India's Budget to Boost Solar, EVs, and Nuclear SMRs for Energy Security
In what could be its most ambitious drive to energize the power sector, the Centre is likely to bring in several changes in the 2024-25 budget with more focus on clean sources of energy. The need is to localize the value chain locally more so in the manufacturing sector related to solar, hydrogen, and batteries, helped by global geopolitical changes emanating post-COVID-19, writes Anujesh Dwivedi, Partner, Deloitte India.
"The budget is likely to further strengthen the government's resolve to these crucial sectors by continuing support to domestic manufacturing in areas where local capability building aligns with the trend of the global energy transition", said Dwivedi.
The prospect of fiscal policies will increasingly be focused on building the resiliency of electricity infrastructures against the impact of escalated adverse weather incidents as a result of climate change. These involve huge appropriations for the digital transformation of electrical grids, with the objectives of supporting DALI (Distributed Assets and Load Integration) under increasing peak demands.
The challenge for India which added 18 GW of solar capacity in FY24 is ramping up its annual renewable energy capacity to about 50 GW if it is to meet a 2030 target of 500 GW of generation from non-fossil fuel sources. "Scaling up renewable capacity at this rate will require more than the business-as-usual continuation of ongoing programs but also an incremental impulse, especially on corporate renewable contributions and offshore wind projects", said Dwivedi.
It is also expected to highlight some of the emerging new energy technologies, including electric vehicles, green hydrogen, and Nuclear Small Modular Reactors. These are critical sectors in strengthening India's energy security and reducing dependency upon fossil fuels.
"Investments in the next budget would most likely be heavy for transmission and distribution infrastructure and will be systematically complemented by digitization of the grid to enable it for modern distributed energy systems", Dwivedi added.
It is expected that Finance Minister Nirmala Sitharaman will present Union Budget for FY25 on July 23. The Budget session is going to start on July 22 and end on August 12, 2024.
This budgetary focus underlines the strategy of the Government for hastening India's transition to a much more sustainable and resilient energy future compatible with global trends, besides covering needs related to energy security and environmental sustainability domestically.