Power, especially renewable power is expected to be a top priority for the Government. As India marches ahead with its COP 26 commitments and targets fulfilling 50% of energy needs through renewable power by 2030, it is important to note that the Budgetary allocations have to match the broader objectives. Most industry experts believe that apart from allocations to the sector, Govt needs to incentivise companies excelling in adopting sustainability and create instruments like Green bonds to pass on the benefit. 

Allocations for sustainable power so far

During the Interim Budget Rs 28,352 crore was allocated to the power sector and this is a sharp 50 per cent increase from the revised estimate (RE) of Rs 18,945 crore for 2023-24.  The Finance Minister announced solarisation of 10 million households via rooftop solar installations and viability gap funding (VGF) for offshore wind projects with a combined capacity of 1,000 MW.

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The largest funding during the Interim Budget 2024 went to hydropower projects, the Bio Energy initiative, and the National Green Hydrogen Mission (NGHM). These programmes aimed at reforming the power distribution industry also received a budgeted allocation increase of at least 39 per cent. The amount allotted for hydropower efforts is Rs 51 crore, a substantial increase of 155 per cent over the Rs 20 crore in the revised projection for FY24. 

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By December 2024, the 2,000 MW Subansiri Lower plant, which is presently under construction in Assam and Arunachal Pradesh, should be completely operational.

The amount allotted to solar energy development programmes in the budget grew to Rs 8,644 crore, a 75 per cent increase over the Rs 4,941 crore in the revised FY24 estimates. Notedly, the Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan Yojana (PM-KUSUM), which aims to solarise the agriculture sector, is not included in this statistic.

Incentivise investment in renewables

According to Aditi Balbir, Co-founder, EcoRatings, the Union Budget 2024 should prioritise investments in sustainable infrastructure projects and clean energy solutions as 70 per cent of greenhouse gas emissions stem from energy, industry, and buildings . This will create a future-proof foundation for economic growth and help in achieving netzero targets. “Globally, 85 per cent of institutional investors incorporate ESG factors into their investment decisions, making ESG investments the emerging norm. The Union Budget should extend industry recognition programs to companies excelling in sustainability. This will encourage wider adoption and foster a more responsible business landscape beyond the financial sector,” she added.

“The introduction of innovative financial instruments, such as green bonds and climate risk insurance, is essential for mobilising private sector investment and driving sustainable projects. Strengthening the Carbon Credit Trading Scheme (CCTS) with clear regulations, enhancing the CCTS offsets demand in India, and robust verification mechanisms will also be vital in incentivising emission reductions and attracting investments in clean technologies. Hand-holding with international QA/QC agencies like ICVCM & VCMI may bring in greater credibility for overseas investment interest in Indian offsets under CCTS,” said Manish Dabkara, Chairman and MD of EKI Energy Services.

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Meanwhile, Neerav Nanavaty, CEO at BluPine Energy said that a skilled workforce is crucial to meet escalating demands and push technological boundaries forward. “Seamless integration of renewable sources into a resilient grid infrastructure will enhance national reliability and resilience. Robust regulations for C&I sector will not only attract investments but also streamline operations, fostering sustainable growth. Despite challenges such as high initial costs and regulatory complexities, robust incentives and streamlined processes are imperative to make solar power more accessible and affordable. This strategic focus will propel India towards a brighter, greener future, reinforcing our global leadership in clean energy innovation and sustainability,” Nanavaty said.