The Interim Budget 2024–25 announced major financial support for green energy projects. The government will provide viability gap funding (VGF) for offshore wind energy projects with an initial capacity of 1 GW.

Furthermore, Buget also announced financial support for coal gasification and liquefaction plants. Units with a production capacity of 100 metric tons will be set up by 2030, which will effectively reduce the import of methanol. The finance minister also stated that India is aiming to achieve net zero by 2070.

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Apart from this, the union budget also announced extended support to expand the EV ecosystem in India. The government will support and establish EV manufacturing units and charging stations across the country.

The budget also revised the estimates of various programs, such as solar power, from USD 598 million to USD 1.02 billion, the National Green Hydrogen Mission from USD 35 million to USD 72 million, and the Green Energy Corridor from USD 60 million to USD 72 million.

There will be mandatory blending of compressed biogas (CBG) with compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes.

The Union budget also announced the rooftop solarization scheme, which will provide 300 units of free electricity to 1 crore households across India.

What is Viability Gap Funding?

Viability Gap Funding (VGF) is a type of financial assistance that the government or other organizations offer to close the gap between a project's cost and anticipated revenue. 

VGF helps to bridge the gap between the project's total cost and the expected revenue that can be generated from it, making the project more attractive to private sector investors. This can be done through a variety of mechanisms, such as:

• Grants: The government provides a one-time payment to cover the gap between the project's cost and its expected revenue.


• Subsidies: The government reduces the cost of the project for the private sector investor, such as by providing tax breaks or low-interest loans.


• Revenue guarantees: The government guarantees a certain level of revenue for the project, regardless of actual performance.

Last year, the Union cabinet approved a scheme for viability gap funding for the development of battery energy storage systems. The government provided financial support of up to 40% of the capital cost as budgetary support through Viability Gap Funding (VGF) to substantially reduce the cost of battery storage systems, making them more economically viable.

The scheme is strategically designed to harness the potential of renewable energy sources, such as solar and wind power.

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