By Nidhi Dua
Gujarat has been an early adopter of renewable energy in India. The state’s renewable energy journey began with a strong emphasis on wind power. It introduced its first wind policy as early as 1993, which was a visionary move at that time. This early momentum was reinforced over the years through subsequent wind policies and revisions, with major updates introduced in 2007 and further refined through policy interventions in 2009, 2013 and 2016, according to the Gujarat Energy Development Authority. By 2014, Gujarat’s installed renewable capacity reflected this wind-led approach. Installed capacity stood at 3,365.49 MW for wind power, alongside 926.75 MW for solar. However, the state’s renewable landscape has since undergone a significant transformation. As of December 2025, solar power has emerged as the dominant renewable energy source, with installed capacity reaching 25,529.4 MW, surpassing wind capacity, which stands at 14,820.94 MW.
This shift was owing to the growing attractiveness of solar power for investors. The rise of solar power in the state was supported by the Solar Power Policy of 2009. Like the wind policy, the solar policy also underwent significant updates over the course of time. Beginning with the 2009 policy, Gujarat introduced major revisions in 2015 through multiple amendments and extensions. This was followed by targeted policies for distributed and rooftop solar in 2019, and finally a comprehensive overhaul with the Gujarat Solar Power Policy in 2021. This adaptive policy approach has been central to the state’s ability to scale up renewable capacity and remain at the forefront of India’s energy transition.
Renewable Watch examines the key recent policy developments in Gujarat, the challenges and future outlook for the state’s renewable energy ecosystem…
Integrated renewable energy policy: Targeting 150 GW of renewable capacity by 2035, 300 GW by 2047
Keeping with the trend of updating policies in line with the changing times, Gujarat has launched its new Integrated Renewable Energy Policy 2025. The policy sets out clear and ambitious targets, aiming to achieve more than 50 per cent of the total energy consumption from non-fossil fuel sources by 2030, an installed renewable energy capacity of over 150 GW by 2035, and 300 GW by 2047.
Unlike the earlier framework, the new policy brings solar, wind, hybrid projects and battery energy storage systems (BESS) under a single umbrella. Furthermore, energy storage is emerging as a central pillar, as BESS projects are encouraged alongside renewable installations to support large-scale renewable integration along with transmission and distribution networks.
The policy promotes emerging technologies such as ocean energy, geothermal energy, concentrated solar thermal, building-integrated photovoltaic (PV) systems, rail and road-integrated PV, agrivoltaics and vertical-axis wind turbines are incentivised through pilot projects.
Wind development in Gujarat began with small, early-generation turbines that are now well past their design life and deliver low efficiency and limited grid value. Repowering these sites can unlock much higher output from the same infrastructure while improving grid reliability and overall project economics. To this end, the policy focuses on the repowering and life extension of wind projects. It enables the replacement of small-sized and inefficient wind turbines with larger, more efficient machines using improved technology.
Furthermore, the policy focuses on rooftop wind, allowing consumers to install mini and micro wind turbines with a capacity of less than 50 kW within their premises under net metering, gross metering or other approved metering frameworks, in line with Gujarat Electricity Regulatory Commission regulations.
Beyond infrastructure, the policy explicitly links renewable energy expansion with green job creation. To achieve the goals outlined in the policy, it envisages the creation of around 100,000 green jobs.
Green hydrogen policy: Aiming for 30 GW of electrolyser capacity and 3 mmtpa of green hydrogen production by 2035
Green hydrogen is increasingly emerging as a critical pillar of the renewable energy transition. Beyond enabling decarbonisation of hard-to-abate sectors, it offers a pathway to balance renewable intermittency, reduce fossil fuel dependence and create new industrial value chains. Recognising this strategic importance, Gujarat has notified a comprehensive Green Hydrogen Policy, 2025.
Under this, Gujarat aims to develop around 30 GW of electrolyser capacity, supported by nearly 75 GW of renewable energy capacity. The policy also targets 3 million metric tonnes per annum (mmtpa) of green hydrogen production capacity by 2035, facilitate investments of approximately Rs 5,000 billion across the green hydrogen and renewable energy sectors, while generating close to 600,000 direct and indirect green jobs. On the decarbonisation front, the policy targets a reduction of at least 2 mmtpa of natural gas consumption through green hydrogen adoption and the elimination of nearly 5 mmtpa of carbon emissions within the state.
A key strength of Gujarat’s green hydrogen policy lies in the breadth and calibration of its incentive framework, which spans production, infrastructure, mobility and end-use adoption. Rather than offering a uniform subsidy, the policy differentiates incentives across technologies, scales and use cases. Projects with electrolyser capacities ranging from 1 MW to 10 MW are eligible for benefits, subject to an overall cap of 500 MW, with incentives for a single beneficiary limited to 10 MW. The benefits include a 20 per cent capex subsidy on eligible components, capped at Rs 10 million per MW of electrolyser capacity. Recognising the importance of flexibility and round-the-clock operations, a 20 per cent capital subsidy is provided for dedicated BESSs, capped at Rs 1.8 million per MWh, for storage capacities of up to 4.5 MWh per MW of electrolyser capacity.
Moving beyond individual plants, the policy places strong emphasis on cluster-based development. For the establishment of green hydrogen hubs, developers are eligible for a 20 per cent capital subsidy, capped at Rs 350 million per hub, for up to two hubs with a minimum green hydrogen production capacity of 3 kilotonnes per annum each. These hubs are required to integrate production, storage, transportation and distribution, and must host at least 10 industrial units, including one green hydrogen producer. By incentivising refuelling stations and hydrogen-based buses and heavy-duty vehicles, the policy addresses one of the most persistent barriers to adoption: the absence of enabling infrastructure and assured early demand.
Pumped storage policy: Targeting 75 PSPs by 2035, 100 by 2047
In a bid to promote storage solutions, the state has notified the Gujarat Pumped Storage Project (PSP) Policy, 2025. Under the policy, Gujarat aims to establish 75 PSPs by 2035, attracting investments of approximately Rs 750 billion. Looking further ahead, the state targets the development of 100 PSPs by 2047. The incentive framework under the policy is category-specific, with benefits linked to the manner in which projects are awarded to developers. Across categories, developers are eligible for exemptions from electricity duty on input renewable energy, subject to prevailing statutory provisions.
As Gujarat accelerates its green energy ambitions, pumped storage emerges as a critical enabler not just for grid reliability, but also for making renewable power commercially viable at scale.
State of the sector: Renewables account for around 63 per cent of the state’s power capacity mix
According to the Central Electricity Authority (CEA), as of December 2025, Gujarat’s total installed power capacity stood at 66,733.63 MW, with thermal power contributing 24,174.89 MW to the total power mix. Furthermore, as per the Ministry of New and Renewable Energy (MNRE), as of December 2025, Gujarat’s total installed renewable energy capacity reached 42,583.49 MW, or around 63 per cent of the total power capacity.
The state’s renewable energy capacity comprises approximately 25,529.4 MW of solar power, 14,820.9 MW of wind power, 1,990 MW of large hydro, 129.85 MW of biopower and 113.3 MW of small-hydropower. The state’s solar capacity is further segmented into 17,771.21 MW of ground-mounted solar, 6,412.8 MW of rooftop solar, 1,172.38 MW of hybrid capacity and 173.01 MW of off-grid/PM-Kusum components. The biopower segments comprise 65.3 MW of biomass power/bagasse cogeneration, 12 MW of non-bagasse biomass cogeneration, 7.5 MW of waste-to-energy (WtE) and 45.05 MW of off-grid WtE components.
One of the key reasons for this scale of deployment has been Gujarat Urja Vikas Nigam Limited’s (GUVNL) ability to consistently deliver competitive tariffs for its state tenders. Recent auctions show similar trends, and low-tariff bids are often attributed to abundant solar and wind resources, streamlined approvals and robust grid infrastructure. Last year, GUVNL announced the results of its 250 MW solar power project (Phase XXVI) auction in March 2025, where the lowest discovered tariff was Rs 2.60 per kWh. During the past year, Gujarat concluded two wind power auctions: GUVNL’s 250 MW (Phase IX) auction in April 2025 and the 250 MW (Phase X) auction in December 2025. The lowest tariffs in these wind auctions were Rs 3.64 per kWh and Rs 3.43 per kWh respectively. Furthermore, between November 2024 and November 2025, results were announced for three standalone BESS auctions conducted by GUVNL. These are the 500 MW/1,000 MWh standalone BESS (Phase IV) auction, the 500 MW/1,000 MWh standalone BESS (Phase VI) auction and the viability gap funding (VGF)-based tender for 2,000 MW/4,000 MWh standalone BESS (Phase VII) auctions. The lowest tariffs discovered across these auctions stood at Rs 225,985 per MW per month, Rs 280,000 per MW per month and Rs 185,390 per MW per month respectively.
On the generation side, Gujarat’s leadership is equally evident. According to the CEA’s daily renewable generation report, the state recorded an average renewable energy generation of 155.63 MUs per day in December 2025. Of this, solar power accounted for 103.81 MUs per day, followed by wind power at 51.52 MUs per day, while other renewable sources, including biomass, bagasse and small-hydro, contributed 0.3 MUs per day.
In terms of outstanding dues, as of January 2026, PRAAPTI data shows total outstanding dues of Rs 37.23 billion. Of this, Rs 32.18 billion, around 86 per cent, is classified as current dues. On the operational side, according to the Revamped Distribution Sector Scheme dashboard, aggregate technical and commercial losses declined from 11.56 per cent in 2020-21 to 9.12 per cent in 2023-24. Additionally, according to the National Smart Grid Mission, a total of 16,510,860 smart meters have been sanctioned in Gujarat, of which only 3,466,500 meters have been installed so far. Thus, there is scope for further improvements in billing efficiency.
Challenges: GIB issue, setbacks in offshore wind and transmission delays dampen investor confidence
Gujarat’s renewable energy leadership is increasingly being tested by various structural, regulatory and governance challenges. In April 2021, the Supreme Court mandated undergrounding of overhead transmission lines in Great Indian Bustard (GIB) habitats, effectively restricting green energy corridor (GEC) development. This mandate was revised in March 2024 and further clarified through a judgment on December 19, 2025, which designated 740 square km in Gujarat and Rajasthan as priority conservation areas. Within these zones, new wind projects, solar parks above 2 MW and the expansion of existing renewable capacity are prohibited. As a result, several 33 kV, 66 kV and higher voltage GEC-linked lines in Gujarat will need to be undergrounded or rerouted, with compliance timelines extending up to 2028, creating uncertainty for GEC Phase II expansion. Recognising the resulting delays, in January 2026, the MNRE classified these disruptions as force majeure, granting a timeline extension for scheduled commission dates to affected developers.
Further, in August 2025, the Solar Energy Corporation of India scrapped two offshore wind energy tenders with a combined capacity of 4.5 GW due to the lack of developer participation. One of these tenders was for a 500 MW offshore wind project to be built off the coast of Gujarat under the VGF scheme. In response, India’s offshore wind tendering approach is now under review, with fresh bids expected to be issued in 2026.
Gujarat often faces grid congestion and curtailment issues. According to media reports, in 2025, the state experienced curtailment during peak solar generation hours, driven by transmission delays, corridor congestion and lower-than-expected demand during the extended monsoon period. This issue directly impacts project revenues and weakens investor confidence in Gujarat’s otherwise strong renewable energy ecosystem.
To this end, the state needs to lay equiproportional focus on capacity additions and building new transmission and evacuation infrastructure. According to the CEA’s quarterly report on under-construction renewable energy projects released in September 2025, the total under-construction capacity of solar parks in Gujarat is over 11 GW. Further, the under-construction capacity for renewable energy projects in the state is over 36 GW. The efficient management of the vast pipeline of under-construction capacity is possible only with adequate investments in transmission infrastructure and BESS projects. On the transmission side, Gujarat is among the few states to be included in both Phase I and Phase II of the intra-state transmission system (InSTS) GEC scheme. However, progress has been slow. In 2025, four states, including Gujarat, sought an extension until December 2025 to implement InSTS GEC Phase I. The reasons for which the extension was sought included land acquisition, right-of-way issues, legal cases and environmental clearance issues. However, this does not imply that Gujarat has made no progress in terms of developing transmission and evacuation infrastructure. In a key recent development, in December 2025, POWERGRID Khavda II-B Transmission commissioned an interstate transmission system to evacuate 4.5 GW of renewable energy from the Khavda pooling station in Kutch district of Gujarat, under Phase II, Part B.
Outlook: Gujarat will need to add around 108 GW of renewable capacity in the next decade to meet policy targets
Gujarat’s renewable energy sector has indeed evolved over the years. As of December 2025, its installed renewable energy capacity crossed 42 GW, a sharp rise from around 5 GW about a decade ago. This translates into a CAGR of 23.72 per cent. However, with Gujarat now targeting 150 GW of installed renewable capacity by 2035, the pace of expansion must accelerate significantly, requiring the addition of over 100 GW within the next decade. While the sector has matured and new policies have been introduced, a major transition is still required. That said, Gujarat remains well placed to deliver on this ambition, supported by a strong policy direction, enabling infrastructure and sustained investor confidence, provided there is timely transmission augmentation. The state is well positioned to remain at the forefront of India’s energy transition, supporting its own growth while contributing to the country’s long-term sustainable future.
