Speeding renewable energy progress
The budget allocated INR930 crore to wind power and introduced viability gap funding (VGF) for 1 GW of offshore wind energy. To support domestic manufacturing, the government also scrapped customs duty exemptions on solar glass and tinned copper interconnects, strengthening the supply chain for solar energy components.
Focusing on the Critical Mineral Mission
The Critical Mineral Mission, announced in the budget, will focus on domestic production, recycling and overseas acquisition of critical minerals. The mission is aimed at establishing resilient supply chains, supported by customs duty waivers on 25 critical minerals and reduced duties on graphite, silicon quartz and silicon dioxide.
Prioritizing pumped storage and nuclear power
The government has also prioritized pumped energy storage, with a new policy to leverage India's 103 GW potential. Additionally, an outlay of INR96 was allocated for battery energy storage systems (BESS) in 2024-25. The government also announced a collaboration with the private sector to develop Bharat Small Reactors and Small Modular Reactors (SMRs), which are expected to diversify India's energy mix and support green hydrogen production.
These budgetary measures collectively aim to advance India's sustainable energy infrastructure, promote green technologies and ensure a stable, low-carbon energy supply.
Implications for enhancing green hydrogen and energy security
The expansion of renewable energy infrastructure, particularly in solar and wind, will necessitate the upskilling of the workforce. As the industry grows, it will achieve larger economies of scale, leading to reduced costs of green energy. This cost reduction will, in turn, make green hydrogen production targets more economically viable.
The Budget’s emphasis on solar and wind energy, along with investments in offshore wind, pumped hydro energy storage and Small Modular Reactors (SMRs), will create a diversified energy mix. This diversification will enhance the reliability and flexibility of the grid, helping address the intermittency of renewable energy sources. Electrolyzers will require round the clock green power and emerging standards and certifications will require green hydrogen production from clean energy sources. The introduction of these new renewable sources will also foster job creation and spur economic development. The announcements aim to enhance energy security by reducing dependence on fossil fuels. Initiatives such as the critical mineral mission are vital for energy security. Localizing parts of the value chain will reduce prices for solar panels, batteries, electrolyzers and increase the availability of these materials for domestic use. Rare earth minerals are crucial components of electrolyzers and the mission will help bring down costs and create a domestic supply of those components.
The combined emphasis on solar, wind and energy storage, along with supportive customs duty adjustments, should drive substantial growth in India’s renewable energy capacity. This growth will catalyze the development of green hydrogen infrastructure in the coming years.