomy for climate finance aims to enhance the availability of capital for climate adaptation and mitigation projects. This initiative supports the achievement of the country's climate commitments and green transition, providing a structured framework for investments in sustainable projects.

Electric Vehicle (EV) Push | The budget emphasizes expanding manufacturing capabilities and charging infrastructure for EVs. This focus is essential for reducing greenhouse gas emissions from the transport sector and promoting sustainable mobility.

Research and Development in Nuclear Energy | The government's commitment to nuclear energy is evident in the proposed partnership with the private sector to set up and develop Bharat Small Reactors. The focus on research and development of newer technologies for nuclear energy underscores its significant role in India's future energy mix.

| Some Misses |

Continuation to build new coal plants| To meet the estimated electricity demand by 2031-32, 80 GW of coal-based power capacity is still planned. Energy Security for the country is critical and can't treaded lightly. However, the latest Flexible Demand Renewable Energy (FDRE) auction aims to provide 24-hour renewable power at a competitive rate of ₹4.99 per kWh. These plants are much quicker to build than a new coal plant and are equally (and at times even more) reliable to provide power on demand. They solve the intermittency & grid stability issues the renewable sector traditionally grappled with. They are a strong alternative to building green power quickly and more economically than coal. In this light, why should additional coal plants still be built? Why is a new allocation to develop Advanced Ultra Super Critical (AUSC) thermal power plants needed?

Training Programs for Labor Transition from Coal | The budget misses an opportunity to introduce training programs for labour currently employed in conventional power plants, facilitating their transition to the renewable energy sector. Such programs mitigate employment concerns associated with the decline of coal-based power and, in addition, provide skilled talent in the renewable industry. This will hinder the transition to a cleaner power mix and dependency on coal plants due to labour concerns that have been traditionally deployed there!

Insufficient Support for Battery Storage | While there is a policy on pumped storage & heavy focus on renewable energy, the budget is surprisingly silent on the need for enhanced support for battery storage technologies. Financial incentives and subsidies for battery energy storage systems at both utility-scale and distributed levels are crucial for further aiding round-the-clock renewable sources and ensuring a stable energy supply. Battery will also develop the EV sector and is a need of the hour.

Lack of incentives for the masses to promote green behaviour | While the budget emphasizes sustainable practices, it doesn't give any specific incentives to the masses to promote green behaviour. Direct tax incentives for individuals adopting green behaviours, like tax breaks for activities such as purchasing electric vehicles, installing solar panels, or engaging in energy-efficient home renovations, could have significantly incentivized climate-conscious consumption and further enhanced the LiFE (Lifestyle for Environment) mission's goals.

Overall, the Union Budget 2024-25 reflects a strong commitment to advancing India's renewable energy capabilities and fostering a culture of sustainability. While it is a decent budget for renewable and climate action, it falls short of being a groundbreaking or out-of-the-box approach. The devil, as always, lies in the details, and it remains to be seen how these policies will be implemented on the ground.

- Tanya Singhal, Industry Expert, Renewable Energy & Climate Technology, Founder, Mynzo Carbon & SolarArise