Budget 2022: Key takeaways for power & utilities sector

It is encouraging and motivating to see the focus of the present budget on clean energy transition and climate action. Finance Minister Nirmala Sitharaman tabled the Budget 2022-23 on February 1 which continues to provide the impetus to the power sector with energy transition and climate action taking centre stage.  

The projected 9.2% economic growth is largely driven by clean energy interventions across sectors. The blueprint for Amrit Kaal (100 years of independence) strategically acknowledges energy transition and climate action as key pillars.

The budget very aptly provides the ecosystem for sectoral growth with multiple mainstream and allied sector interventions.

In the mainstream domain, allocation of Rs 19,500 crore PLI for manufacturing of high-efficiency modules, battery swapping policy with interoperable standards, 38 MMT of Co2 reduction by biomass fuel-based intervention in thermal generation, Sovereign Green Bonds for green infrastructure growth, 0.5% capping for power sector reforms in state borrowings are welcome announcements that will enable sectoral growth.

These will certainly provide a push and pull effect for promoting newer cleaner technologies.

It is also heartening to see that the clean energy agenda is not only complimented by sectoral interventions but also by a balanced and strategic set of interventions across sectors such as 2,00,000 Saksham Aganwadis powered by clean energy, 400 energy-efficient Vande Bharat Trains, provisioning for decentralised renewable energy under vibrant village programs, special mobility zones to promote EVs, policy shift to promote public mobility and transport systems implemented with cleantech and zero fossil fuel policy etc.

The energy goals which the country plans to achieve requires intensive capital infusion. The government has a catalysing role to play in capital infusion and has appropriately addressed by classifying climate action as a sunrise sector eligible for blended finance with government share limited to 20%, according infrastructure status to energy storage systems including grid scaling battery system to financially complementing the clean energy policy and projects.

In the present fiscal year, when India has committed to net-zero goals, the sector is witnessing transformation with disruptions like green hydrogen, penetration of clean energy in buildings and industry segments. The budget 2022-23 provides a consistent and balanced intervention to promote the long-term growth and sustainability of energy goals.

(The author is Power & Utilities Leader, EY India.)