Impact of the budget on the renewable energy sector

Mobility Energy and Transportation

09 Feb 2024

Renewable energy emerged as a key focus in the interim budget presented by the government. A net total of INR 12,850 Cr has been allocated to the development of the renewable energy sector, marking an increase of ~64% from the previous financial year, signaling a decisive move towards a more sustainable future (Exhibit 1).

The government's primary emphasis lies in the solar energy sector, with a budget allocation of INR 10,140 Cr, constituting ~80% of the total budget. Moreover, there is a notable surge in the budget for solar energy, rising by ~68% in FY25 from the revised estimate of INR 6,041 Cr in FY24. Green hydrogen is another segment that has received an increase in budget, rising to INR 1,200 Cr in FY25 from INR 534 Cr in FY24.

The notable highlights of the renewable energy sector include the following:

There is a substantial increase in the allocated budget for solar off-grid power generation, soaring by approximately 79% to reach INR 8,500 Cr:
- In line with the Pradhan Mantri Suryodaya Yojna, as unveiled by the Prime Minister
- Rooftop solar panels are slated for installation in 1 Cr households across the country
- This initiative promises to provide free electricity up to 300 units, to these households through the rooftop solar plants
The above endeavor is expected to fortify the order book position of domestic solar module manufacturers:
- Solar modules to be used for these projects are mandated to be domestically sourced
Aiming to tap into the offshore wind energy potential, viability gap funding will be extended to harness an initial capacity of 1 gigawatt (GW):
- The government has laid the proposal to net invest INR 800 Cr in wind power, with a significant focus on offshore wind
In the pursuit of achieving a "Net-Zero" future by 2070, the government has outlined specific targets:
- By 2030, there is a commitment to install 100 MT of coal gasification and liquefaction capacity
- A phased approach towards mandatory blending of compressed biogas (CBG) into both compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic use will be implemented

Implications for stakeholders

Adoption of the interim budget 2024 would create opportunities and benefits for key stakeholders in the renewable energy sector such as EPCs / IPPs, equipment manufacturers, DISCOMs, and consumers. In Exhibit 2, we can observe the strength of opportunities for these stakeholders.