Budget 2025: Power Sector Seeks Incentives For Grid Scale Batteries, Latest Tech

With Union Budget 2025 round the corner, power sector is hopeful for a preferential treatment this time, to meet the ambitious renewable energy target for 2030.

The industry has sought government intervention to incentivise the grid scale batteries and fast-track the development of battery storage and pumped hydro storage projects in the upcoming budget on priority.

That apart, resolving issues related to transmission infrastructure and evaluating high-end technologies that have high upfront cost are equally critical for long term benefits.

Grid-Scale Batteries: A Critical Component

The integration of grid-scale batteries is crucial for India's renewable energy ambitions. With a target of 500 GW of renewable energy capacity by 2030, the country needs to ramp up its energy storage capabilities. The industry is seeking government incentives to promote the development of battery storage and pumped hydro storage projects.

According to the Central Electricity Authority, India's energy storage capacity requirement is projected to increase significantly from 82.37 GWh in year 2026-27 to 411.4 GWh in 2031-32.T

According to Nikhil Dhingra, chief executive officer of ACME Solar, the viability gap funding proposed scheme for pumped hydro storage in the last budget should be fast-tracked, and priority sector lending for renewables should be considered to give impetus to the sector.

In GIFT City, large scale lending for export oriented Green Hydrogen Projects require framework evaluation, but that hasn't happened, he said. "I think only teething problems remain and that will get resolved."

Tanmoy Duari, CEO of Germany headquartered solar panel manufacturer, AXITEC Energy India Pvt., wants the government to incentivise solar energy storage, green hydrogen, and grid-scale solar projects in the Union Budget 2025, to bridge the gap between India's installed solar capacity of 60 GW and the ambitious target of 300 GW by 2030.

“Clarity on customs duty exemptions and GST reductions will also be crucial in making renewable energy more affordable. A supportive budget will propel India's transition to a low-carbon economy,” Duari said.

The power sector is also seeking support for advanced technologies in the battery energy storage space, especially with longer durability. Instead of being technology agnostic, the industry wants the government to focus on high-end technologies that may have higher upfront costs, but offer longer lifespans and lower lifecycle costs.

Incentivising such technologies will help avoid long-term challenges and ensure a sustainable energy future, said TC Arora, founder of Accunergy Power Consultants Pvt.

Transmission Infrastructure: A Key Enabler

Transmission infrastructure is another critical area that requires attention. The industry is seeking resolution of issues within new greenfield projects. This will ensure seamless power supply and support the growth of renewable energy.

Adequate budgetary allocation is expected for augmenting the transmission infrastructure for evacuation of power from upcoming renewable power projects.

Extending the Inter-State Transmission System waiver for state utilities signing power purchase agreements until December 2025 is crucial, said Vineet Mittal, chairman of Avaada Group. This would incentivise states to comply to renewable purchase obligation regulation and sign pending PPA of more than 40 GW.

Additionally, rooftop solar requires increased subsidies and incentives for residential and commercial sectors. Expanding financial support for this segment will help democratise energy generation and contribute to India's solar targets.

Hitachi Energy's N Venu said the focus must shift to creating future-ready systems—scaling renewable energy capacity, enhancing grid reliability, and embracing technologies like AI-driven smart grids and green hydrogen that can truly define the tone of the next few years.

The government should also address systemic limitations, such as transmission and distribution losses and the financial sustainability of state-owned discoms. It will require a collaborative synergy between policy reforms, private sector participation, and sustainable practices, said Venu, chief executive officer and managing director, India and South Asia of Hitachi Energy.

The power sector is also seeking support for domestic manufacturing. Incentivising domestic manufacturers through Production Linked Incentive Scheme and investing in research and development will help match global competition.

Alok Garodia, managing director of solar cell manufacturer Jupiter International, said the upcoming budget will focus on policies that strengthen domestic solar manufacturing.

Conclusion

Industry sees Union Budget 2025 as a critical opportunity to receive government support to drive growth. By incentivising grid-scale batteries, transmission infrastructure, and advanced technologies, the government can help achieve India's renewable energy targets and support a sustainable energy future.

The 15% tax break for new manufacturing plants ended in June 2024 that should be extended for new plants as government aims to boost power production as well as equipment manufacturing, Dhingra of ACME said.

“Incentivising domestic manufacturers through Production Linked Incentive Scheme and investment into research and development are necessary to match global competition," said Gautam Das, CEO, Oorjan Cleantech.

While policies have evolved significantly, further refinement is needed to ensure they are structured, predictable, and transparent, enabling timely implementation, scalability, and trust among stakeholders, Das said.