Budget 2024: What Does the FM Have for the Renewable Energy Sector?

As Budget 2024 approaches, stakeholders in the renewable energy sector are eager to uncover what the Finance Minister Nirmala Sitharaman has in store. Speculations are rife about potential allocations and strategic initiatives aimed at propelling India's renewable energy agenda forward. Will this budget set the stage for transformative growth in sustainable energy? To find more about this, TICE.News delves into what could be on the horizon for one of India's pivotal sectors.

Renewable Energy Projected Growth and Sector Dynamics

According to a recent study by CRISIL, the renewable power sector is set to expand substantially. Current projections indicate a capacity surge to 180 gigawatts by FY26, driven predominantly by the relentless advancement of solar energy technologies. This ambitious target marks a substantial increase from the existing 130 gigawatts, showcasing a clear commitment towards sustainable energy sources.

Recent Achievements & Planned Additions

Recent years have seen remarkable strides in renewable energy deployment. From 72 gigawatts in FY20 to 97 gigawatts in FY22—a 35% increase—the momentum is palpable. As of FY24, the sector stands at 130 gigawatts, with a promising pipeline of 75 gigawatts expected to be operational by FY26. This growth trajectory is supported by a diversified approach, with 75% of new additions anticipated from a robust executable pipeline and the remainder from commercial and industrial (C&I) sectors and rooftop installations.

Policy Initiatives & Their Impact

The forthcoming budget is expected to introduce transformative policies aimed at accelerating renewable energy adoption. Key among them is the ambitious Rs 75,000 crore scheme to install solar rooftops on 10 million households through the PM Surya Ghar initiative. Additionally, the launch of the online portal PM Surya Ghar is poised to streamline approvals, making renewable energy solutions more accessible across the nation. Favorable green open access policies and reduced open access charges in select states are further anticipated to catalyze the transition towards cleaner energy sources.

Challenges and Mitigation Strategies

Despite the promising outlook, challenges persist. High tariffs associated with storage-linked capacities pose a potential barrier to widespread adoption of renewable energy. As of April 2024, nearly 65% of auctioned capacity lacks power supply agreements, mainly due to cost considerations associated with storage technologies. Timely development of storage infrastructure is therefore critical to managing the intermittent nature of renewable energy generation and ensuring grid stability.

Financial Implications and Investment for Renewable Energy

The scale of the envisioned expansion necessitates substantial financial investments. Experts estimate a requirement of approximately Rs 3 trillion over the next two years to fund these ambitious projects. In FY24, investments totaled Rs 1.8 trillion, with domestic debt playing a pivotal role, constituting 55-60% of the funding. Looking ahead to FY26, debt financing is expected to rise to 72-76%, underscoring the need for robust financial planning and management to sustain growth momentum.

As India navigates its energy transition journey, the upcoming Union Budget holds immense significance for the renewable energy sector. With ambitious targets, supportive policies, and substantial financial commitments on the horizon, the stage is set for a transformative period in India's energy landscape. The key lies in effective implementation, innovative solutions, and strategic partnerships to achieve sustainable and inclusive growth

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