India's Pathway to Green Transition: Budget 2024-25 and Beyond

As India prepares for the new budget, the focus is on propelling the nation’s green energy initiatives to new heights. With an ambitious target of achieving 500 GW of renewable energy capacity by 2030, the forthcoming budget is set to be a cornerstone in India's green transition journey.

Key Insights and Expectations:

• Enhanced Green Energy Push:

The government is poised to increase support for green energy, emphasizing the expansion of solar and wind energy projects. This effort aims to make renewable energy more accessible and affordable, contributing to the goal of reducing household electricity bills to zero. The interim budget for FY25 has introduced a rooftop solar scheme expected to benefit around 10 million households, enabling them to receive up to 300 units of electricity per month for free.

• Significant Financial Allocations:

In the 2023 budget, the government allocated ?19,700 crore to the Green Hydrogen Mission, targeting the production of 5 million metric tonnes of green hydrogen by 2030. Additionally, ?35,000 crore has been allocated for priority capital investments in the renewable energy sector, focusing on tripling the current renewable energy capacity.

• Viability Gap Funding:

The government has announced viability gap funding for offshore wind projects, with an initial capacity target of 1 GW. This funding aims to mitigate high initial costs and encourage private sector participation in these projects.

• Industry Collaboration:

Industry players are optimistic about increased allocations for renewable energy in the upcoming budget, particularly for solar and wind segments. The industry is also advocating for enhanced incentives for battery storage solutions and CSP with thermal storage to ensure round-the-clock availability of renewable energy and improve grid stability.

• Policy and Infrastructure Development:

The policy landscape is evolving to support the continuous availability of renewable energy, with incentives for advanced battery storage solutions. This move is critical for maintaining grid stability and reliability. The government is also focusing on encouraging innovation and indigenous manufacturing in the renewable energy sector particularly CSP with thermal storage, which is expected to receive a significant push in the upcoming budget.

Research Insights:

According to my research, India's cumulative renewable energy capacity is projected to grow substantially from FY23 to FY30:

• Power Consumption: Projected to grow from 1512 billion units in FY23 to 2156.58 billion units by FY30, reflecting a 2% annual growth rate.

• Cumulative Renewable Energy Capacity:

Solar Power: Expected to increase from 67 GW in FY23 to 309.5 GW by FY30.

Wind Power: Anticipated to rise from 42.8 GW in FY23 to 80.8 GW by FY30.

Green Hydrogen: Planned growth from 0 GW in FY23 to 38 GW by FY30.

Hydro Power: Steady at 51.79 GW in FY23, maintaining 52 GW through FY30.

Bio Power: Constant at 10.64 GW from FY23 to FY30.

• Total Renewable Energy Supply Infrastructure Capability: Expected to reach approximately 490.94 GW by FY30.
• Energy Capacity Addition Projections:

Solar Power: Planned addition of 135-150 GW between FY24 and FY28.

Green Hydrogen: Planned addition of 30-34 GW between 2024 and 2028.

Wind Power: Planned addition of 36-40 GW over the next five years.

• Peak Electricity Demand: Forecasted to grow from 224 GW in FY23 to 420.6 GW by FY30, with a 6% CAGR over the years.
• Capital Costs for Infrastructure Creation (2024-2030):

Wind: Estimated at ?60,800 crore.

Solar: Estimated at ?1,42,500 crore.

Total investment required: Approximately ?2,03,300 crore initially, expected to rise to ?2,50,000 crore by FY30.

The Road Ahead:

Strategic investments and robust policy frameworks mark India's journey towards a green transition. The upcoming budget is anticipated to be a catalyst, reinforcing the country's commitment to renewable energy and sustainability. As we move forward, the collaboration between the government and industry will be pivotal in achieving green energy targets, driving economic growth, and ensuring a cleaner, greener future for all.

Dr Mayilvelnathan Vivekananthan M.Eng.,PhD

Green Hydrogen Expert

Director, Cipher Neutron Inc

[email protected]

www.cipherneutron.com

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