New Delhi: Energy security was listed among the nine key priorities in the Union Budget 2024-25, announced by Finance Minister Nirmala Sitharaman in Parliament Tuesday, with an increase in allocation for the Ministry of New and Renewable Energy (MNRE) to Rs 19,100 crore from Rs 6,900 crore in 2023. Sitharaman’s speech highlighted a boost for small nuclear reactors, advanced ultra-supercritical (AUSC) thermal power, and solar manufacturing.
The government’s strategy is “high and more resource-efficient economic growth, along with energy security”, she said. To this end, it will release a policy brief on energy transition pathways that will balance the priorities of “employment, growth and environmental sustainability”.
Keeping in line with the announcements made during the interim budget, Sitharaman also highlighted the Pradhan Mantri Surya Ghar Muft Bijli Yojana (PM-SGMBY). However, while the interim budget mentioned clean energy sources like wind energy and biogas, the Union Budget focused more on solar and nuclear, grid connectivity, and pumped storage systems.
Among conventional energy sources, Sitharaman announced the government’s support for an 800 MW thermal power plant set up by NTPC and BHEL using indigenous advanced ultra-supercritical (AUSC) technology.
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Solar energy – boost to installations and grid
PM-SGMBY, launched in February to encourage rooftop solar installations and provide 300 units of free electricity to 1 crore households, received an outlay of Rs 6,250 crores. Sitharaman told Parliament that the policy had already attracted 1.28 crore registrations and 14 lakh applications.
With a massive focus on grid connectivity for solar power, the budget offered a Rs 10,000 crore outlay for the Solar Power (Grid) central scheme, more than double the Rs 4,700 crore allotted to the scheme last year.
Within this allocation, the MNRE plans to commission solar parks with a target of generating 5,000 MW of power. It is also targeting the domestic power production solar modules and cells with the capacity of up to 12.4 GW this year — this is under schemes such as PM-KUSUM and PM Surya Ghar Muft Bijli Yojana, which have a mandatory domestic content requirement (DCR).
Certain capital goods used to produce solar cells and photovoltaic panels will be exempted from customs duty, though the budget did not specify which goods in particular. At the same time, some goods used in solar manufacturing, like solar glass and tinned copper interconnect, will no longer be exempted from the duty because of sufficient domestic manufacturing. A customs duty of 10 percent on solar glass and 5 percent on tinned copper interconnect will be levied from 1 October.
“The industry was expecting a GST cut on wind, battery storage, EVs and charging stations, which has not been factored now, but there will be a meeting in the next few weeks to discuss tax rationalisation on certain components. Industry is hopeful that their demand will be taken care of by the GST council,” said Vibhuti Garg, director of the South Asia, Institute for Energy Economics and Financial Analysis (IEEFA), in a statement.
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Focus on nuclear and thermal energy
Sitharaman also said the nuclear energy sector is a “very significant part of the energy mix for Viksit Bharat by 2047”. The budget proposed private-sector partnerships to boost the research and development for Bharat Small Reactors and Bharat Modular Reactors. Additionally, critical minerals like lithium, copper, and cobalt — key for nuclear energy production — will be fully exempted from customs duty. The finance minister also announced the formation of the Critical Mineral Mission to help produce, recycle and acquire minerals.
Rishabh Jain, Senior Programme Lead at CEEW said it was an important mission. “Critical minerals are building blocks for energy transition and other strategic sectors such as electronics, defence, and telecommunications. The Mission will encourage private and government companies to develop capabilities in the critical minerals supply chain and build competitiveness in the medium to long term,” he said in a statement.
Thermal energy will also receive a boost in government funding for an 800-MW power plant based on AUSC technology. It obtains maximum efficiency from thermal power plants while reducing the overall carbon dioxide emissions. Since 2016, the National Thermal Power Corporation and Bharat Heavy Electrics Limited have been working on the domestic development of AUSC thermal power technology. According to the Ministry of Heavy Industries, this domestic AUSC technology will increase the plant load factor of thermal power plants to 46 percent, and reduce CO2 emissions by 11 percent.
To support the smooth integration of renewable energy into the national energy mix, the government also announced that it will outline a policy to promote pumped storage projects. The budget also promised a roadmap for energy transitions in ‘hard-to-abate’ industries, as well as energy audits of micro and small industries, like brass and ceramic. Sixty clusters of these industries will also get financial support for transitioning to cleaner forms of energy.
“The Union Budget 2024 has undeniably taken forward the Prime Minister’s commitment towards India’s clean energy transition. With continued policy support, accessible financing, and robust public participation, I am confident that we will achieve our renewable energy aspirations for a cleaner, more resilient, and economically vibrant India,” said Sumant Sinha, founder, chairman and CEO of ReNew Energy in a statement.
(Edited by Sanya Mathur)