By Khushboo Goyal
It was at the COP26 global climate summit in Glasgow in 2021 that India set the ball rolling by announcing its intent to achieve net zero emissions by 2070. In addition to this, it announced an ambitious clean energy goal of installing 500 GW of non-fossil energy capacity as a part of the country’s clean energy transition journey. At that time (end-October 2021), India had 149.57 GW of renewable energy capacity, comprising 47.67 GW of solar power, 46.51 GW of hydro, 39.99 GW of wind, 10.58 GW of biopower and 4.82 GW of small-hydropower. Meanwhile, nuclear power, another non-fossil energy source, accounted for 6.78 GW of installed capacity, bringing the total non-fossil fuel-based power capacity to 156.35 GW.
Three COPs and just three years later, India has shown remarkable progress in its transition towards clean energy sources. Its renewable energy capacity has expanded by an impressive 54 GW to reach 203.22 GW as of October 2024, which translates into almost 45 per cent of the country’s entire installed power capacity. 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 reached 47.72 GW, with 7 GW of capacity additions over the past three years, and nuclear power capacity has reached 8.18 GW. Growth in the other three segments has been more sluggish, with hydropower currently standing at 46.97 GW, biopower at 11.33 GW and small-hydro at 5.08 GW.
Thus, the total non-fossil fuel-based power capacity of the country stands at 211.39 GW at present, with almost a quarter of it having been installed over just the past 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 to even come close to this goal.
It is a daunting task, but is not impossible, considering the untapped clean energy potential in India. The solar potential, for instance, 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 as 695.5 GW at 120 metres and 1,163.9 GW at 150 metres above ground level for just onshore wind. The country has a vast resource of untapped potential from other sources, such as bioenergy and hydropower, as well. In addition, emerging areas like green hydrogen, solar-wind hybrids, round-the-clock (RTC) renewables, offshore wind and energy storage can give a major boost to the sector with various large projects now under construction. Combined with the right enablers such as 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 abundant renewable energy resources can help meet the target for the clean energy transition.
Against this backdrop, this article will 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 priority areas or action items for the next six years to reach the 2030 target.
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 October 2024, translating into 24.11 GW of new capacity addition during this period. In line with the trends of the past few years, a massive 20.1 GW or approximately 83.37 per cent of the new renewable energy deployment has been in the solar space.
Solar power continues to dominate new capacity additions in the country owing to its versatile nature (rooftop, floating, agri PV, ground-mounted), availability of good resources across the country, attractive cost economics, an expanding market landscape, scalable business models, an enabling policy regime, and increasing consumer awareness and demand. Wind power, on the other hand, is concentrated in a few states in the western and southern parts of the country, and many high-wind sites have already been utilised by older, lower-capacity turbines. Further, the segment has faced challenges due to the greater demand for solar power from both utilities and consumers, disruptions caused by changes in project allocation regimes, and supply chain issues. However, the recent slew of solar-wind hybrids, RTC and firm and despatchable 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 held in the past one year, as the capacity and number of hybrid auctions have increased to become comparable with solar power auctions. According to Renewable Watch Research, between November 2023 and October 2024, auctions were conducted for 27.93 GW of hybrid, RTC and FDRE capacities, compared to 21.78 GW for solar and 2.65 GW for wind power. Tariffs were also competitive, with hybrid tariffs being in the range of Rs 2.99-Rs 3.60 per kWh versus Rs 2.50-Rs 2.68 per kWh for solar power and Rs 3.56-Rs 3.81 per kWh for wind power. With costs of energy storage systems declining, FDRE tariffs came down to a new low of Rs 4.25 per kWh .
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 both domestic and global players. The year 2024 witnessed policy developments focused not only on standalone utility-scale renewables but also on emerging areas such as 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, encompassing a variety of consumer categories, technologies and business models.
For instance, in the green hydrogen space, financial incentives were announced for green hydrogen production and electrolyser manufacturing. Meanwhile, various guidelines were announced to support the development of green hydrogen hubs, enable funding for testing facilities, facilitate the procurement of green hydrogen and establish pilot projects in the shipping, steel and mobility sectors.
In the distributed solar space, schemes were launched to encourage consumers to become prosumers. The landmark PM Surya Ghar: Muft Bijli Yojana 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 electrifying 100,000 households belonging to “particularly vulnerable tribal groups”. However, in the solar manufacturing space, there was some uncertainty at the beginning of the year regarding the Approved List of Models and Manufacturers for solar modules.
The previously neglected bioenergy space received a fillip with targeted support for various sub-segments, including incentives for biomass aggregation machinery, updated central financial assistance rates for biomass pellet manufacturing units, and concessional customs duty certificates for bio-compressed natural gas (CNG). Further policy support to promote the bioenergy segment included guidelines for the development of pipeline infrastructure to inject compressed biogas (CBG) in the city gas distribution network, as well as clear mandates for the phased blending of CBG into CNG and piped natural gas. The bioenergy space has historically struggled due to policy paralysis, and these policy initiatives will go a long way in improving investments and tapping the vast bioenergy potential in the country.
In the wind power segment, offshore wind and repowering received the much-needed and long-overdue attention from policymakers. Recognising the country’s need to develop offshore wind capabilities, the government announced a viability gap funding (VGF) scheme for 1,000 MW of projects to give a kickstart to the nascent offshore wind industry. As many of the country’s good wind sites have been taken up and are being run by outdated, low-capacity wind turbines, the government announced the National Repowering and Life Extension Policy for Wind Power Projects, 2023. This policy offers incentives such as fiscal benefits, micro-siting flexibility and preferential loans for the replacement or refurbishment of older turbines with more efficient models. The policy identifies a repowering potential of more than 25 GW for turbines of below 2 MW capacity. With proper implementation, this could significantly boost India’s wind power capacity.
To streamline the 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 interstate transmission system (ISTS) projects for renewable energy evacuation. As storage becomes a critical part of the renewable energy landscape, guidelines were released for VGF of up to 40 per cent to support the development of 4,000 MWh of battery energy storage systems. Plans have also been announced for a comprehensive pumped storage policy.
Development of new technology: India’s renewable energy sector is witnessing growing in-house development of diverse technologies. There has been a significant increase in focus on developing research and development (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 for cost-efficient products, domestic manufacturers are also scaling up the production of these technology solutions. Further, manufacturers are now focusing on developing capabilities in vertical integration and the upstream solar supply chain to build self-reliance.
Self-reliance in supply chains is also being developed in the electrolyser and battery energy storage spaces. As emerging segments such as green hydrogen and energy storage witness successive auction successes, resulting in the allocation of large-scale projects, various manufacturers have entered the space with ambitious production plans, utilising the latest technologies. Meanwhile, in the wind segment, where India has a significant domestic manufacturing base, the focus is on developing efficient wind turbines that can cater to the country’s low wind speeds.
Another critical area in developing domestic manufacturing capabilities for clean energy equipment is building reliable supply chains for critical minerals. Currently, the 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 the security of future mineral supply chains.
With the increasing scale, number and size of renewable energy projects and portfolios, automation has become critical across the manufacturing, design, construction, and operations and maintenance phases. Thus, the automation of various activities and the integration of smart technologies across different clean energy verticals are emerging other important areas of focus. Robots, drones, artificial intelligence, big data, predictive analytics, machine learning tools and advanced digital technologies are 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 capitalists, pension funds, multilateral banks and energy majors from across the world. India’s renewable energy sector is now drawing substantial investments from domestic financial institutions as well.
In line with the trend of the past few years, equity infusion and mergers and acquisitions have remained the preferred mode of financing. This signifies that the country’s renewable energy market is maturing, and assets are finding good value with buyers. Buyers, on their part, 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 a controlling stake in Leap Green Energy, Reliance Industries’ sale of REC Norway, IndiGrid’s acquisition of ReNew’s 300 MW assets and BluePine’s purchase of 369 MW of solar power assets from the ACME Group. On the services side, Suzlon’s acquisition of a majority stake in Renom was a big highlight this year.
Meanwhile, on the debt side, companies were able to raise loans not just through domestic banks but also through multilateral banks, like ENGIE’s Rs 14.6 billion loan agreement with the Asian Development Bank (ADB), and Fourth Partner Energy’s fundraising from the International Finance Corporation and the ADB. Lenders such as the State Bank of India, Standard Chartered Bank and Tata Capital focused on financing plain vanilla wind and solar projects as well as distributed solar projects.
A key trend in renewable energy financing during the year was the slew of initial public offering (IPO) announcements by companies as awareness grew and the sector found growing acceptance among a variety of investors. Now, both developers and manufacturers are taking the well-established IPO route to raise funds 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 people.
Road to 2030
The developments mentioned in the previous section are a testament to India’s impressive renewable energy growth story. The sector is driven by a strong political will, policy backing, and an enterprising private and public sector ready to capitalise on these opportunities and build up the sector. As India moves ahead in its transition to clean energy, increased collaboration between the private and public sectors will be vital to realising the country’s vision and targets. Needless to say, international and regional collaboration, along with continued partnerships, are essential for technology transfer, capacity building, attracting investments and ensuring future energy security. Global and domestic collaboration is especially urgent in four key priority areas to bridge existing gaps and maintain the clean energy growth momentum.
Overcoming T&D bottlenecks: Adequate transmission infrastructure is vital for evacuating renewable power from generating stations to load centres. However, despite significant planning and efforts to quickly expand the transmission system to meet the growing demand, there is a large gap in available capacity and what is required. Since a major portion of the capacity is being developed in a few states such as Gujarat and Rajasthan, there are long queues for getting grid connectivity, going up to years. The withdrawal of the ISTS waiver in June 2025 may lead to a greater focus on the development of intra-state transmission networks, potentially alleviating the current transmission bottlenecks to some extent in the future. Even then, the build-out of ISTS infrastructure needs to be accelerated through better planning and coordination with developers, as well as quick bidding and approval of projects.
Another critical aspect of the power landscape is distribution, and many of the state-owned distribution utilities and their infrastructure are in dire need of reform and upgradation. Major improvements in their technical and financial health are needed to ensure timely payments to generators. This will enable further innovation, adoption of advanced technologies, and aggregator-based discom-anchored projects in emerging areas such as community solar, electric vehicle charging and residential rooftop solar adoption. Only with a strong transmission and distribution (T&D) infrastructure can India meet its renewable energy ambitions and sustain that growth.
Securing supply chains: To grow its clean energy capacity to 500 GW and beyond, India needs to rapidly secure its supply chains through a combination of expansion of domestic capabilities and diversification. Diversification is important, not just from the perspective of supply routes but also alternative technologies. For instance, since China is the primary producer of lithium-ion cells for batteries, alternative battery chemistries can be explored. Similarly, in solar PV, along with crystalline technology, thin film should also be encouraged. Hence, the expansion of R&D activity with bigger budgets and state-of-the-art infrastructure is crucial for the country to develop cost-efficient clean energy technologies ideal for Indian climate and market conditions.
Regarding manufacturing, the sector needs a phased approach to developing capacities at scale across the solar, storage and electrolyser industries. The sudden imposition or removal of tariff and non-tariff barriers can create uncertainty and impact investor confidence. The country’s clean energy manufacturing industry 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 the supply chain for critical minerals to safeguard the industry from any future shocks, as witnessed during the Covid pandemic and, more recently, in the commodities market. Recycling, sustainable mining and exploration, along with alternative and diverse supply channels for essential minerals, are key to ensuring future energy security.
Policy and regulatory clarity: The country has done remarkably well in developing the right policy frameworks to meet current needs and undertaking course correction as market demands evolve. This has led to the rapid scaling of renewables within a short period, and global players have invested in the Indian market due to its transparent bidding and project allocation processes. However, since power is a concurrent subject, there has been a certain disconnect between the central government’s initiatives and their implementation at the state level. This is especially the case in areas such as open access, net metering, green hydrogen and standalone wind power projects. Thus, the right policies exist at the centre, but many states are slow to adopt them and often have their own interpretation of these policies. This can become quite cumbersome for industry players that operate across multiple states. Therefore, better coordination between the central and state agencies with alignment in vision and targets is the need of the hour.
Furthermore, renewable power projects are long-term infrastructure projects with lifecycles going up to 25 years, and developers require policy certainty and visibility to invest in such projects. Thus, policy direction must be supported by clear and long-term regulatory frameworks as sudden flip-flops can deter investors. In addition, penalties should be clearly defined and enforced for stakeholders that breach contracts, with greater accountability across all parties. This will help ensure that quality infrastructure is rapidly built to clean the energy mix. This also necessitates streamlined and faster approvals for land acquisition, grid connectivity, tariff adoption and the signing of power purchase agreements.
Capacity building: Building clean energy infrastructure across all states and different segments such as solar, wind, biopower, green hydrogen, energy storage and T&D will require skilled manpower. Trained and qualified personnel are required not only to construct these projects but also to operate, maintain 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 programmes at the school/college level, combined with specialised courses in various clean energy technologies, are essential.
At the organisational level, regular capacity building and upskilling are required to retain the workforce. Further, the expansion of renewable energy requires increased awareness within the financier community, as well as among state-level or municipal-level approval agencies. Continued capacity building efforts at these levels are crucial for sustained progress.
Finally, the local population must be empowered and educated on the benefits of renewable energy adoption. The country’s energy transition will be successful only if it is inclusive, just and sustainable.
