Budgeting for Net Zero | Supplementary technical note

This supplementary technical note describes the methodologies and unit cost models used to estimate the 'cost gap' for five key clean energy technologies in India: Battery Energy Storage Systems (BESS), offshore wind, solar photovoltaic (PV), electric vehicles (EVs), and green hydrogen (GH2). It details how these cost gaps are calculated relative to conventional benchmarks and how they are integrated into the Green Economy Model (GEM) to analyze the macroeconomic impacts of various levels of government support on GDP, employment, and emissions.

• The study calculates the cost gap for standalone Battery Energy Storage Systems (BESS) by comparing the levelized cost of storage (LCOS) against the average evening electricity price on the Indian Energy Exchange, which was INR 7.30/kWh in 2023. In the business-as-usual scenario, BESS is projected to achieve cost parity in 2028, with a capacity goal of 208 GWh by 2029/2030.
• For offshore wind, the cost gap is based on the differential between the levelized cost of electricity (LCOE) and a benchmark of INR 5.62/kWh (the 2023 average price of round-the-clock electricity). The technology is expected to reach cost parity in 2037, with an indicative auction trajectory of 37 GW by 2030 off the coasts of Tamil Nadu and Gujarat.
• Solar PV is already cheaper than new coal and gas in India; therefore, the cost gap is defined as the differential between the LCOE of domestically manufactured modules versus imported modules. Domestically manufactured modules are projected to achieve cost parity with imported ones around 2030 in the business-as-usual scenario, which includes a 40% customs duty on imports.
• The cost gap for electric vehicles (EVs) is determined by the difference in Total Cost of Ownership (TCO) between EVs and their internal combustion engine (ICE) counterparts. The analysis uses different adoption curves—Linear, S-Shaped, and Rapid—to model how consumer preferences and price differentials affect the rate of EV adoption.
• Green hydrogen (GH2) is projected not to reach cost parity with grey hydrogen (benchmarked at USD 2.25/kg) until 2050 in the business-as-usual scenario. The model assumes an expected demand of nearly 35 million tonnes per annum by 2050, with a target of 5 million tonnes by 2030.
• The Green Economy Model (GEM) is used to conduct cost-benefit analyses by simulating the impact of bridging cost gaps with government support (at levels of 100%, 30%, and 5%). The model tracks how these interventions affect GDP through three primary channels: energy spending (capital productivity), employment (job creation in manufacturing and O&M), and air pollution (labour productivity).

APA

International Institute for Sustainable Development (n.d.). Budgeting for Net Zero | Supplementary technical note. https://www.iisd.org/system/files/2025-01/india-budgeting-for-net-zero-technical-note.pdf

Chicago

International Institute for Sustainable Development. Budgeting for Net Zero | Supplementary technical note. n.d. https://www.iisd.org/system/files/2025-01/india-budgeting-for-net-zero-technical-note.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Budgeting for Net Zero | Supplementary technical note |url=https://www.iisd.org/system/files/2025-01/india-budgeting-for-net-zero-technical-note.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndbudgeting, author = {{International Institute for Sustainable Development}}, title = {{Budgeting for Net Zero | Supplementary technical note}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/2025-01/india-budgeting-for-net-zero-technical-note.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }