India’s 2024-25 budget, announced on 23 July 2024, underscores a strategic and forward-thinking approach for the nation’s energy sector. It aims to enhance energy security, foster sustainability, and drive technological innovation through several key initiatives.
Promotion of pumped storage projects
One notable initiative is the promotion of pumped storage projects for electricity storage, which are crucial for integrating the growing share of renewable energy into the overall energy mix. Pumped storage projects help balance the grid and ensure reliable power supply, especially because renewable energy sources like solar and wind are intermittent. This policy is poised to stabilise the grid, reduce dependence on fossil fuels, and promote energy storage solutions, thereby enhancing the efficiency and reliability of the entire power system.
Advancements in nuclear energy
The budget underscores collaborations with the private sector to establish Bharat Small Reactors, conduct R&D on Bharat Small Modular Reactors (SMRs), and pioneer newer technologies for nuclear energy. These initiatives mark a significant step towards diversifying India’s energy portfolio and enhancing energy security.
SMRs offer a safer, more flexible, and cost-effective alternative to traditional large reactors. These reactors, typically ranging from 10 to 300 megawatts (MW) in capacity, can be deployed in a shorter timeframe and seamlessly integrated into existing infrastructure. This makes them particularly attractive for remote or off-grid locations, as well as for replacing aging fossil fuel-based power plants.
By fostering partnerships with the private sector, the government aims at accelerating innovation and reducing costs, positioning India as a leader in advanced nuclear technology. Global examples, such as those in the US and Canada, highlight the potential of SMRs to enhance energy security, support economic growth, and contribute significantly to global climate change mitigation efforts.
Transitioning hard-to-abate industries
The budget proposes a roadmap for transitioning ‘hard-to-abate’ industries from energy efficiency targets to emission targets, marking a crucial shift towards more comprehensive and stringent measures in reducing greenhouse gas emissions. By focusing on emission targets, industries will be motivated to adopt cleaner technologies and practices, thereby supporting India’s climate goals and lowering the carbon footprint of industrial activities. This shift from energy efficiency to emission targets ensures that industries focus directly on reducing their greenhouse gas emissions, particularly in sectors such as cement, steel, and chemicals, which are significant contributors to India’s overall emissions.
The proposal is further complemented by the development of a domestic carbon market. Recently, the Bureau of Energy Efficiency (BEE) issued a Detailed Procedure for Compliance Mechanism under Carbon Credit Trading Scheme (CCTS), which provides a much-required framework for the domestic carbon credit market. Drawing from the successful European Union Emissions Trading System (EU ETS), this initiative will drive investment in low-carbon technologies and enhance energy efficiency.
Joint venture for advanced ultra super critical (AUSC) technology
A joint venture between NTPC and BHEL will establish an 800 MW commercial plant using domestically developed AUSC technology. AUSC thermal power plants operate at higher temperatures and pressures compared to traditional subcritical and supercritical plants. This higher operational efficiency allows AUSC plants to convert more energy from coal into electricity, significantly reducing the amount of coal required per unit of electricity generated, leading to lower fuel costs and reduced emissions.
The enhanced efficiency of AUSC plants results in lower carbon dioxide (CO2) emissions per unit of electricity generated, making AUSC technology more environmentally sustainable than older coal-fired power plants. The extreme operating conditions of AUSC plants require advanced materials that can withstand high temperatures and pressures without degradation, making research and development in materials science critical in making AUSC technology viable.
Despite higher initial capital costs due to advanced materials and technology, the long-term benefits – including improved efficiency, lower fuel costs, and reduced emissions – make AUSC plants economically attractive and environmentally beneficial.
Rooftop solar Initiative
Building upon the PM Surya Ghar Muft Bijli Yojana announced during the interim budget, the 2024-25 budget further boosts the installation of rooftop solar plants. This scheme aims to provide free electricity up to 300 units per month to one crore households. By encouraging the adoption of rooftop solar, it alleviates pressure on the national grid, reduces household electricity expenses, and supports the government’s goal of increasing renewable energy capacity, contributing to energy security and environmental sustainability.
Support for micro and small industries
The budget provides financial support for traditional micro and small industries to transition towards cleaner energy forms and implement energy efficiency measures. The funding will incentivise the adoption of renewable energy sources, implementation of energy-efficient technologies, and access to technical expertise. These measures are essential for reducing carbon emissions, lowering energy costs, and improving the competitiveness and sustainability of these industries.
Customs duty adjustments for solar manufacturing
The budget eliminates the customs duty on certain additional capital goods for manufacturing solar cells and modules, reducing it from 7.5% to zero. However, customs duty exemptions on solar glass and tinned copper interconnects will not be extended, resulting in duties of 10% and 5%, respectively, effective October 2024. Lowering the customs duty on capital goods will decrease production costs and encourage domestic manufacturing, supporting the ‘Make in India’ initiative. Meanwhile, the reintroduction of duties on solar glass and interconnects aims to promote domestic production, fostering a competitive and sustainable solar manufacturing ecosystem.
Comprehensive energy transition policy
A policy document outlining appropriate pathways for energy transition, balancing employment, growth, and environmental sustainability, is set to be released. This comprehensive framework is crucial for guiding India’s energy transition, ensuring that economic growth and job creation are aligned with environmental objectives.
India’s 2024-25 budget reflects a strategic and holistic approach to the energy sector, emphasising sustainability, innovation, and energy security. By promoting pumped storage, advancing nuclear technology, transitioning to emission targets, and supporting renewable energy and energy efficiency, the budget lays a strong foundation for a sustainable and resilient energy future. These initiatives are expected to drive economic growth, create jobs, and position India as a global leader in the clean energy transition, demonstrating the government’s commitment to building a sustainable and prosperous energy ecosystem.
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