Union Budget 2024 To Boost Renewable Energy With Grants, Tax Breaks, And Incentives, Says CareEdge Ratings
CareEdge anticipates that the budget will prioritise building dedicated transmission lines for renewable energy.
The Union Budget 2024–25 can promote a better domestic manufacturing ecosystem for renewable energy through a mix of grants, tax breaks, and product-linked incentive schemes across areas like green hydrogen, according to CareEdge Ratings.
CareEdge expects an allocation over and above the current outlay under the Strategic Interventions for Green Hydrogen Transition programme, launched in 2022, which offers financial incentives, according to its note on Wednesday.
The financial services firm anticipates that the budget on 23 July will announce support for standalone battery energy storage or pumped hydro-storage projects. It expects the budget to introduce a single-window clearance for these projects, eliminating the need for approvals from multiple government departments.
CareEdge also expects continued momentum in tendering activity by government agencies for renewable energy projects that combine battery storage or pumped storage to improve grid stability.
The charge-waiver in the Inter-State Transmission System is a Union government policy that exempts certain electricity generators, mainly renewable sources like solar and wind, from fees for using the national power grid, it said, adding that the projects commissioned by June 2025 will benefit from this waiver. CareEdge also suggests that the deadline may be extended to support the competitiveness of renewable energy.
Companies such as NTPC Ltd., Godawari Power & Ispat Ltd., SJVN, NHPC Ltd., JSW Energy, Inox Wind Energy Ltd., and Suzlon Energy Ltd. have solar or wind projects currently under construction that are eligible for the waiver if commissioned by the deadline, according to NITI Aayog data.
CareEdge anticipates that the budget will prioritise building dedicated transmission lines for renewable energy through the Green Energy Corridor and the ISTS. This will reduce transmission losses, enhance grid stability, and accelerate renewable energy development.
The rating agency firm predicts that the budget will strengthen enforcement of central renewable purchase obligations by imposing penalties on non-compliant states. These obligations require electricity distribution companies to source a percentage of their power from renewables like solar and wind.
CareEdge expects the government to rationalise the goods and services tax on renewable energy components. The current GST rate stands at around 12%, which the rating agency expects to be reduced to 5%.
