Union Budget 2024-25: Boosting Energy Security And Renewable Growth

The Union Budget 2024-25 has placed a strong emphasis on energy security, making it a key priority. The budget allocation for solar power, specifically for grid-connected solar projects, has seen a significant increase from ₹4,970 crore to ₹10,000 crore. This increase aims to boost the PM Surya Ghar: Muft Bijli Yojna, a scheme designed to encourage the installation of rooftop solar panels across the country.

In addition to financial support, the government has expanded the list of goods exempted from customs duties. This includes specified capital goods used in the manufacturing of solar cells and panels. The customs duty exemption for certain products crucial to solar cell or module production, such as silicon wafers, flat copper wire, and EVA, has been extended until March 31, 2026. However, the exemption on solar glass, tinned copper, catalysts, and resins used in components for wind-operated electricity generators and Active Energy Controllers (AEC) for Renewable Power Systems (RPS) inverters will expire by September 30, 2024.

The budget also outlines plans to establish advanced ultra-supercritical thermal power plants with a higher efficiency capacity of 800 MW. In the realm of nuclear energy, the government is opening up collaboration with the private sector. This includes setting up Bharat Small Reactors and engaging in research and development of Bharat Small Modular Reactors, along with exploring new technologies for nuclear energy.

To promote cleaner energy transitions, the government will facilitate investment-grade energy audits in various clusters, providing financial support for these cleaner energy initiatives. There will also be a shift in policy for “hard to abate” industries, moving from energy efficiency targets to emission targets. This will involve transitioning these industries from the current “Perform, Achieve and Trade” mode to the “Indian Carbon Market” mode, with appropriate regulations to be implemented.

The budget also highlights the implementation of a policy to promote pumped storage facilities, which are crucial for energy storage and grid stability. To encourage private investments in the infrastructure sector, the government will promote Viability Gap Funding and establish enabling regulations.

Despite these incentives, the benefit of a lower tax rate of 15 percent, previously available for power generation entities commencing production on or before March 31, 2024, has not been extended. This change could impact future investments in the power generation sector.

Overall, the Union Budget 2024-25 reflects a comprehensive approach to enhancing energy security, promoting renewable energy, and supporting the transition to cleaner energy sources. By increasing budget allocations, extending customs duty exemptions, and implementing new policies and regulations, the government aims to foster a more sustainable and resilient energy sector in India.