India, today stands at a pivotal moment in its renewable energy journey and this year’s Union Budget is a crucial opportunity to redefine our clean energy future. India embarks on the ambitious journey of achieving net zero emissions by 2070, and a part of that future is achieving 500 GW of energy from non-fossil fuel forces by 2030. To the same end, this year’s budget announcement could be a watershed moment for India’s renewable energy sector. 

Time to Scale: Solar Projects 

In FY 2024-25, the Ministry of New and Renewable Energy (MNRE) had allocated funds worth INR 19,100 crore, marking a 143% hike from the previous fiscal. Solar Power Grids claimed the majority of this budget allocation, around 45%, while PM Surya Ghar Muft Bijli Yojana received 33% of the allocated funds. 

We certainly expect the government to continue these measures. Under PM Surya Ghar Muft Bijli Yojana, installations of rooftop solar panels shall continue to meet the ambitious target of providing up to 300 units of free electricity to over 1 crore households. The same would require a stronger vendor network and enhanced consumer knowledge, for ensuring overall success.

Giving financial assistance, subsidies, low-interest loans, etc for rooftop solar systems would certainly make it more affordable, allowing us to achieve scale and truly push towards the future of clean energy. Understanding the need for Battery storage with solar, MNRE has approved Solar hybrid systems with batteries to be allowed subsidy under the PM Surya Ghar Muft Bijli Yojana.

Need of the Hour: Energy Storage Systems 

As of the end of 2024, India had a capacity of 215 GW and to meet its ambitious targets, India needs to annually add a capacity of 50 GW. However, a critical impediment to achieving this is energy storage.

2025 is the year when storage systems will be in focus, and any support given to this area will aid in achieving the goal of 500 GW of renewable energy by 2030. India needs 250 GWh of battery storage solutions and to meet this ambitious target, this year’s budget should create a springboard to foster innovation and help in making Battery storage solutions financially viable. 

Bold measures such as tax incentives for Battery Energy Storage Systems, subsidies for energy projects, and support for innovations in advanced battery technologies like LFP and Ni-Cd are required. Furthermore, BESS comprises several items, each attracting a different customs duty. If the same is brought under the Project Import Scheme, attracting a consistent customs duty of 5%, it will not only streamline operations but give a much-needed push to overall renewable energy & conservation.

Driving Execution Excellence 

It’s a trend observed in other capex-based sectors as well, where execution becomes a persistent issue. However, just like in the case of manufacturing, there are production-linked incentives, the government should introduce an Execution-Linked Incentive for EPC companies. It should reward companies for executing projects before the project timelines and also, for the volume of work completed in a Financial year. This will drive the companies to complete projects ahead of schedule, as well as execute a greater number of projects in a year. This will certainly accelerate the pace of economic growth and will bring in another league of execution excellence in the country. 

Additionally, the government should also focus on addressing the talent gap in clean energy initiatives. Introducing training programs for sectors like solar, wind, and green hydrogen, and developing indigenous talent, especially for technicians and operators in the field will certainly lead to job creation. 

While India’s renewable energy goals may seem too ambitious, they are certainly achievable with decisive action. The Union Budget 2025 needs to be forward-looking and fostering innovation within the sector. We envision a future where India leads the world in sustainable energy. And this budget should foster collaborations between the government and private firms to drive this transformation.