India sets aside USD 4.3bn for energy security and transition

India’s finance minister Nirmala Sitharaman on Wednesday presented in Parliament the Union Budget 2023-2024, which includes INR 350 billion (USD 4.28bn/EUR 3.95bn) in funding for energy security, energy transition, and net-zero objectives.

When it comes to renewables, the budget sets aside central support of INR 83 billion for the construction of a INR-207-billion Inter-state transmission system, the purpose of which is to evacuate and integrate with the grid 13 GW of renewable energy capacity from Ladakh. At the same time, the government will support battery energy storage systems with a total capacity of 4,000 MWh with Viability Gap Funding.

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The budget pays attention to biogas projects too, with a total allocation of INR 100 billion. Minister Sitharaman announced that this amount will be invested in the construction of 500 so-called “waste-to-wealth” plants that will promote a circular economy under the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme. The total number includes 200 compressed biogas (CBG) plants and 300 community or cluster-based facilities.

The document also reiterates the country’s target to achieve an annual production of 5 million tonnes of green hydrogen by 2030. The National Green Hydrogen Mission was approved less than a month ago with an outlay of INR 197 billion.

Sumant Sinha, the chairman and CEO of one of the largest renewable energy independent power producers (IPPs) in the country – ReNew Power (NASDAQ:RNWWW), welcomed the budget announcement, saying the following:

“The focus of the budget on expanded support for infrastructure investment, growth of small industry and agriculture sectors, while committing to fiscal consolidation, strikes the right balance. In the context of overall geopolitical and economic outlook, the outlay of [INR 350 billion] for energy transition and energy security is a significant step forward. We believe the Finance Minister has presented a Green Budget that demonstrates Government of India’s unwavering commitment to achieving Net Zero by 2070.”

“For the clean energy sector, there are several welcome announcements. Support for Battery Energy Storage Systems (requested by ReNew Power during pre-budget consultations), the transmission infrastructure to evacuate power from Ladakh, the allocation for biogas to energy projects and the initiatives for scrapping of old vehicles of the central and state governments are all significant steps in the right direction,” Sinha stated, adding that the company is looking forward to seeing more information about the financial allocation for the green hydrogen mission.

(INR 10 = USD 0.122/EUR 0.113)