Rooftop solar has received a substantial push through the PM Surya Ghar Muft Bijli Yojana. The scheme aims to promote the adoption of rooftop solar in one crore households, with 300 units of free electricity monthly. Announced during the interim budget with an allocation of Rs 6250 crore, the national portal has received more than 1.28 crore registrations and 14 lakh applications. However, reports suggest applications received on the portal average at 4kW, indicating that the benefits are going to people living in substantially larger homes than the targetted lower and middle income groups.
To step up solar cell and panel manufacturing, the budget proposes to expand the list of exempted capital goods. However, it has also decided to not extend the exemption of custom duties on solar glass and tinned copper. The financial impact of these decisions on manufacturers remains unclear. Expectations of certain exemptions on wind and battery storage also were unmet.
Thermal power plant defies transition targets
In the budget, the plans for NTPC and BHEL to jointly set up a highly efficient 800 MW advanced ultra supercritical (AUSC) power plant was announced. Current thermal power plants operate only at around 32 per cent efficiency but the AUSC technology can provide 46 per cent efficiency. With the country aiming for 50 per cent of its total energy needs from renewables by 2030, it definitely raises the question on this current need as the construction period will itself be close to five years. This also comes at a time when the cost of storage for renewables is on the decline.
On the plus side, the government aims to bring out a pumped storage policy for electricity storage and integration of renewable energy in the overall energy mix, as well as a policy document on appropriate energy transition that would balance the imperative of employment, growth and environmental sustainability. The announcement of partnering with private firms for setting up Bharat small reactors would add a good mix of renewables to the energy basket.
Transition of transportation sector
The FMs announcement on the establishment of Critical Mineral Mission will be an important boost to both electric vehicle and energy sector. These minerals are the building blocks of the products that enable the transition. It would encourage auto industry to venture into domestic cell manufacturing, reducing India’s import dependence.
The Production-Linked Incentive (PLI) scheme for the automobile and auto components sector has been increased to Rs 3500 crore from Rs 484 crore in 2023-24. It aims to boost production of electric and hydrogen vehicles and their components. But the third phase of the FAME scheme did not find any mention, as expected. Considering its importance in boosting the EV ecosystem, it becomes all the more important that it comes with strong incentives later this year.
The government has also announced that it will develop a taxonomy for climate finance to enhance the availability of capital for adaptation and mitigation efforts.
Along with this the financial and technology support for green transition of MSMEs and regulations for hard to abate industries to transition from the ‘Perform, Achieve and Trade’ mode to the ‘Indian Carbon Market’ mode will pave way for decarbonisation of the sector.
