Renewable energy and green mobility sector stakeholders have welcomed the Budget 2023 proposals laid out by Union Finance Minister Nirmala Sitharaman. The allocation for capital expenditure, an emphasis on improving green energy evacuation infrastructure, and steps towards strengthening battery energy storage systems have assured the industry that the government intends to meet its net zero targets within the stipulated timeline of 2070.

Some of the important proposals in the budget are:

• ₹350 billion (~$4.3 billion) for priority capital investment for energy transition and net-zero objectives and energy security
• Investment of ₹207 billion (~$2.5 billion), including central support of ₹83 billion (~$1.02 billion) for the evacuation and grid integration of 13 GW of renewable energy from Ladakh
• Viability gap funding support for battery energy storage systems with a capacity of 4000 MWh
• Green Credit Program under Environment Protection Act
• ₹100 billion (~$1.2 billion) for the GOBARdhan program
• Customs duty exemption on capital goods and machinery required to manufacture lithium-ion cells

Mercom spoke to industry stakeholders for their reactions to the budget:

Capital expenditure

“The Union Budget 2023, with an outlay of ₹350 billion (~$4.3 billion) for green energy transition, in addition to the recently announced Green Hydrogen mission with an outlay of ₹195 billion (~$2.4 billion), have reiterated the government’s commitment to achieving net zero targets alongside making India important hub for renewable manufacturing,” Bikesh Ogra, MD & CEO, Jakson Green, said.

“The generation, transmission, and storage of renewable energy will be supported with the priority capital investment. This gives players in this market a special opportunity to make clean energy solutions accessible and affordable, enabling mass consumerization. The inclusion viability gap funding for battery storage, renewable energy evacuation, and green credit policy coupled with domestic and foreign debt funding makes this a game-changer in the making,” said Bharat Bhut, Co-Founder & Director of Goldi Solar.

S N Goel, Chairman and Managing Director of Indian Energy Exchange, said, “The capital allocation for energy transition, focus on promoting green hydrogen and incentivizing environmentally sustainable actions through the green credit program, will accelerate decarbonization of the power sector. The emphasis on energy storage projects, critical to scale up renewable energy capacity, complements India’s net-zero carbon emissions target of 2070.”

“We look forward to receiving the policy structured in a detailed manner. With this budget announcement, we are encouraged to keep up the rapid expansion in energy production, manufacturing required equipment, and construction of energy storage capacity. We will need to continue having a closer industry-government collaboration to reach the net-zero aim by 2070,” said Srinivasan Viswanathan, Chief Executive Officer of Vibrant Energy.

Evacuation infrastructure for renewables

Rajiv Mishra, MD, Apraava Energy, said, “The proposed inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh at the cost of ₹207 billion (~$2.5 billion) will facilitate the development of large RE projects in the union territory, which is endowed with abundant solar and wind potential.”

“For the first time, ‘Green Growth’ has been identified as one of the Saptarishi priorities. The grid connectivity offered for renewable projects in the Ladakh region will open a new arena. Overall, the steps will accelerate the energy transition and help India move towards its net-zero carbon emission target,” said Rajat Seksaria, CEO of ACME Group.

National Solar Energy Federation of India (NSEFI) CEO Subrahmanyam Pulipaka said, “The allocation of funds to ISTS for evacuation and grid integration of renewable energy from Ladakh will also address issues about both Energy Access and Evacuation.”

Battery energy storage system

“At NSEFI, we are happy that the Ministry of Finance has accepted our request for creating a detailed framework for pumped storage projects in the country. The viability gap funding announced for a storage system with the capacity of 4 GWh will help penetration of solar as a dispatchable energy generation source,” Pulipaka said.

Nitin Kapoor, Managing Director of Saera Electric Auto, said, “The support for viability gap funding for battery storage solutions and a reduction in customs duty on lithium-ion batteries for one more year will bring us close to a net-zero carbon emission goal by 2070. This massive investment will fuel India’s sustainable development goals and accelerate the EV industry.”

“Viability gap funding for battery storage can bring about a CAPEX of around ₹150 billion, leading to lower tariffs for storage-linked project bids. We also look forward to FM’s announcement for formulating a detailed framework for pumped storage projects which will prove a catalyst to the whole process,” V G Anil, Head of Operations, ARENQ, said.

Electric vehicles

Pankaj Sharma, Co-Founder & Director of Log9 Materials, said, “The government’s decision to extend the concessional duty on lithium-ion cells for batteries for another year is definitely welcoming as it would sustain the ongoing momentum within the Indian EV sector. Considering EV batteries account for approximately up to 60% of the EV cost, this relaxation will make electric vehicles more affordable and hence enhance the EV adoption rate.”

“Customs duty exemption is being extended to imports of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles to boost green mobility further,” said Sameer Aggarwal, CEO and Founder of Revfin Services.

 “The Centre’s focus on Green Mobility, by announcing ₹350 billion (~$4.3 billion) towards energy transition and more clarity in the Vehicle Scrapping Policy, will offer a fillip to the automobile finance business. Further, the government’s push for the speedy transmission to the electric mobility solutions, higher allocation for green hydrogen production, and duty relief to domestic manufacturing of lithium-ion batteries will accelerate the EV finance segment,” Aditya Damani, Founder & CEO of Credit Fair, said.

Shivaji Waghmare, CEO of Fuji Electric India, said, “We appreciate the move to extend customs duty exemption to the import of capital goods and machinery required for manufacturing of lithium-ion (Li-ion) cells for batteries used in EVs. This would reduce the production cost and lower the cost of EVs.” 

Green Credit Program

Anjali Bansal, Founder of Avaana Capital, said, “The Green Credit program will channel much-needed capital to support the transition to a sustainable economy. Concessional duties on Li-ion batteries will further boost the EV sector and help decarbonize the transport and logistics sectors. The measures announced in Budget 2023 will further strengthen India’s position as a global climate leader and catalyze sustainable, inclusive development.”

Vishal Kapoor, MD and CEO of CESL, said, “Green hydrogen, pumped hydro, RE evacuation from Ladakh, and inclusion of Green Credit in Environment Protection Act will go a long way in decarbonizing the Indian economy. This reiterates the government’s commitment to taking India in a big way to green mobility and achieving the targets set for 2030.