How will the 2024-2025 budget reshape India's energy landscape? 🌱🔋

By: Rudranil Roysharma , Growth Expert & Director – Energy & Environment, MEASA

KEY ANNOUNCEMENTS MADE & FROST PERSPECTIVE

§  Announcement 1: ‘Energy Security’ as one of the Nine pillars

Impact: Energy Security would be critical to meet India’s NDC target and achieving self-sufficiency in meeting energy requirements. Policy on Energy Security would promote localization of energy production value chain and subsequent reduction in energy imports – this in turn would provide necessary boost to multiple domestic energy sector companies and attract investments in capacity and capability developments in local manufacturing of energy equipment and solutions – this in turn would boost India’s equipment export potential and set India as a global manufacturing hub for renewable energy sector. Industries likely to benefit

• Companies operating in Solar PV value chain including Polysilicon, Wafer-Ingots, Cells, and Modules
• Companies operating in storage space – ACC batteries, Pump Storage, etc.
• Companies operating in the Alternate energies space such as Green Hydrogen, Methanol, etc.
• Companies operating in Bio-fuels such as Ethanol, Compressed Bio-Gas, Sustainable Aviation Fuel, etc.

§  Announcement 2: Launch of PM Surya Ghar Muft Vijli Yojana programme

Impact: With an allocation of over INR 750 billion, the scheme aims to provide financial assistance through capital subsidies, facilitating the installation of rooftop solar panels and granting up to 300 units of free electricity every month to approximately 10 million households across India. This scheme aims to decrease dependency on traditional energy sources and moving towards sustainable energy practices. The scheme exclusively requires the utilization of DCR solar modules. As per Frost & Sullivan analysis, this scheme is expected to generate 25 – 30 GW of rooftop solar installation opportunities over the next 2-3 years and similar opportunities for domestic Solar PV component manufacturers.

§  Announcement 3: A policy to support pump storage projects will be brought to provide round-the-clock energy

Impact: Given the ongoing energy transitions in the country and as the country is aiming to generate 40% of electricity through renewables, there would be increasing requirements for Grid stability and balancing. The development of Pumped Storage Projects (PSPs) assumes importance for providing greater inertia and balancing power to the grid. PSPs are also known as ‘the Water Battery’, which is an ideal complement to modern clean energy systems. Currently, PSPs with aggregate capacity of 3.8 GW are under construction in the county and another 50 GW is under various stages of development. It is projected that PSP capacity shall increase from 4.7 GW to around 55 GW by FY2032. Companies to benefit are Hydro power developers, Hydro Turbine companies, Alternators and Motor companies and Metals companies.

§  Announcement 4: The Government plans to partner with the private sector to set up Bharat Small Reactors and conduct research and development on small modular reactors and newer nuclear technologies.

Impact: As India aiming to reduce emissions intensity by 45% by 20230, sustainable development of electricity sector is one of the key pillars for India’s low carbon long term development strategy. Nuclear is going to play an important role in that journey. The Indian government has initiated steps to increase the country’s nuclear power capacity from the current 7.5 GW to 22.5 GW by FY2032. However, India is largely dependent on global companies for supply of equipment for these projects. Development of local capability is a welcome step and for the first time, Nuclear will gain limelight from domestic manufacturing perspective and Nuclear would become a substantial component of India’s power generation portfolio. This would boost investment in the local manufacturing sector and also help the Govt. to ramp up the domestic Nuclear power capacity.

§  Announcement 5: Setting up of hi-tech thermal plant using Advanced Ultra Super Critical (AUSC) technology

Impact: AUSC technology based Thermal Power Plants will yield plant efficiency of 46% against ~38% efficiency of subcritical and ~41- 42% of supercritical sets besides reducing coal consumption / CO2 emissions by about 11% as compared to super-critical plants. India has already developed the technology indigenously and this would allow the Govt. to continue with Coal based power plants for longer period while achieving the NDC targets. As per 20th Electric Power Survey, the peak electricity demand in the country is expected to reach approx. 295 GW by FY2028 and 366 GW by FY2032. Coal based power plants would be crucial to meet India’s base load requirement.

§  Announcement 6: Roadmap for 'hard to abate' industries will be formulated for transition from 'Perform, Achieve and Trade' mode to 'Indian Carbon Market' mode.

Impact: Once implemented and roadmaps are formulated, that would enable development of a robust and vibrant domestic carbon trading system. Investment in costly de-carbonization technologies has been a key challenge for India’s large MSME sector – this policy would introduce carbon emission reduction targets for most of those companies and bring them under the ambit of overall sustainability / de-carbonization targets of the country. However, this policy would help them to achieve those targets through carbon trading and incentivize various businesses to reduce their carbon footprint and invest in cleaner technologies.

§  Announcement 7: Energy audit of MSME in 60 clusters to be facilitated, and financial support to help clusters to shift to cleaner energy sources will be introduced,

Impact: Contribution from India’s MSME sector would be crucial to meet India’s net zero targets and especially the companies present in energy intensive sectors like Glass, Ceramic, Steel, etc. This policy would enable many of these MSME companies to invest in cleaner technologies which till now has been a biggest roadblock for de-carbonization. This in turn could create ample business opportunities for the companies which are in the Energy Audit business, ESCO business, Clean Energy equipment business, etc.

Overall Impact: Very Positive

Overall Analysis & Perspective: The budget has been a very progressive and forward looking from the Energy sector perspective. The policies announced, once implemented, would help in achieving the following:

1. Establish India as one of the leading Renewable Energy equipment manufacturers in the world – significant investment inflow in domestic energy equipment and solution manufacturing realizing the dream of ‘Make in India’ and ‘Atmanirbhar Bharat’.
2. Significant reduction in energy imports and greater control on energy security – This would help India to decouple from the fragile regional and global geopolitical environment and become self-sufficient in meeting energy requirements for becoming the top 3 global economies.
3. Sustainable energy mix for balancing the growth and sustainability over the next 2-3 years – India, the fifth largest economy and the fastest growing large economy will lead the way in achieving growth through low carbon development and create ample examples for the other developing economies to follow.
4. Significant inflow of green funds in India’s distributed clean energy and energy efficiency sectors – As MSMEs will join the India’s de-carbonization bandwagon, the green investments / green funds inflow into the country will swell significantly and create ample business opportunities for the Energy sector start-ups.

Schedule a complimentary Growth Dialog with Rudranil Roysharma to dive deeper into transformational strategies and explore specific needs within your company basis the key announcements made today.