It was at the COP26 global climate summit in Glasgow in 2021 that India announced its intent to achieve the target of net zero emissions by 2070. In addition, an ambitious clean energy goal of achieving 500 GW of installed non-fossil energy capacity was also announced as part of the country’s clean energy transition journey. At that time, by the end of October 2021, India had 149.57 GW of renewable energy capacity with 47.67 GW of solar power, 46.51 GW of hydropower, 39.99 GW of wind power, 10.58 GW of biopower and 4.82 GW of small hydropower. Meanwhile, another non-fossil energy source, nuclear power, stood at 6.78 GW of installed capacity, taking the total non-fossil power capacity to 156.35 GW.
Three COPs and just three years later, there are signs of remarkable progress made by the country as it transitions towards clean energy sources. India’s renewable energy capacity has expanded by an impressive 54 GW to reach 203.22 GW as of October 2024, which translates to almost 45 per cent of the entire installed power capacity of the country. This comprises 92.12 GW of solar power, which has singularly been responsible for around 45 GW of the total capacity additions over these past three years. Wind power capacity has now reached 47.72 GW, with 7 GW of capacity additions in the last three years and nuclear power installations have increased to 8.18 GW. Growth has been more sluggish in the other three segments with hydropower at 46.97 GW, biopower at 11.33 GW and small hydro at 5.08 GW as of today.
Thus, total non-fossil power capacity of the country stands at 211.39 GW currently, with almost a quarter of it installed over just the last few years. However, this capacity is significantly short of the 2030 target of 500 GW. The country would need at least 45 GW of new installations every year over the next six years, in order to even come close to meeting this goal.
This is a daunting task but it is not impossible considering the untapped clean energy potential in India. Case in point, the country’s total solar potential is a massive 748 GW as per the National Institute of Solar Energy. Further, the National Institute of Wind Energy estimates the wind power potential at 695.50 GW at 120 meter and 1,163.9 GW at 150 meter above ground level for just onshore wind. The country has a vast resource of untapped potential from other sources like bioenergy and hydropower as well. In addition, emerging areas like green hydrogen, solar-wind hybrids and round-the-clock (RTC) renewables, offshore wind and energy storage can give a big boost to the sector with various large projects now under construction. Combined with the right enablers in the form of grid, land and other infrastructure, transparent policy and regulatory regimes, attractive market dynamics, ready demand for clean energy and access to finance, the country’s ample renewable energy resource is enough to easily meet the country’s targets for this transition to clean energy.
With this backdrop, this article will now review the progress made during the past year with respect to capacity expansion, key auctions, policies, technology trends and financings, and then follow up with six priority areas or action items for the next six years to reach the 2030 targets.
Review of the past year
Growing renewable energy capacity: India’s total renewable energy capacity has grown from 132.13 GW as of October 2023 to 156.24 GW as of today, translating to 24.11 GW of new capacity additions in this year. In line with the trends of the past few years, a massive 20.10 GW or roughly 83.37 per cent of the new renewable energy deployment has been in the solar power space. Meanwhile, wind power witnessed 3.43 GW of capacity additions during this time period. In the financial year 2024-25, 10.31 GW and 1.83 GW of new solar and wind power capacity has been installed respectively.
Solar power continues to dominate new capacity additions in the country owing to its versatile nature (rooftop, floating, agriPV, ground-mounted), availability of good resource across the country, attractive cost economics, an expanding market landscape, scalable business models, enabling policy regime and increasing consumer awareness and demand. Wind power, on the other hand, is limited to a few states in the western and southern part of the country and many good wind power sites have already been utilised by older lower capacity turbines. Further, the segment has suffered owing to greater demand for solar power from both utilities and consumers, the upheaval caused due to change in project allocation regimes, as well as supply chain issues. However, the recent slew of solar-wind hybrids, RTC and firm and dispatchable renewable energy (FDRE) projects has given a boost to the wind segment (along with solar power), with wind power offtake expected to increase significantly.
Consumers want quality 24×7 clean power supply which solar or wind alone cannot guarantee, and thus, a mix of resources is ideal. This is evident from the auctions that happened in the last one year, where capacity and number of auctions under hybrids have increased over the past one year to become comparable to solar power. According to Renewable Watch Research, auctions were conducted for 27.93 GW of hybrid, RTC as well as FDRE capacity versus 21.78 GW of solar and 2.65 GW of wind power capacity between November 2023 and October 2024. Tariffs were quite comparable as well, with hybrid tariffs ranging from Rs 2.99 per kWh to Rs 3.6 per kWh versus Rs 2.5 to 2.68 per kWh range in solar power and Rs 3.56 to 3.81 per kWh range for wind power. FDRE tariffs, on the other hand, came down to as low as Rs 4.25 per kWh, and are expected to go down further with increase in demand and declining cost of energy storage systems.
Evolving policy landscape: India’s expanding clean energy ecosystem is being supported by continuous policy and regulatory support to sustain renewable energy development and attract domestic and global players to this market. This year witnessed a round of policy developments focused on not standalone utility-scale renewables but emerging areas including green hydrogen, offshore wind, repowering, and energy storage, as well as the previously neglected biopower and residential rooftop solar segments. These recent policy developments aim to promote inclusive clean energy deployment in the country that encompasses a variety of consumer categories, technologies, and business models to support sustainable development.
For instance, in the green hydrogen space financial incentives were announced for green hydrogen production as well as electrolyser manufacturing. Meanwhile, different guidelines were announced to support development of green hydrogen hubs, enable funding for testing facilities, procurement of green hydrogen and setting up of pilot projects in shipping, steel, and mobility sectors.
On the other side, in the distributed solar space, schemes were launched to attract consumers to become prosumers. The landmark PM Surya Ghar Muft Bijli Yojana (PMSGY) was launched to incentivise household owners to set up rooftop solar systems supported by attractive subsidies. Guidelines were also issued for creating model solar villages and electrification of 100,000 households in “particularly vulnerable tribal group”. In the solar manufacturing space, there was some uncertainty in the beginning of the year regarding Approved List of Models and Manufacturers for solar modules.
The once neglected bioenergy space got a fillip with targeted focus on various sub-segments through incentives on biomass aggregation machinery, updated central financial assistance rates for biomass pellet manufacturing units, and concessional customs duty certificates for bioCNG. Further policy support for promoting bioenergy segment included guidelines for the development of pipeline infrastructure to inject CBG in the city gas distribution (CGD) network as well as clear mandates for a phased blending of CBG into CNG and PNG. The bioenergy space has suffered historically due to policy paralysis, and these policy drivers will go a long way in improving investments and in tapping the vast bioenergy potential in the country.
In the wind power segment, offshore wind and repowering got the much needed and long-due attention from policymakers. Realising the country’s need to develop offshore wind capabilities, the government announced a viability gap funding scheme for 1,000 MW of projects, giving a much-required kickstart to the country’s yet to develop offshore wind industry. Since, many of the country’s good wind sites have been taken up obsolete low-capacity wind turbines, the National Repowering and Life Extension Policy for Wind Power Projects was announced which offers incentives such as fiscal benefits, micro-siting flexibility and preferential loans for replacement or refurbishment of older turbines with more efficient models. The policy identifies a repowering potential of more than 25 GW for turbines below 2 MW capacity, and if this is followed up with proper implementation, it can significantly boost India’ wind power deployment.
Finally, for streamlining integration of such large volumes of renewable energy into the grid, new policies were introduced in the power transmission and energy storage spaces as well. On the transmission side, the National Electricity Plan for transmission was launched and Rs 135.95 billion was sanctioned for new ISTS projects for renewable energy evacuation. As storage becomes a critical part of the entire renewable energy landscape, guidelines were released for VGF of up to 40 per cent for supporting development of 4,000 MWh of battery energy storage systems and plans have also been announced for a comprehensive pumped storage policy.
Development of new technology: India’s renewable energy sector is finally witnessing diversification in not just uptake of technology but also in-house development of technology. There has been a significant improvement in attention being given to development of R&D capabilities. In the solar power space, developers are increasingly opting for TOPCon and heterojunction technologies like the rest of the world. Encouraged by developers’ response to technology upgrades and their requirement of cost-efficient products, domestic manufacturers are also scaling up production of these technologies. Further, manufacturers are now focusing on developing capabilities in vertical integration and upstream solar supply chain as well, to build self-reliance.
This self-reliance in supply chains is also being developed in the electrolyser and battery energy storage spaces. As emerging segments like green hydrogen and energy storage witness successive successful auctions resulting in allocation of large-scale projects, various manufacturers have entered the landscape with ambitious production plans utilising the latest technologies. On the other hand, India has a significant domestic manufacturing base for wind power turbines. Thus, the focus here is on developing efficient wind turbines that can cater to India’s low wind speeds.
Another vital area of focus in developing domestic manufacturing capabilities for clean energy equipment is building reliant supply chains for critical minerals. Currently, production of most critical minerals is concentrated in a few countries, making India dependent on imports of these commodities. Thus, the government has proposed the Critical Mineral Mission to give a boost to the discovery, mining, and recycling of these essential raw materials and ensure security of future minerals supply chains.
With the increasing scale, number and size of renewable energy projects and portfolios, automation becomes critical across manufacturing, design and construction, as well as in operations and maintenance. Thus, automation of various activities and integration of smart technologies across different clean energy verticals is becoming another important area of focus. Robots, drones, advanced artificial intelligence (AI), big data, predictive analytics, machine learning tools and various digital technologies are now being increasingly used to navigate complicated issues more efficiently.
Enabling financing environment: The 63rd edition of EY’s Renewable Energy Country Attractiveness Index released in June 2024 ranks India seventh amongst the world’s top 40 markets based on the attractiveness of its renewable energy investment opportunities. The country’s renewable energy sector continues to be a top investment destination for global private equity firms, venture capitalist, pension funds, multilateral banks as well as energy giants from across the world. The renewable energy investments in the country have become lucrative over the years and now find ready investments from domestic financial institutions as well.
Keeping with the trend of the past few years, equity infusion and M&A activity continued to be a preferred mode of financing. This signifies that the country’s renewable energy market is maturing, and assets find good value with buyers. Buyers, on the other hand, want to quickly expand their renewable energy portfolios and acquisitions may seem uncomplicated when compared to developing new assets from scratch. Some recent big-ticket deals include Brookfield’s acquisition of controlling stake in Leap Green Energy, Reliance’s sell-off of REC Norway, as well as acquisition of ReNew’s 300 MW assets by IndiGrid and BluePine’s buying of 369 MW of solar power assets from the ACME Group. On the services side Suzlon’s acquisition of majority stake in Renom was a big highlight this year.
Meanwhile, on the debt side, companies were able to raise loans not just though domestic banks but also through multilateral banks like ENGIE’s Rs 14.6 billion loan agreement with the Asian Development Bank and Fourth Partner Energy’s fundraising from International Finance Corporation and Asian Development Bank. Lenders like State Bank of India, Standard Chartered Bank and Tata Capital focused on financing not just plain vanilla wind or solar projects but also for distributed solar projects.
A key trend in renewable energy financing this year has been a slew of IPO announcements by the companies as awareness grows and the sector finds growing acceptance amongst a variety of investors. Now not only developers, but manufacturers are also going through the well-established and successful route of IPOs to raise finance for expanding their capacities. Companies like ACME Solar, Vikram Solar, Waaree Energies, NLC India Renewables Limited, and NTPC Green Energy Limited have already announced or are in the process of announcing their IPOs. This trend is expected to continue as renewables become more prominent in the everyday lives of Indian people.
Road to 2030
All the developments mentioned in the past section are a testament to India’s impressive renewable energy growth story. The renewable energy sector has political will backed up by policy support and an enterprising private and public sector to capitalise on these opportunities and build the sector. As India moves ahead in its transition to clean energy, these two sides will need more collaboration to realise the country’s vision and targets. Needless, to say, international and regional collaboration and continued partnerships are essential for technology transfer, capacity building, bringing in investments as well as ensuring future energy security. This global and domestic collaboration and consequent action are more urgent in four key priority areas to address existing gaps and continue the clean energy growth momentum.
Addressing T&D bottlenecks: Adequate transmission infrastructure is vital to evacuate renewable power from generating station and transport to load centers. However, despite significant planning and efforts to quickly expand the transmission system to meet the demand, there is a severe lag in capacity available vs required. Since a major chunk of the capacity is coming up majorly in a few states like Gujarat and Rajasthan, there are long queues for getting grid connectivity, going up to years. The withdrawal of ISTS waiver in June 2025 may lead to greater focus on development of intra-state transmission networks and that might ease up the current transmission bottlenecks to a small extent in the future. Even then, the build out of ISTS infrastructure needs to be accelerated with better planning and coordination with developers, and quick bid out as well as approval of projects.
Another facet of the overall power landscape is distribution and the many of the Indian state-owned distribution utilities and their infrastructure are in dire need of reformation and upgradation. Their technical and financial health needs severe improvement for them to be able to pay generators on time, innovate and adopt new technologies as well as initiate aggregator-based discom-anchored projects in emerging areas of community solar, EV charging and residential rooftop solar adoption. Only with a strong T&D backup, can India reach its renewable energy ambitions and sustain that growth.
Securing supply chains: For India to expand its clean energy capacity to 500 GW and beyond, the country needs to rapidly secure its supply chains through a combination of expansion of domestic capabilities as well as diversification. Diversification is important not just from a supply route perspective but also through focusing on alternate technologies. For instance, since China is the main producer of lithium-ion cells for batteries, alternate battery chemistries can be explored. Similarly, in solar PV, along with crystalline technology, thin film should also be encouraged. Hence, expansion of R&D activities with bigger budgets and state-of-the-art infrastructure is crucial for the country to develop cost-efficient clean energy technologies ideal for the Indian climate and market conditions.
Regarding manufacturing, the sector needs a phased approach to develop capacities at scale across solar, storage or even electrolyser industries. Sudden implication or removal of tariff and non-tariff barriers can create uncertainty and harm investor confidence. The country’s clean energy manufacturing space is finally showing signs of expanding and this must be supported by attractive financial and non-financial policy provisions.
Finally, the country needs to take early and urgent steps to secure supply chains in the critical minerals area to safeguard the industry from any future shocks as witnessed during covid or even more recently in the commodity markets. Recycling, mining and exploration in a sustainable way along with alternate and diverse supply channels for essential minerals is the way forward for future energy security.
Policy and regulatory clarity: The country has done remarkably well in terms of developing the right policy frameworks as per the need of the hour and doing course correction as the market demands. This has led to rapid scale of renewables in a few years and global players have come to the country owing to the transparent bidding and project allocation processes. However, as power is a concurrent subject, there has been a certain disconnect between direction from the center and implementation at the state level. This is especially the case in open access, net metering, green hydrogen, and standalone wind power projects. Thus, the right policies exist at the center, but many states are slow to adopt them, and each state has their own interpretation of these policies. This can become quite cumbersome for the industry players who are operating across multiple states. Hence, better coordination between central and state agencies with aligned visions and targets is the need of the hour.
Furthermore, renewable power projects are long-term infrastructure projects with project lifecycles going up to 25 years, and developers require certainty and visibility of policy to invest in such projects. Thus, policy direction must be supported by clear and long-term regulatory frameworks as sudden flip flops deter investors. In addition, there should be clear penalties defined and extracted from stakeholders for breaking contracts and greater accountability across all parties to ensure quality infrastructure is rapidly built to clean our energy mix. This also translates to streamlined and faster approvals for land acquisition, grid connectivity, tariff adoption and signing of power purchase agreements.
Capacity building: Building this massive clean energy infrastructure spread across all states and different segments like solar, wind, biopower, green hydrogen, energy storage, T&D and others will require skilled manpower. Trained and qualified manpower is not required to only construct these projects but also operate and maintain them and improve them over the project lifecycle. Moreover, researchers and skilled technicians are required to innovate and help expand the country’s manufacturing facilities. Focused and practical programs at school/college level combined with specialised courses for a variety of clean energy technology is the need of the hour.
At the organisation level, regular capacity building and upskilling of manpower is required to retain the workforce. Further, the expansion of renewable energy in India needs awareness amongst the financier community as well as at state-level or municipal-level approval agencies and it is important for continued capacity building efforts at this level.
Finally, the local population needs to be empowered and made aware about the benefits of renewables uptake as the country’s energy transition will be successful only if its inclusive, just, and sustainable.
