Residential Solar: Govt Aims To Increase Penetration Of Distributed Renewable Platform

There has been no mention of ESG reporting and assessment, development of a transparent green taxonomy and importantly, the green bond market in India

Sankar Chakraborti, Chairman, ESG Risk Assessments & Insights

FinTech BizNews Service   

Mumbai, February 3, 2024: Sankar Chakraborti, Chairman, ESG Risk Assessments & Insights, evaluates the key budgetary announcements, made by the Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman in the Parliament on 1st February.

  • The budget has listed down some specific measures to make progress towards India's Sustainable development Goals (SDGs) which among others, include 50% of power generation capacity from renewable energy by 2030.
  • A provision of viability gap funding for the harness of offshore wind energy potential of 1 GW in the initial phase with an allocation of Rs 930 Cr
  • Setting up infrastructure for coal gasification & liquefaction with a capacity of 100 million tonnes by 2030
  •  New Roof Top Solarization Programme under PM Suryodaya Yojana for 1 Cr households which can generate 300 units of electricity every month that can be utilised free of cost by the household and also sold to discoms, leading to savings of 15,000 to 20,000 per year.
  • Solar power (grid) expenditure is proposed to be doubled from Rs 4,970 Cr to Rs 10,000 Cr and the National Green Hydrogen Mission allocation raised from Rs 297 Cr to Rs 600 Cr.
  • Allocation to green energy corridor to increase from Rs 434 Cr to Rs 600 Cr
  • Proposed the strengthening of the e-vehicle ecosystem by supporting manufacturers and expanding charging infrastructure.
  • Expansion of the e-buses public transport network
  • Phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes
  • Provision of financial assistance for procurement of biomass aggregation machinery to support biomass collection
  • Launch of a new scheme to support bio-manufacturing and bio-foundry which will enable the introduction of friendly alternatives such as biodegradable polymers, bioplastics, biopharmaceuticals and bio-agri-inputs.
  • Scheme to create a resilient blue economy by focusing on restoration and adaptation measures, coastal aquaculture, and mariculture with an allocation of Rs 2,352 Cr

Impact Analysis

  • The residential solar roof top scheme is another fresh attempt by the government to increase the penetration of this distributed renewable platform. A similar scheme had been announced by the GoI in 2014 but hadn't been effective majorly due to a lack of awareness among households and affordability of the solar panels. The issues of incentivization and implementation would need to be addressed in this revamped version.
  • Coal gasification projects will be possibly implemented by the PSUs and this help to reduce the direct usage of coal along with lower imports of natural gas, ammonia and methane.  
  • The sale of EVs – particularly passenger cars and three wheelers have seen a sharp growth over FY23 and FY24 but still accounts for a modest proportion of the overall auto market. One of the key constraints in the development of the EV market is the lack of adequate charging infrastructure. The expansion of EV charging stations proposed in the interim budget will drive demand over the medium term; however, no further details have been provided on the measures to be taken. While there was an expectation of a fresh commitment on FAME (Faster Adoption and Manufacturing of Electric Vehicle in India ) subsidy, the allocation has actually dropped from Rs 4,807 Cr to Rs 2,671 Cr.
  • By mandating the use of compressed biogas in CNG and PNG, there will be lesser dependence on traditional fossil fuels, promote circular economy, and recycle organic waste into valuable resources. Upon implementation, the plan is expected to attract investment of approximately Rs. 37,500 Cr and facilitate the establishment of 750 CBG projects by 2028-29, thus enhancing employment and saving foreign exchange reserves of USD 1.17 billion as estimated by IBA. The financial support proposed for procurement of biomass aggregation machinery also indicate the commitment of the government to scale up the nascent biomass energy sector.
  • While the government has made commitment to the progressive development of alternative energy sources, the scale and intensity of the measures seem to fall short of the expectations particularly given the urgency in the energy transition plan. Also, there has been no mention of ESG reporting and assessment, development of a transparent green taxonomy and importantly, the green bond market in India.  

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