Kerala budget 2026-27 outlines energy investments and green hydrogen push

Kerala’s Finance Minister K.N. Balagopal has set out the state’s energy priorities in the 2026-27 budget, with funding for renewable energy, grid upgrades and new technologies such as green hydrogen. The proposals focus on improving energy efficiency, strengthening grid reliability and supporting long term economic growth through clean power.

The budget allocates Rs 1,309.84 crore to the power sector. Of this, Rs 71.04 crore is set aside for non-conventional and renewable energy sources. Planned investments include Battery Energy Storage Systems (BESS), smart meter installation and pumped storage projects, with allocations of Rs 5 crore, Rs 31.22 crore and Rs 5 crore respectively. Externally aided projects such as the Energy Efficiency Indian Grid and Green Energy Corridor 2 receive Rs 150 crore. Funding for the Agency for New and Renewable Energy Research and Technology (ANERT) rises to Rs 53.18 crore to support renewable energy deployment.

On emerging technologies, the government has continued work on its Hydrogen Valley initiative. A Green Hydrogen Disposing Unit has been established through a partnership between Cochin International Airport Limited (CIAL) and Bharat Petroleum Corporation Limited (BPCL). The central government has also approved Hydrogen Valley innovation clusters for Kerala. The budget earmarks Rs 7.18 crore for the implementation of green hydrogen projects.

Solar energy initiatives include an allocation of Rs 7 crore to install solar power systems in unelectrified remote tribal areas, referred to as Unnathis. In addition, a community based solar generation and storage programme has been announced. A pilot project in Perinjanam, Thrissur, has been provided with Rs 2 crore.

The budget notes that Kerala has not experienced power cuts or load shedding over the past ten years. It highlights the importance of reliable electricity for essential services, including the 39.79 lakh new drinking water connections provided across the state. The Kerala State Electricity Board (KSEB) is allocated Rs 1,238.80 crore for development works. Further provisions include Rs 9.36 crore for the Electrical Inspectorate and Rs 7.71 crore for the Meter Testing and Standards Laboratory to strengthen safety oversight and testing capacity.

In a broader context, the budget links energy security with industrial development and investment. The speech refers to the World Economic Forum, where Kerala signed Expressions of Interest worth Rs 1.18 lakh crore, including proposals in renewable energy. In addition, a Rare Earth Corridor from Vizhinjam to Kochi has been proposed, backed by a Rs 100 crore mission, to support access to critical minerals for energy and electric vehicle applications.

Overall, the 2026-27 budget presents a coordinated approach to upgrading Kerala’s energy infrastructure, expanding renewable capacity and advancing new technologies such as green hydrogen. The measures aim to support economic activity while aligning the power sector with sustainability objectives.