New Delhi: The Union Budget 2024 clearly reflects why the power sector is a top priority for the central government. Finance Minister Nirmala Sitharaman in her Budget speech today said that PM Suryaghar Muft Bijli Yojana aims to install rooftop solar panels to enable 1 crore households to obtain free electricity up to 300 units each month.
This is in turn with Sitharaman's interim Budget speech earlier this year where she said that through rooftop solarisation, one crore households will be enabled to obtain up to 300 units of free electricity each month. According to the finance minister, there will be "savings up to Rs 15,000-18,000 annually for households from free solar electricity and selling the surplus to the distribution companies.
Considering the anticipated economic growth and energy transition, India has set a target of having 500 GW of renewable energy by 2030 and has 50 per cent of installed power generation capacity from non-fossil fuel sources.
The total expenditure of the power ministry has been pegged slightly higher at Rs 20,502 crore for 2024-25 against the revised estimated expenditure of Rs 17,635 crore for 2023-24. The budgeted expenditure for the ministry was at Rs 20,671.32 crore for the last fiscal.
Dr Arunabha Ghosh, CEO of the Council on Energy, Environment and Water (CEEW) said, "The 2024 Budget has several promising provisions to build a sustainable economy. It addresses not only India's clean energy ambitions (with a focus on rooftop solar and pumped hydro storage) but also outlines actions on water treatment, air quality, and recovery from riverine floods."
"In parallel, it targets the broader implications of India’s green industrialisation, how MSMEs—the backbone of India's industry—will transition, and the importance of a Critical Mineral Mission. These elements are peppered through, but looked at together they form a significant push for a greener economy. Each of these provisions—from clean energy markets, to green industry, to quality of life—can benefit from a focus on loss prevention from climate events, promoting new business models for households and small industry, a circular economy of resources, and innovative financing beyond budgetary support. In that regard, the Budget’s proposal to define climate finance is a positive step towards mobilising capital for sustainability. These measures can lay strong foundations for a sustainable and prosperous India, with the energy transition as the fulcrum on which public policy can be leveraged for a wider economic transformation,” added Dr Ghosh.
Suranjali Tandon, Associate Professor, the National Institute of Public Finance and Policy, said, "Investors and industry have been demanding a taxonomy and transition pathway as guidance for flow of finance and reorientation of economic activity. The budget announcements that clearly mention the establishment of a carbon market, taxonomy and transition pathways mark significant progress in planning towards Net Zero in 2070."
Rishabh Jain Senior Programme Lead, CEEW, said, "Critical minerals are building blocks for energy transition and for other strategic sectors such as electronics, defence, and telecommunications. The announcement of a Critical Mineral Mission for India will encourage private and government companies to develop capabilities in the critical minerals supply chain and build competitiveness in the medium to long term."
Nitin Bassi, Senior Programme Lead, CEEW, added, "CEEW analysis suggests that more than 64 per cent of tehsils in India have seen an increase in the frequency of heavy rainfall days in the last decade, compared to the previous three decades. Hence, the emphasis of the Union budget 2024 on flood mitigation in vulnerable states like Sikkim, Assam, Bihar, Uttarakhand and Himachal Pradesh is a welcome step."
"Further, there is a need for increased focus on developing city-specific action plans to manage flood risk. Such an action plan developed by CEEW for the Thane Municipal Corporation can be a template for interventions like upscaling early warning systems, replacing ageing infrastructure, and institutional capacity development to prepare and respond proactively to reduce loss and damage,” added Bassi.
Dr Anjal Prakash, Associate Professor (Research) and Research Director at the Bharti Institute of Public Policy at ISB, said, "I welcome this budget because it has made significant allocations for some components of climate change. For example, developing a taxonomy for climate finance to help improve the funds for adapting to climate change and also reducing greenhouse gas emissions."
Neshwin Rodrigues, Electricity Policy Analyst - India, Ember, added, "This year's budget has a lot in store for the energy sector. It is in line with the interim budget, and with major investments in renewable energy will give a shot in the arm to clean energy companies. It underscores a move towards more holistic energy transition pathway, considering energy security, economic growth, employment generation, and environmental sustainability. India now needs to find ways to reduce reliance on thermal power and with battery costs expected to further fall sharply in the coming years, can plan to phase down this reliance."
Girish Tanti, Chairman, the Global Wind Energy Council, India, said, "The recent budget demonstrates India’s global leadership in combating climate change by prioritising the development of clean technologies and fostering a conducive environment for renewable energy investments. The Indian Government is not only enhancing India's energy security but also expediting the energy transition with its forward-thinking approach. I believe India's strides in renewable energy will set a benchmark for nations worldwide, inspiring collective action towards a cleaner, greener planet."
Martand Shardul, Policy Director- India, Global Wind Energy Council added, "The budget lays thrust on the creation of jobs and the growth of the manufacturing sector, in particular, MSMEs. This aligns well with the priorities of the wind industry for the current fiscal year. In a recent notification, the Ministry of New and Renewable Energy placed a greater emphasis on wind manufacturing as part of the "Make In India" initiative. Further, as a result of the recent commitments/progress announced by the major wind companies, new opportunities will arise. These developments will assist India's vision of energy security and energy transition, which is a priority indicated in the budget.”
Vibhuti Garg, Director, South Asia, Institute for Energy Economics and Financial Analysis (IEEFA) Policy Continuity, said, "For the energy transition, policy continuity is welcome. Government schemes announced during the interim budget on PM Surya Ghar Muft Bijli Yojana and Pumped Hydro Storage are at the centre. Further, the government will develop a policy document on appropriate energy transition pathways that balances the imperatives of employment, growth and environmental sustainability."
"Enhancing the availability of capital through the development of a taxonomy for climate mitigation and adaptation is a welcome move. While many countries have established a taxonomy that helps in greenwashing and identification of activities that can be classified as green, India, by developing a taxonomy, will help developers attract ESG financing. The government is also simplifying foreign direct and overseas investment and promoting opportunities for using the Indian Rupee as a currency for overseas investments. Finally, the government has also recognised an important piece of the puzzle, the MSME sector. The budget emphasised the transition of these industries and also other large corporates from the current ‘Perform, Achieve and Trade’ mode to the ‘Indian Carbon Market’. For MSMEs in particular, energy audits will be provided and financial support for deploying clean energy and energy efficiency measures," he added.
Purva Jain, Energy Specialist, Gas & International Advocacy on cluster-based financial support for MSMEs to transition to clean energy, said, "The proposed approach to provide cluster-based financial support for transitioning micro and small industries to clean energy is a welcome step. The recent increase in the use of natural gas by micro and small industries which have operational clusters, such as the ceramic cluster in Gujarat, tea cluster in Assam, and glass cluster in Uttar Pradesh, can take advantage of the proposed financial support for transitioning to clean energy and enhancing energy efficiency. This is critical as there are massive amounts of heat loss and release of pollutants in the form of flue gas with natural gas due to inefficient combustion."
Key Points In Budget 2024 To Understand India’s Energy Sector
- The government has proposed increasing the investment of eight state-owned power companies by nearly 14 per cent to Rs 67,286.01 crore during the financial year 2024-25. The annual revised investment by these eight power sector firms for the 2023-24 fiscal was Rs 59,119.55 crore.
- The eight include: Power Grid Corporation (proposed investment at Rs 12,250 crore for this fiscal from Rs 8,800 crore budgeted and revised estimate of investment for 2023-24); SJVN Ltd (Rs 12,000 cr for 2024-25, from the revised Rs 10,000 cr for 2023-24; NHPC Ltd (Rs 11,761.87 cr in 2024-25 compared to the revised estimated investment of Rs 9,006.31 cr for 2023-24); NTPC Ltd (Rs 22,700 cr for 2024-25 compared to the revised as well as budgeted estimates of Rs 22,454 cr for 2023-24); Damodar Valley Corporation (investment pegged at Rs 3,262 cr for 2024-25, higher than budgeted estimates of Rs 2,708 cr for 2023-24); North Eastern Electric Power Corporation (Rs 1,841.18 cr investment in 2024-25 compared to revised estimated investment of Rs 1,150.02 cr for 2023-24); Tehri Hydro Development Corp. (will invest Rs 3,440.96 cr in 2024-25 against revised estimates of Rs 4,877.22 cr for 2023-24).
- To fulfil India's commitment to 'net-zero' by 2070, finance minister Nirmala Sitharaman has announced a viability gap funding for harnessing offshore wind energy. Viability gap funding will be provided for harnessing offshore wind energy potential for the initial capacity of 1 GW.
- According to the Central Electricity Authority data, India has a solar energy-installed generation capacity of over 73 GW. Similarly, wind energy capacity in the country stood around 45 GW while large hydro (over 25 MW capacity each) is 47 GW. The biomass power/cogen capacity is about 10 GW and that of small hydro (up to 25 MW) is around 5 GW, while the waste-to-energy capacity stood at 583 MW.
- Pradhanmantri Suryodaya Yojana will enable one crore families to get up to 300 units of free electricity every month and help them save up to Rs 18,000 annually. PM Modi had announced the scheme earlier in January 2024.
- FM Nirmala Sitharaman in her interim Budget speech earlier this year said through rooftop solarisation, one crore households will be enabled to obtain up to 300 units of free electricity each month. According to the finance minister, there will be "savings up to Rs 15,000-18,000 annually for households from free solar electricity and selling the surplus to the distribution companies.
- The FM in her budget speech announced that the government will mandate the phased blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and natural gas (PNG) for domestic purposes. The government also announced financial assistance for converting biomass into CBG. The objective of the scheme will be to support the transition towards energy security.
- Coal gasification and liquefaction of 100 metric tonnes will be set up by 2030, the FM said in her Budget speech. In January this year, the government approved an outlay of Rs 8,500 crore as financial assistance for promoting coal, lignite gasification projects.
- The government has also approved setting up of a coal-to-SNG (Synthetic Natural Gas) project through a joint venture between Coal India and GAIL at an investment of Rs 13,052.81 crore and a coal-to-ammonium nitrate project through a joint venture between CIL and BHEL for Rs 11,782.05 crore. The decision is a significant step as it helps reduce the import of chemicals, which can be derived through coal gasification.
- The government will expand the electric vehicle ecosystem by supporting charging and manufacturing infrastructure in the country. FM noted that usage of electric buses for public transport networks will be encouraged, and the government will expand and strengthen the e-vehicle ecosystem by supporting manufacturing and charging infrastructure.
