Budget to drive progress in green energy transition, say analysts

The green transition is needed to reduce India’s dependence on fossil fuel imports—currently, most of the country’s crude oil requirements is met through imports. The budget proposals are also aimed at helping the country meet its international commitment to achieve zero carbon footprint by 2070.

A special focus on energy transition, with a dedicated corpus of ₹35,000 crore, prioritization of evacuation offtake of 13 GW renewable energy capacity being developed in Ladakh and a dedicated corpus of ₹19,700 crore for enhancing green hydrogen production targeted to reach 5 MT by 2030 were among the key proposals to help India become a net zero economy, said Sandeep Upadhyay, managing director, infrastructure advisor at Centrum Capital.

Experts said the dedicated corpus and support were needed to make green hydrogen projects viable within a stipulated timeline. There had been a number of concerns and question marks that had been highlighted. Therefore, these initial stages supported by the government for setting up a corpus remain critical to achieving the first milestone of 5 MT of green hydrogen production by 2030, they said.

Experts gave the example of solar projects that saw very high cost of production during the initial phases before solar power prices declined to ₹3-4 per unit over time.

The recent correction in commodity and metal prices is another positive since the drive toward green hydrogen adoption remains dependent on a significant decline in the price of electrolyzers costs by 2030.

The dedicated corpus on prioritizing offtake of renewable energy capacities being developed in Ladakh is also likely to provide an impetus to green energy, said analysts.

The inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh is to be constructed with an investment of ₹20,700 crore including central support of ₹8,300 crore.

In addition, certain more announcements in power sector will benefit smart meter manufacturers, said Rupesh Sankhe, analyst at Elara Securities India Pvt Ltd.

The budget provides for ₹35,000 crore for priority capital investments toward energy transition and net zero objectives. This is a huge allocation, said analysts as Varatharajan S. an analyst at Antique Stock Broking.

Sanjay Moorjani, research analyst, SAMCO Securities on National Hydrogen Mission said that Reliance Industries, Tata Power, Adani group, L&T, BPCL, HPCL and NTPC would benefit from the green hydrogen mission.