India has made impressive strides in its renewable energy journey, with its installed capacity reaching new milestones. As of December 2024, the country’s renewable energy capacity surged to 209.44 gigawatts (GW), accounting for 45.3 percent of its total installed capacity. This growth marks a significant year-on-year increase of 28.65 GW (16 percent), up from 180.79 GW in December 2023.
India has reaffirmed its commitment to achieving 500 GW of non-fossil fuel energy capacity by 2031-32 and net-zero emissions by 2070. Both of these goals demand innovation and collaboration across the energy, industry, and transport sectors. However, several challenges, including land acquisition issues, regulatory hurdles, and financial constraints, continue to impede the large-scale deployment of renewable energy.
The deteriorating financial health of distribution companies (DISCOMs) also affects renewable energy deployment in India. Many DISCOMs face financial distress due to mounting losses, inadequate tariffs and inefficient bill collection. These challenges prevent them from signing power purchase agreements (PPAs), stalling renewable energy projects. The backlog of unassigned PPAs delays project commissioning and creates uncertainty for renewable energy developers, impacting revenue cash flow and financing.
Systemic measures to stabilise DISCOM finances, ensure fair practices in energy procurement, and enhance transparency are critical
Furthermore, allegations of unfair practices against prominent energy companies from time-to-time raise concerns about the transparency and fairness of the process. These issues erode investor confidence and discourage stakeholders from investing in renewable energy projects. For DISCOMs, such challenges intensify their financial struggles. Moreover, delayed payments to developers and uncertainty over PPAs, including renegotiations or cancellations, deepen the financial strain.
To navigate these hurdles, corporate and industrial (C&I) consumers, who account for a large share of energy demand, are increasingly turning to direct procurement options like Green Energy Open Access (GEOA). The GEOA Rules were brought in to promote clean electricity generation, purchase, and consumption, aligning with India’s Nationally Determined Contributions to achieve net-zero emissions by 2070. A total of 22 Indian companies have set net-zero targets. By promising lower costs and reliable energy supply, GEOA has emerged as a viable alternative to traditional procurement. The GEOA market has attracted new developers like Kalpa Power, JSW Energy, and Ampyr Energy, in addition to established companies like ReNew Power and Avaada Energy. The regulatory support provided by GEOA has spurred rapid growth in the C&I open access market, achieving a compound annual growth rate of 46 percent between the fiscal year (FY) 2021-22 and FY2023-24, with cumulative capacity reaching 18.7 GW by the end of FY2023-24.
Systemic measures to stabilise DISCOM finances, ensure fair practices in energy procurement, and enhance transparency are critical. Such interventions can restore confidence, enable developers to proceed with projects, and encourage collaboration among stakeholders.
A key enabler of India’s renewable energy growth and competitiveness has been the Inter-State Transmission System (ISTS) waiver, which exempts transmission charges for renewable energy projects commissioned up to June 30, 2025, making them cost-effective. As of December 31, 2024, India had successfully installed 97.86 GW of solar and 48.16 GW of wind power, with an impressive 232.88 GW and 74.96 GW in the pipeline, respectively. This waiver has been particularly crucial for solar and wind energy projects.
Though the Ministry of Power has extended this waiver to green hydrogen and green ammonia projects, exempting them from transmission charges for 25 years, such support is also required for hybrid and storage projects
While vanilla renewable energy technologies (solar and wind) continue to become more competitive and may eventually operate without subsidies, the sector is now shifting towards hybrid and capital-intensive projects such as Firm Dispatchable Renewable Energy (FDRE), Round-The-Clock (RTC) power tenders, battery energy storage systems (BESS), pumped storage plants (PSPs) and green hydrogen. These projects, due to their high capital expenditure and infrastructure needs, rely on the ISTS waiver to remain financially viable. Though the Ministry of Power has extended this waiver to green hydrogen and green ammonia projects, exempting them from transmission charges for 25 years, such support is also required for hybrid and storage projects to address intermittency challenges and ensure grid stability.
The lack of sufficient substation infrastructure threatens the viability of projects, particularly hybrid and energy storage projects, which rely on the waiver for financial sustainability. With developers unable to meet infrastructure requirements, these projects risk becoming economically unfeasible. Industry voices are calling for an extension of the waiver to address these concerns.
The Central Electricity Regulatory Commission (CERC) recently rejected a petition to approve the tariff for Solar Energy Corporation of India’s (SECI) first standalone BESS project of 500 MW/1,000 MWh. This decision underscores a critical issue in India’s renewable energy sector: projects are being awarded but often fail to secure buyers, risking cancellation under standard tender rules. This hampers progress towards achieving the 236.22 GWh of BESS capacity needed to integrate the planned renewable energy under the Central Electricity Authority’s National Electricity Plan 2023. As of March 2024, India had only 0.2 GWh of BESS installed capacity.
The concentration of global mineral refining and processing in a few countries, especially China, is concerning
Another example is the Karnataka High Court’s decision to strike down the Green Energy Open Access Rules, 2022, which disrupts a critical avenue for renewable energy procurement, leaving consumers and developers in limbo. This compounds challenges for project developers and consumers who rely on affordable and direct procurement models.
To overcome these challenges, India must address regulatory hurdles by setting clear tariffs, ensuring buyer identification pre-tender, and enforcing penalties for defaults. Accountability and collaboration among stakeholders are critical for advancing India’s renewable energy goals.
Another concern is India’s 100 percent reliance on imports for critical minerals essential for renewable energy technologies, such as lithium, cobalt and nickel. Minerals at risk include graphite (natural and synthetic), lithium oxide, nickel oxide, copper cathodes, nickel sulphate, cobalt oxide, and copper ores and concentrates. While India aims to achieve 50 percent of its electric power capacity from non-fossil fuels by 2030, its dependence on foreign sources for these minerals, particularly from China, exposes it to supply disruptions, price volatility, and geopolitical risks. India imports significant amounts of copper cathodes, nickel sulphates, lithium oxide, and graphite from China, Russia, and Japan, all of which are exposed to trade risks.
The concentration of global mineral refining and processing in a few countries, especially China, is concerning. China accounts for 70 percent and 85 percent of the world’s rare earth mining and processing capacities, respectively. Further, global refining of 68 percent of nickel, 40 percent of copper, 59 percent of lithium, and 73 percent of cobalt takes place in China.
India must accelerate efforts to diversify its mineral supply chain by forging stronger partnerships with mineral-rich nations like Australia, the US and Indonesia. Additionally, India must focus on developing its refining and processing capacity to reduce its dependence on foreign imports and strengthen its critical minerals supply chain.
India’s renewable energy journey has been nothing short of remarkable, with significant progress in expanding clean energy capacity. While challenges remain, India has shown resilience and innovation in addressing its energy transition obstacles. The financial struggles of DISCOMs, an unstable regulatory environment, and reliance on imports for critical minerals threaten to derail India’s clean energy transition. However, by implementing systemic reforms to stabilise DISCOM finances, extending support to hybrid and storage projects, and diversifying the supply of critical minerals, India can overcome these hurdles and stay on track to achieve its renewable energy goals.
