India, a late entrant to the global renewable energy (RE) scene, started according top priority to the sector at the national level under Prime Minister Modi from 2014, based on the successful model he had developed in Gujarat as Chief Minister. This resulted in India’s wind and solar capacity growing exponentially, from a mere 25 GW in 2014 to 130 GW by 2024.

The share of renewable energy (RE) in India’s total power generation has grown three-fold to 12 per cent in the same period. The latest FY 23-24 saw the highest ever addition of 18 GW of wind and solar capacity.

In his Budget Speech for FY 2014-15, then Finance Minister, Arun Jaitley, had declared, “New and Renewable Energy deserves a very high priority”. This priority has been continued by Finance Minister Nirmala Sitharaman in all her seven Budgets and the latest Budget is no exception. The announcement of optimal energy transition pathways seeking to balance the imperatives of growth and employment with India’s ambitious climate goals will further bolster the sector’s growth momentum.

The proposed roadmap for decarbonising hard to abate sectors and transitioning them from energy efficiency targets to emission targets is extremely timely. Financial support to micro and small enterprises for shifting to cleaner sources of energy will plug a critical gap in industrial RE adoption.

Green projects

Taxonomy for climate finance will catalyse funding for green projects. The decision to expand the list of custom duty exempted capital goods used for solar cells and panels will help boost domestic manufacturing. Rationalisation of custom duties on critical minerals also augurs well for RE manufacturing. The Budget proposes digitisation of land records in both rural and urban India, which will go a long way in ensuring litigation free procurement of land parcels for RE projects, speeding up execution. Overall, this Budget reassures the nation and the world of India’s continued emphasis on the RE sector, as an important tool for achieving India’s net zero and energy security goals.

The Prime Minister’s visionary policies in his first two terms, such as the revised National Solar Mission, waiver of ISTS (Inter-State Transmission System) charges, must run status of wind and solar power, accelerated depreciation and generation-based incentives, solar parks, renewable purchase obligations, strengthening transmission infrastructure have all been instrumental in driving a massive expansion in RE capacity as India remains well poised to achieve its goal of 500 GW by 2030.

To actualise this goal of 500 GW, fresh wind and solar capacity of nearly 300 GW must be created over the next five years. This means from now onwards, annual capacity addition must rise from current levels of 18 GW to excess of 60 GW. While this may appear to be a stiff challenge, FY24 saw 40.56 GW of RE capacity auctioned, the highest ever. Further, many of the new bids were of complex firm and dispatchable RE type.

This makes one extremely optimistic about achieving a three-fold increase in annual RE capacity addition. This year’s Budget also promises a policy for pumped storage projects for smooth integration of RE — this is a welcome move.

Furthermore, the government remains committed to developing India as a green hydrogen (GH) manufacturing and export hub and it has made its support for GH production abundantly clear through generous incentives and funding under the National Green Hydrogen Mission.

The government must be complimented for working overtime to remove all possible roadblocks and accelerating the growth of the RE sector. The Budget proposals on clean energy sector reconfirm the government’s steady resolve to meet India’s stated climate goals for 2030 and beyond.

The writer is CMD, Hero Future Energies

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