Key Highlights
India targets 500 GW non-fossil capacity by 2030, led by solar and wind.
Policy levers—transmission-charge waivers, Renewable Energy Certificates, Green Hydrogen Mission—cut costs and spur investment.
Grid integration, large-scale storage, and discom finances remain pressing hurdles.
Diversified energy mix supports energy security while meeting Net Zero 2070 pledges.
Lessons from global peers guide India’s next phase of sustainable growth.
Introduction
India stands at a decisive juncture where rapid economic growth must dovetail with deep emissions cuts. The country’s energy transition—anchored by solar, wind, and emerging green hydrogen—offers a route to reconcile energy security, climate commitments, and sustainable development. Central policies such as waivers on interstate transmission charges, a revamped Renewable Energy Certificate (REC) market, and the National Green Hydrogen Mission (NGHM) aim to accelerate this shift. Yet grid integration, storage capacity, and the financial health of electricity distributors challenge momentum. How India navigates these fault lines will shape its progress toward a Net Zero economy by 2070 and influence the global clean-energy narrative.
Context
Rising Renewable Share
In 2015, renewables formed 13% of India’s installed capacity; by March 2025, the figure touched 44%, with solar alone surpassing 80 GW. Wind stands at 46 GW, while small hydro, biomass, and waste-to-energy add diversity. The International Energy Agency (IEA) ranks India the third-largest solar market, trailing only China and the United States.
Policy Momentum
Transmission-Charge Waivers: Interstate transmission fees are exempt for renewable projects commissioned before 2030, lowering delivered costs by 20-30 paise per kWh.
REC Mechanism 2.0: New rules permit certificates to carry forward indefinitely, improving liquidity for off-takers seeking compliance with Renewable Purchase Obligations (RPOs).
National Green Hydrogen Mission: Launched 2023 with ₹19,744 crore outlay, the mission targets 5 MMT annual production by 2030, linked to export corridors and hard-to-abate sectors.
International Commitments
At COP26, India pledged Net Zero emissions by 2070 and interim targets—50% cumulative electric power from non-fossil sources and 1 billion-tonne emission reduction by 2030. These goals align with SDG 7 (Affordable and Clean Energy) and bolster India’s global climate credibility.
Analysis
Balancing Energy Security and Climate Goals
India’s per-capita electricity use remains one-third of the OECD average. Demand is forecast to double by 2030. Scaling renewables reduces import dependence on volatile LNG and coal markets, shielding the economy from price shocks. However, variable solar and wind raise concerns over supply reliability.
Grid Integration Challenges
Renewables cluster in western and southern states, far from load centres. Green Energy Corridors—11,000 km of high-capacity lines—address this mismatch, yet right-of-way issues and seasonal curtailment persist. Flexible thermal capacity, demand-side management, and regional power exchanges help balance the grid, but systemic upgrades are vital.
Storage Imperatives
By 2030, India could need 160 GWh of storage to meet 24×7 renewable supply targets. Lithium-ion battery costs have fallen 80% since 2012, but long-duration storage—pumped hydro, compressed-air, flow batteries—remains nascent. The Production-Linked Incentive (PLI) for Advanced Chemistry Cells aims to localise 50 GWh annual cell manufacturing, but supply-chain risks and high capital costs linger.
Financial Viability
Discom Stress: Outstanding dues exceed ₹90,000 crore, eroding payment confidence for renewable developers.
Tariff Concerns: Reverse auctions pushed solar bids below ₹2.2 per kWh, squeezing margins. Rising module prices and rupee depreciation risk project bankability.
Capital Access: Green bonds crossed $20 billion cumulative issuance, yet smaller developers struggle with high cost of capital relative to OECD peers.
Case Studies
Rewa Ultra-Mega Solar Park (Madhya Pradesh): First large project supplying both state discoms and the Delhi Metro through open-access contracts. It pioneered tripartite payment-security mechanisms that cut perceived risk and attracted low bids.
Bhuj Hybrid Park (Gujarat): Targeting 30 GW of mixed solar-wind-storage across barren land, the park exemplifies hybrid projects that flatten generation profiles and optimise transmission.
Global Benchmark—Australia’s Hornsdale Power Reserve: The 150 MW/193.5 MWh Tesla battery stabilised South Australia’s grid during outages and recouped investment within two years via frequency-control markets. India can replicate such models as its ancillary-services market matures.
Way Forward
Strengthen Grid Flexibility
Invest in smart meters and flexible demand to allow real-time price signals.
Retrofitting coal plants for ramping ensures back-up without fresh emissions-intensive capacity.
Scale Storage and Hybrid Solutions
Fast-track pumped-hydro sites under clearances.
Use viability-gap funding for first-of-a-kind long-duration storage, de-risking private investment.
Encourage hybrid tenders that bundle solar, wind, and battery contracts under a single tariff.
Reform Electricity Distribution
Enforce the Late Payment Surcharge Rules to discipline discom finances.
Promote public-private franchises for loss-making circles, raising billing efficiency.
Catalyse Green Hydrogen
Finalise Guaranteed Offtake Agreements for steel, fertiliser, and refining sectors.
Earmark Dedicated Renewable Zones with co-located electrolysers to cut logistics costs.
Deepen Financial Markets
Expand sovereign green-bond issuance for grid and storage projects.
Allow pension and insurance funds larger exposure to renewable Infrastructure Investment Trusts (InvITs).
Foster Just Transition
Map coal-dependent districts, create Reskilling Funds, and support local MSMEs in clean-tech supply chains.
Draw lessons from Germany’s Ruhr Valley and South Africa’s Just Energy Transition Investment Plan.
Conclusion
India’s energy transition is not a linear march from coal to renewables; it is a nuanced balancing act among affordability, security, and climate ambition. Forward-looking policies—transmission waivers, RECs, and the Green Hydrogen Mission—signal political resolve. Yet achieving Net Zero 2070 hinges on robust grid upgrades, affordable storage, and financially sound discoms. Coordinated governance, innovative finance, and community-centric approaches can transform India into a resilient, low-carbon powerhouse. The road is complex, but with adaptive policy and technological leaps, the world’s fastest-growing major economy can chart a sustainable energy future.
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