Green energy aided by strong ecosystem, say industry representatives

India's renewable energy sector is growing fast but faces hurdles in financing, transmission, and storage, even as policy support and innovation drive progress toward 2030 targets

India’s renewable energy (RE) sector is growing but faces challenges like high capital costs, gaps in generation and transmission, and high storage expenses, said senior industry executives during a panel discussion at the Business Standard Infrastructure Summit last week in New Delhi. 

Vaishali Nigam Sinha, cofounder of green energy company ReNew; Gauri Singh, deputy director-general of International Renewable Energy Agency (IRENA), an intergovernmental organisation; and Prashant Choubey, president of another green energy company Avaada Group, spoke with Ashok Bhattacharya of Business Standard. 

Citing challenges in RE generation, Sinha said: “We get over 300 days of sunlight, which means there is enough opportunity to put up solar farms, but land acquisition is an issue. On the finance side, the cost of capital in India has been on the higher side, which has been a deterrent for global institutions to invest more in the sector. Another roadblock, on the infrastructure side, is that our pace of energy generation is faster than transmission development. We need transmission from where we generate energy to where it is scarce.” 

Singh called for “clear strategies” in financing. “As we add more renewable capacity, we need more investments in the transmission and storage network, and they need to be built simultaneously. We also need a lot more innovation and emphasis on how we can bring the cost of storage down because if storage solutions at affordable costs are not forthcoming, it will stymie the push to add capacity on the supply side.” 

‘Big constraint’ in transmission

 

Singh said the high weighted average cost of capital and currency risk hedging are roadblocks that prevent investors from putting money in a developing country like India. Any policy should provide a long-term visibility of the road ahead with “clear targets and strategies” backing it.

 

Weighted cost of capital and transmission are indeed “notable roadblocks”, said Choubey. “Transmission is a big constraint. One important aspect is that the timeline required to implement a solar project needs to keep pace with transmission. You can deploy a solar project in 12 months, which means you also need to have a transmission asset in time. Another important aspect is integration because such a humongous integration of RE into the system will create an issue.”

 

Choubey listed decentralisation and democratisation as other major challenges in building RE capacity in the country, and central and state governments are making progress on that front. “We are seeing a larger democratisation of RE in terms of PM Surya Ghar Yojana, where a lot more emphasis is on rooftop capacity building and also KUSUM scheme, where we are looking for solarisation of agri pumps,” he said.

 

PM Surya Ghar Muft Bijli Yojana, which was launched in 2024, provides a subsidy of 60 per cent of solar unit cost for systems up to 2 kilowatt (kW) capacity and 40 per cent of additional system cost for systems between 2 and 3 kW capacity. The subsidy is capped at 3 kW capacity. Under the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM-KUSUM) scheme, the central government provides subsidies up to 50 per cent of the total cost for the installation of standalone solar pumps and also for the solarisation of existing grid-connected agricultural pumps.

 

India seeks to install 500 gigawatts (GW) of RE by 2030 as part of its broader climate commitment and push towards energy transition. However, the country is a little under halfway there, with an installed base of around 225 GW across solar, wind, and other renewable sources. The gap highlights both the progress made and the scale of the challenge ahead.

 

About energy storage, IRENA’s Singh emphasised that India must develop solutions for the local context, keeping in mind factors such as cost, resources, and the demands of its consumers. Alongside, she noted the importance of building systems that enable India to exchange renewable energy with neighboring countries.

 

“If we talk about solar and wind energy coming in larger capacity into the grid, there is no getting away from storage. We need to explore solutions because it’s not simply about getting electricity and the power into our grid, but we should also be able to trade with our neighbors and use the time difference.

 

“The second important thing is that, in India, we have a huge potential for pump storage, which has just started to get recognised. The technical studies are going on, and if we can exploit this, it can become a very affordable way of managing the storage solutions,” she said, adding that long-term solutions will come later but the country needs to keep innovating and ensure it does not copy the West.

 

Expanding storage

 

Singh recommended giving people incentives to shift heavy power usage (such as running washing machines) to non-peak hours — practices like that would eventually require less energy storage. The Global South keeps an eye out for the solutions that India can bring to the table, she said.

 

Concurring with Singh, Choubey said that while India has around 4.8 GW of pumped storage capacity but its requirement is much higher. “India is going to need a humongous amount of storage in the system. We need to look beyond peak arbitrage, and the storage system needs to be a real anchor of a grid balance," he said. India is the world’s third-largest renewable market and that size means upping capacity is not arduous.

 

Sharing an optimistic outlook, Sinha said storage remains a crucial factor for RE growth and significant innovation is already taking place in the sector. Government incentives are encouraging advancements in storage technologies. That will not only help integrate more renewable power into the grid, but also strengthen India’s clean energy transition in the long run.

 

“The fact is, storage is important, and innovation is happening because there are incentives that are being provided by the government for all of us to innovate and generate energy. As far as pump hydro is concerned, there are private sector players who have been able to invest, and funds are following this. It's an area we are also looking at, and so, it's good that we are able to look at round-the-clock generation and that the private sector is innovating, which is following the policies that the government is coming up with,” Sinha said.

 

Tariffs should make RE adoption efficient, sustainable and encourage innovation, said Singh and Sinha. They highlighted that India still largely follows a flat tariff structure that limits the scope for demand-side management and advanced business incentives. By introducing dynamic pricing mechanisms, the sector will encourage consumers to shift usage patterns, ease pressure on the grid, and create space for new market opportunities.

 

“What you see right now is mostly a flat tariff in most places. If we look at shaving off peaks [in power usage], then it would be good to incentivise people. We can then actually see its impacts, and even households can actually gain from it,” said Singh.

 

“In several western countries, aggregators have brought in new business models around demand aggregation that improve the grid, benefit discoms, and create new business opportunities,” she said, noting that tariffs can be a “powerful instrument” in shaping demand and usage. “It’s something that regulators should really start looking into”.

 

Sinha, too, called for change. “On tariffs, there is scope for reform, and perhaps, across the spectrum, we can see some more agility. If we see how the wind and solar sectors have evolved, we had the feed-in tariff, and then we moved to competitive bidding. So, it was enabling the ecosystem. But now, that has become pretty standard and settled. As we come up with new products in new areas, perhaps we should follow a similar approach rather than having a standard approach,” she added.

 

Regardless of the challenges and roadblocks, industry representatives agreed that India’s renewable energy sector is gaining momentum in an enabling environment. The policy framework has remained largely consistent over the years. In addition, targeted incentives, such as subsidies, viability gap funding, and production-linked schemes, have encouraged both domestic manufacturing and project deployment. They noted that political commitment has further strengthened investor confidence and positioned RE as a central pillar of India’s growth strategy.

 

“Our policy evolution with respect to providing incentives, whether wind, solar or green hydrogen, has been in tandem with issues that were coming up as businesses were trying to get into this area. India has had an enabling policy environment, and we have made good progress. We moved from different sorts of products, and there has been a lot of innovation at a large scale, institutional level, and also at a micro level,” Sinha said. Helped by appropriate policies and government measures, the country has made significant progress in a challenging journey, moving from 50-60 GW green energy capacity in 2010 to 225 GW now.

 

India’s achievement

 

Singh also commended the country’s momentum and emphasis on renewable capacity-building. “Globally, at Dubai COP [2023 UN Climate Change Conference], there was a commitment to triple renewable energy, to around 11,000 GW. We are sitting globally at about 5,000 GW right now. Unless you have large countries like India putting their weight behind such commitments, they would be just thin air. The fact that India has been able to ramp up its ambition with a very strong political commitment and momentum is important to note.”

 

The United Nations Climate Change Conference or Conference of the Parties of the UNFCCC (COP28) was held in Dubai in 2023. In a joint report, the United Arab Emirates' COP28 presidency, IRENA, and the Global Renewables Alliance said that to limit global warming to 1.5 degrees Celsius, the world requires three times more renewable energy capacity by 2030, or at least 11,000 GW. The report underscored the importance of scaling up investment, infrastructure, and international cooperation to meet the target.

 

Avaada’s Choubey noted that India added 25 GW of RE capacity in 2024, a significant achievement that underscores the country’s growing strength in the clean energy sector. He attributed the progress to a “steadily maturing ecosystem”, where developers, financiers and technology providers work together. The ecosystem gets consistent policy support from the government, creating the stability and confidence needed for long-term investments. This combination has enabled India to accelerate capacity additions and move closer to its ambitious 2030 RE targets.

 

"In 2011, Germany added 10 GW [of RE] in a year, and everyone was amazed. In 2024, we did 25 gigawatts in a single year in India. I think it's fantastic work that has been done, given the great ecosystem and policy consistency," said Choubey.

 

India has set a target of achieving net-zero emissions by 2070. Speaking at COP26 in Glasgow, Prime Minister Narendra Modi had announced that the country will raise its non-fossil energy capacity to 500 GW by 2030 while meeting 50 per cent of its energy demand through renewables.