Union Budget gives boost to energy transition projects

Finance minister Nirmala Sitharaman announced policy measures that will expedite energy transition away from fossil fuels, and help companies access cheap credit for green projects that are key to curbing carbon emissions.

In her budget speech, Sitharaman said that the government will soon come out with a taxonomy for climate finance, which will make it easier for companies to raise capital at preferential rates for funding green projects.

The government will also outline a roadmap for moving hard-to-abate industries from targets around energy efficiency to emission-based targets, the finance minister said in her budget speech for 2024-25. These industries will also soon transition from the current ‘Perform, Achieve and Trade’ regulations to carbon markets-based regulations, she said.

As the country moves away from high-emission sources of power like coal-fired thermal projects, to renewable energy generation from solar and wind, the government is looking to overcome the intermittency (wind and solar energy aren’t available round the clock, they are intermittent) of these renewable sources by promoting pumped hydro storage. A policy for promoting pumped storage projects will soon be brought, the finance minister said.

The government will also partner with the private sector to set up small nuclear reactors and drive research and development on small modular reactors and newer technologies for nuclear energy, she said.

Last year, the government announced plans to add 50 GW of renewable energy capacity annually for the next five years (FY24-FY28), as India aims to have 500 GW of installed electricity capacity from non-fossil fuel (renewable energy + nuclear) sources by 2030.

Energy transition is a keystone for reliable inclusive economic growth, said N. Venu, managing director and CEO, India and South Asia, Hitachi Energy.

On solar energy, the government is expanding the list of exempted capital goods for use in the manufacture of solar cells and panels in the country, while also scrapping customs duty exemptions provided for the import of solar glass and tinned copper interconnects used to make solar cells and modules in India.

The finance minister also underlined the consumer response to the PM Surya Ghar Muft Bijli Yojana announced in the interim budget earlier this year. The scheme promotes installation of rooftop solar panels for up to 1 crore households through subsidies.

The scheme has so far received more than 1.28 crore registrations and 14 lakh applications, Sitharaman said.