Union Budget 2024-25: Exemption of Capital Goods for Solar Energy Expanded, New Solar and Renewable Initiatives Announced

New Delhi: In a decisive step towards advancing renewable energy, Finance Minister Nirmala Sitharaman announced significant measures to bolster solar energy and renewable resources. Key highlights include the expansion of exemptions for capital goods used in solar cell and panel manufacturing and the launch of the PM Suryaghar Muft Bijli Yojana, which aims to provide up to 300 units of free electricity each month to 1 crore households via rooftop solar panels.

Solar Energy Focus

Highlighting the critical role of solar energy in India’s energy transition, Sitharaman announced the expansion of the list of exempted capital goods for the manufacture of solar cells and panels. This measure aims to boost domestic solar manufacturing and support the nation’s shift towards renewable energy. However, due to the sufficient domestic manufacturing capacity of solar glass and tinned copper interconnect, the Budget 2024-25 proposed to discontinue the exemption of customs duties previously provided to these materials.

Pumped Storage Policy

To facilitate the integration of renewable energy, which is often variable and intermittent, Sitharaman announced the introduction of a policy to promote pumped storage projects for electricity storage. This initiative is expected to ensure a stable and reliable energy supply as the share of renewable energy in the overall energy mix continues to grow.

Research and Development in Nuclear Energy

Recognizing nuclear energy’s potential in India’s energy mix, the Finance Minister revealed plans to partner with the private sector to establish Bharat Small Reactors, and to fund the research and development of Bharat Small Modular Reactors. The government will also invest in new nuclear technologies, with the R&D funding announced in the interim budget being allocated to this sector.

Advanced Ultra Super Critical Thermal Power Plants

Sitharaman announced the completion of indigenous technology development for Advanced Ultra Super Critical (AUSC) thermal power plants, which offer higher efficiency. A joint venture between NTPC and BHEL will set up a full-scale 800 MW commercial plant using AUSC technology, with the government providing necessary fiscal support. This development is expected to yield significant economic benefits through the production of high-grade steel and advanced metallurgy materials.

Roadmap for ‘Hard to Abate’ Industries

The Finance Minister also outlined a roadmap for transitioning ‘hard to abate’ industries from energy efficiency targets to emission targets. The new regulations will shift these industries from the current ‘Perform, Achieve and Trade’ mode to the ‘Indian Carbon Market’ mode, promoting a more sustainable industrial sector.

Support to Traditional Micro and Small Industries

Sitharaman announced an investment-grade energy audit for traditional micro and small industries in 60 clusters, including brass and ceramic. Financial support will be provided for transitioning these industries to cleaner energy sources and implementing energy efficiency measures. The scheme will be expanded to another 100 clusters in the next phase.

PM Suryaghar Muft Bijli Yojana

Building on the interim budget announcement, the PM Suryaghar Muft Bijli Yojana has been launched to install rooftop solar plants, providing 1 crore households with up to 300 units of free electricity each month. The scheme has already generated an impressive response, with over 1.28 crore registrations and 14 lakh applications. The government plans to further encourage this initiative to enhance the adoption of solar energy across the country.