Government to Announce Measures for Boosting Renewable Energy Investments in Budget 2024-25

Experts anticipate the 2024-25 Union Budget will feature initiatives promoting investment in renewable energy. Measures may include policy updates, viability gap funding, and incentives for clean energy sectors like battery storage. Enhanced tariff provisions and tax concessions are also expected to boost green hydrogen projects.

The government is preparing to unveil a variety of measures in the upcoming Budget for the fiscal year 2024-25 aimed at fostering investments in the renewable energy sector, according to industry experts.

Finance Minister Nirmala Sitharaman will present the 2024-25 Union Budget in Parliament on July 23.

Experts predict that the budget will feature policy-related measures, viability gap funding (VGF), and incentive schemes targeting the clean energy industry.

'We expect the budget to prioritize green growth, focusing on renewables, storage, and transmission and distribution network strengthening,' said Girishkumar Kadam, Senior Vice President & Group Head - Corporate Ratings, ICRA Ltd.

'There has been slow progress in the pumped storage projects (PSP) sector. Policy adjustments are necessary to expedite these projects, which are crucial for India's energy transition,' he added.

Kadam suggested the introduction of a VGF scheme specifically for battery storage products, alongside the expediting of the Production-Linked Incentive (PLI) Scheme's framework.

Ashwin Jacob, Partner and Industry Leader - Energy, Resources & Industrials at Deloitte, mentioned the potential for concessional tax rates on the sale of carbon credits and Renewable Energy Credits (RECs), as well as clarifications on loss offsets and unabsorbed depreciation.

'Indirect taxes have become a significant cost factor for the Green Hydrogen (GH) sector, owing to customs duties on solar modules and the lack of GST input credits,' Jacob noted. He further recommended policy adjustments to consider electricity supplied by renewable sources to GH units as deemed exports, thus allowing GST refunds.

He also suggested that the Central Board of Indirect Taxes and Customs (CBIC) provide upfront exemptions or reduced customs duties for solar modules used in GH projects.

(With inputs from agencies.)