2025 Budget Impact on Renewable Energy: Key Takeaways

The 2025 Union Budget has introduced several measures to boost India's renewable energy sector — from increased capital allocations for transmission infrastructure to enhanced viability gap funding for battery storage projects. Here's what you need to know.

Setting the Context

The Union Budget 2025–26 was presented against a backdrop of India's accelerating clean energy transition and the government's commitment to achieve 500 GW of installed renewable capacity by 2030. Finance Minister Nirmala Sitharaman's budget signals continued and strengthened support for the sector, while introducing new mechanisms to address long-standing bottlenecks.

Key Announcements for Renewable Energy

1. Green Energy Corridor Funding

The government has allocated an additional ₹12,000 crore for Green Energy Corridor Phase 2 — the transmission backbone that connects renewable-rich states to high-demand centres. This is critical for reducing curtailment and enabling grid integration of new solar and wind capacity.

2. BESS Viability Gap Funding (VGF)

A dedicated VGF mechanism for utility-scale BESS projects has been introduced with a corpus of ₹3,760 crore. This bridges the gap between the current market tariff for storage and the levelised cost of BESS, making standalone battery projects commercially viable for the first time.

3. Accelerated Depreciation Retained

The 40% accelerated depreciation benefit for solar and wind assets has been retained in the budget, continuing to incentivise corporate investment in captive and Open Access renewable energy projects.

4. Customs Duty Exemption on BESS Components

Key battery components — including lithium-ion cells, electrolytes, and separators — continue to attract reduced or nil customs duty under the government's Make in India push, benefiting domestic BESS manufacturers like Lithina.

5. Rooftop Solar Push under PM Surya Ghar

The PM Surya Ghar Yojana — targeting 1 crore households with rooftop solar — has received enhanced funding of ₹7,500 crore in the 2025 budget, with simplified subsidy disbursement through direct benefit transfer (DBT).

What It Means for Developers and Investors

The 2025 budget reinforces three fundamental themes for the renewable energy sector:

• T&D investment is finally catching up with generation capacity additions — reducing the risk of stranded assets.
• BESS is now economically viable as a standalone product, not just as an adjunct to solar PPA contracts.
• The rooftop and C&I segments continue to receive policy tailwinds, expanding the addressable market for developers.

For Ultravibrant, these budget measures reinforce our strategic positioning across integrated EPC, BESS manufacturing, and IPP development. We see the next 3–5 years as a period of exceptional opportunity for well-capitalised, technically capable renewable energy companies in India.