Can Union Budget 2024 Help the Power Sector?

India has emerged as a global leader in green energy with recent data showcasing a shift towards renewable sources such as solar, wind, hydro and biomass. The nation has made remarkable strides, reducing reliance on traditional fossil fuels.

Transformative Initiatives in 2023

2023 budget focused on expanding energy access through key initiatives. The city gas distribution project now covers 98% of the population and the Ujjwala scheme has provided 96 million LPG connections to rural households. These Initiatives have helped more people get clean energy and made it easier for others to use renewable electricity and green hydrogen. The India Gas Exchange and city gas distribution project have improved the infrastructure for using clean energy.

Yearly growth rate in renewable energy took a hit in 2022-23, prompting the need for budget moves to get things back on track. Yet in the following year India's solar efforts soared hitting 73 GW in installed capacity and ranking 5th worldwide. This shift from a power deficit to a surplus marked a big win. Since then the government stepped in with tax incentives and financial support to attract investors and developers all focused on achieving ambitious capacity goals.

Anticipating Budget 2024

Budget 2024 is set to play a crucial role in supporting a cleaner energy system focusing on green hydrogen, solar and wind energy, battery storage and carbon markets. The government aims to achieve an impressive target of 500 GW in non-fossil energy capacity by 2030, with 50% of energy needs met by renewables. This budget is expected to channel investments into renewable energy projects.

Policies targeting green hydrogen including potential reductions in GST rates for key components like electrolysers and solar modules as well as temporary import duty exemptions to promote local production and sustain solar capacity growth are anticipated. Additionally, there may be efforts to increase subsidies for sectors using green hydrogen, such as fertilizers and refineries to drive higher demand for this cleaner energy source.

Green Suggestions for Budget 2024

Green energy experts advise significant investments in an extensive green hydrogen transport infrastructure including clusters and pipelines, to cut costs and boost efficiency. They stress extending Production-Linked Incentive (PLI) schemes for wind and energy storage projects.

In anticipation of the upcoming budget, experts call for clear guidelines on lower tax rates for manufacturing in green hydrogen sectors aligning with the National Green Hydrogen Mission's target of 5 MMT annual production by 2030.

Budget should expand the tax on all carbon certificates like Renewable Energy Certificates (RECs) and Voluntary Emission Reduction (VER) certificates to better encourage clean energy efforts. Creating a domestic carbon market in this year's budget would allow efficient trading of carbon credits for local organizations. This move could contribute to achieving net-zero emissions by 2070.

Final Words

As Budget 2024 approaches there is anticipation for a roadmap that will drive India towards a future marked by innovation in the power sector. Budget 2024 is expected to facilitate key initiatives and investments in clean energy projects, aligning with global sustainable energy trends and capitalizing on future opportunities. India is on the edge of a green energy revolution all set to lead the way towards a cleaner and more sustainable future.