The budget allocation of Rs 35,000 crore for green energy transition, along with additional benefits for the renewable sector, will spur green project growth, according to industry officials.
Additional benefits such as viability gap funding for setting up 4,000 MWh of battery storage capacity, Rs 8,300 crore in central government support for setting up power transmission facilities for 13 GW of renewable power from Ladakh, and a green credit programme will help India achieve its renewable energy and net zero emission targets as planned.
In her budget speech on Feb. 1, 2023, Union Finance Minister Nirmala Sitharaman said the government will provide Rs 35,000 crore for priority capital investments towards energy transition, net zero objectives, and energy security by the Ministry of Petroleum and Natural Gas.
Besides, to steer the economy on a sustainable development path, the minister said that battery energy storage systems with a capacity of 4,000 MWH will be supported with viability gap funding. "A detailed framework for pumped storage projects will also be formulated," the minister said.
The central government will provide Rs 8,300 crore in support for setting up the inter-state transmission system for the evacuation and grid integration of 13 GW of renewable energy from Ladakh. The total investment for the setup will be Rs 20,700 crore, the minister said.
"To encourage behavioural change, a Green Credit Program will be notified under the Environment (Protection) Act," the minister said.
This will incentivise environmentally sustainable and responsive actions by companies, individuals, and local bodies, and help mobilise additional resources for such activities, the minister said.
"The attention and allocation to building a green infrastructure and a decarbonised energy regime is the core of the union budget, which puts India on the path of being future-proof," said Prashant Ruia, director of Essar Capital.
The Rs 35,000 crore allocation for energy transition, along with an ambitious target of 5 MMT of hydrogen, will unleash new demand impulses across the length and breadth of the country, thereby fielding green growth, Ruia said, adding that this was complemented by customs duty and tax reliefs for green mobility.
"For the first time, ‘green growth’ has been identified as one of the ‘Saptarishi’ priorities in the Union Budget," said Rajat Seksaria, chief executive officer of ACME Group. "It's encouraging that the budget provides for allocations that were announced in the National Green Hydrogen Mission."
"The announcements on battery and pump storage would offer the impetus for the projects to take off," he said.
"The grid connectivity offered for renewable projects in the Ladakh region will open a new arena. Overall, the steps will accelerate the energy transition and help India move towards its net-zero carbon emission target," Seksaria said.
The budget placed emphasis on green growth and green jobs. This highlights the government’s focus on power transition and the adoption of renewable energy across different sectors, said Manjesh Nayak, co-founder and chief financial officer at Oorjan Cleantech.
Although the viability gap funding for battery storage and a framework for pumped storage, along with the Rs 35,000 crore investment for the energy transition, are positive steps, there were no striking announcements made to support the solar sector specifically, Nayak said.
"The solar sector has been negatively impacted by the approved list for models and manufacturers and the imposition of the basic customs duty. There were expectations around the reduction of BCD and GST rates on solar and measures to ease financing for rooftop solar adopters. The budget has left these issues unaddressed," Nayak said.
The industry has long been advocating harnessing Ladakh's higher solar potential. Allocating capital to create evacuation infrastructure for 13 GW of renewable power from Lakdakh will greatly boost the industry, said Vineet Mittal, chairman of Avaada Group.
The Gowardhan Scheme for promoting a circular economy with a total investment of Rs 10,000 crore is another landmark step and will give a fillip to greening the economy, Mittal added.
"We also applaud the government's efforts to focus on the ease of doing business through the reduction of compliances and the reforms in contract dispute resolution," he said.
The government highlighted the green credit programme under the Environment (Protection) Act to incentivise sustainable actions, which is a net positive for the renewable energy industry, said Gautam Mohanka, managing director of Gautam Solar.
Promotion of battery energy storage systems by viability gap funding and extending exemption on machinery for production of li-on battery manufacturing will further increase India’s domestic production capacity, Mohanka said.
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