Indian budget for FY 2024-25 proposes rooftop solar plan, policy for energy transition

India's fiscal budget for 2024-25 (April-March) on July 23 proposed free electricity under a rooftop solar power plan to grow renewables while promising to boost energy supply via other pathways such as using nuclear, hydro and thermal power plants.

In her presentation, Finance Minister Nirmala Sitharaman said the government will work on a new policy document for energy transition and a roadmap for decarbonizing the hard-to-abate sectors.

The rooftop solar plan "has been launched to ...enable 10 million households to obtain free electricity up to 300 kWh/month," Sitharaman said, referring to the interim budget in February where it was first announced.

The scheme has generated a "remarkable response" with more than 12.8 million registrations and 1.4 million applications "and we will further encourage it," she said.

India has 179 GW of installed generation capacity of non-fossil fuels in its energy capacity mix where total generation capacity stands at 418 GW, data from Power Ministry showed.

Sitharaman said a policy for promoting pumped storage projects would be brought out for electricity storage and facilitating smooth integration of the growing share of renewable energy with its variable and intermittent nature in the overall energy mix.

She also said nuclear energy is expected to form a very significant part of the energy mix and that the government will partner with the private sector to set up small reactors and conduct research and development for newer technologies.

An expert said the announcements were in line with expectations for facilitating clean energy transition and the policy for energy transition, but silent on the phase-out of traditional fuel sources.

"The Economic Survey talks of inclusive development as the focus of a sustainable energy transition pathway, but I have not seen anything about the just energy transition (in the budget)," said R.R. Rashmi, distinguished fellow at The Energy and Resources Institute (TERI), a think tank.

"There is no mention about how the coal phase down in the long term will be managed in the way that it ensures the social security for people dependent on these industries... (and) how the states will be helped to facilitate this energy transition."

Carbon market

Sitharaman announced a new roadmap for the hard-to-abate sector to progress them from energy efficiency targets to emission targets.

"Appropriate regulations for [the] transition of these industries from the current Perform-Achieve-Trade mode to the Indian Carbon Market Mode will be put in place," she said. For the smaller industrial units, an investment-grade energy audit will be conducted.

Rashmi said if the domestic carbon market relies on offsets, then the global voluntary carbon market might be affected.

Sitharaman said the development of indigenous technology for Advanced Ultra Super Critical Thermal Power Plants with much higher efficiency has been completed.

A joint venture between NTPC and BHEL will set up a full-scale 800 MW commercial plant using this technology for which the government will provide the required fiscal support.