Union Budget 2023: Restructuring Renewable Energy Sectors

In order to reach its ambitious goal of having net zero carbon emissions by 2070, India must prioritize green growth supported by a sustainable economy. On February 1, 2023, the Finance Minister prioritized the issue while presenting the Union Budget 2023 to the Parliament. Sustainability and climate action have garnered the most attention recently, not only in India but also on numerous international platforms in other nations. Even numerous national leaders, such as the Minister of Petroleum and Natural Gas, have repeatedly emphasized the nation's plans for renewable energy, such as producing and exporting green hydrogen or researching sustainable aviation fuel for aircraft.

The Union Budget for this year was drafted by the Finance Minister based on seven guiding principles, or "Saptarishi," of which green energy played a significant role. The government of India has announced a plethora of programs and initiatives that will accelerate the nation's green revolution by promoting sustainable living. This will help facilitate a steady transition of the Indian economy to one powered by green energy. The Ministry of New and Renewable Energy (MNRE) will receive a budgetary allocation of Rs 10,222 crore from the Finance Minister, a rise of 45% from the Rs 7,033 crore anticipated to be spent this fiscal year.

Green Energy Goals

The main goal of the renewable energy players' expectations for Budget 2023 was increased investment in the sector to assist the nation in reducing its reliance on fossil fuels and increasing its reliance on renewable energy. In order to effectively address the issues, the government has set aside 35,000 crores for "priority capital investment". The government's action will significantly help with the energy transition, the net zero goal, and energy security.

The National Green Hydrogen Mission, with a budget of 19,000 crores, was also highlighted by the finance minister. Its goal is to produce 5 MMT of green hydrogen annually by 2030, assisting in the achievement of the net-zero goal. The government has declared that battery energy storage systems with a capacity of 4,000-megawatt hours will be "supported" with viability gap funding to encourage investment, giving green hydrogen an additional boost and supporting the overall renewable energy projects. Additionally, the government's decision to extend an exemption on equipment used to produce Li-Ion batteries will significantly increase India's domestic production capacity.

In order to encourage sustainable behavior, the government established the Green Credit Program under the Environment (Protection) Act, which is ultimately beneficial for the renewable energy sector. As more funds are gradually mobilized for renewable energy projects, the program will gradually encourage environmentally responsible and responsive actions by businesses, people, and local authorities. But for the green credit program to be used to its full potential, several ministries must get involved, as well as a number of current programs that reward businesses for cutting their emissions.

Increase In Budget For Solar Power

The budget allotted for the solar power industry this year is Rs. 5,331.5 crore, which is a 53.65% increase from the Rs. 3,365 crore allotted last year and a 104.58% increase from the Rs. 2,606 crore allotted in FY 21. Another significant increase was for the off-grid solar projects, where the government was supposed to budget Rs 61 crore but the Ministry set aside Rs 360 crore for the upcoming fiscal year. 

Additionally, the National Institute of Solar Energy has received a budget allocation of Rs 54 crore, which is Rs 9 crore more than the budget from the previous year. The intriguing statistics show the government's increased commitment to accelerating the country's energy transition and achieving its net-zero goals. This is a huge boost for domestic competitors as well, which will eventually aid India in achieving its lofty objective of becoming self-sufficient.