India Leads the Clean Energy Shift | 15 Nov 2025

A new study reveals that the clean energy transition for emerging economies is far more affordable than previously thought. Between 2024 and 2030, nine major G20 emerging markets will need just $121 billion in climate finance for power generation, merely the incremental cost above business-as-usual investments. India leads this transformation, requiring $57 billion to boost its renewable share from 45% to 63% of installed capacity. Dramatically falling costs of solar, wind, and battery storage down 83%, 42%, and 90% respectively since 2010, have made this transition economically viable. For India specifically, while fossil-fuel power investments will decline by $43 billion, renewable spending must increase by $90 billion, positioning the country at the forefront of the green energy revolution with the largest climate finance requirement among emerging economies.

What are the Major Milestones in India’s Transition Towards Renewable Energy? 

• Surpassing the Non-Fossil Fuel Capacity Goal Ahead of Time: India has already achieved its COP26 commitment to have 50% of its installed electricity generation capacity from non-fossil fuel sources, showcasing exceptional policy effectiveness and rapid execution.  
  • This early achievement demonstrates a decoupling of energy growth from carbon-intensive sources, providing strong global confidence in India's net-zero 2070 pathway and enabling further ambitious clean energy targets.  
  • As of September 2025, the installed non-fossil capacity has crossed 250 GW, representing over 50% of the country's total power capacity, successfully meeting the 2030 target five years early. 
• Global Leadership in Solar Capacity and Manufacturing Growth: Solar energy is the central pillar of the energy transition, and India is asserting itself as a global solar powerhouse through massive capacity addition and domestic manufacturing support. 
  • The success of national schemes and low tariffs, driven by reverse auctions, makes solar the most cost-competitive and rapidly deployable source of new power generation, reducing the need for imported fuel.  
  • India's cumulative solar capacity has reached around 130 GW (as of October 2025), and domestic solar module manufacturing capacity has nearly doubled from 38 GW to 74 GW in FY 2024–25, driven by the Production Linked Incentive (PLI) scheme. 
• Launch of the National Green Hydrogen Mission (NGHM): The launch of the National Green Hydrogen Mission marks India's aggressive move to decarbonize hard-to-abate sectors like fertilizers, refining, and heavy industries, shifting the focus beyond just the power sector.  
  • The mission establishes a comprehensive ecosystem for green hydrogen production and utilization, positioning India as a potential global hub for green hydrogen export, which is crucial for long-term energy security.  
  • The mission targets developing a Green Hydrogen production capacity of at least 5 Million Metric Tonnes (MMT) per annum by 2030, which is expected to attract over ₹8 lakh crore in total investments. 
• Decentralization of Renewable Energy through Rooftop Solar Schemes: A major shift is the focus on democratizing power generation, moving beyond large utility-scale projects to empower households and farmers as producers of clean energy.  
  • The widespread adoption of decentralized solar, particularly rooftop and agricultural pumping, significantly reduces transmission losses, enhances grid resilience, and directly impacts consumer's electricity bills.  
  • The PM Surya Ghar: Muft Bijli Yojana, launched in February 2024 with a ₹75,021 crore outlay, targets rooftop solar installations in one crore households. 
• Financial Incentives for Energy Storage: Recognizing the intermittency challenge of solar and wind, the government has prioritized energy storage, including Battery Energy Storage Systems (BESS) and pumped storage projects (PSP), to achieve a Round-the-Clock (RTC) reliable power supply.  
  • The introduction of targeted financial mechanisms is essential to bridge the current cost gap, making storage projects viable and facilitating high penetration of variable renewables into the grid.  
  • The Cabinet has approved a Viability Gap Funding (VGF) scheme for BESS, in September 2023 with an initial allocation to support the development of 4,000 MWh of BESS projects. 
• Advancing into the Frontier of Offshore Wind Energy: To diversify the renewable mix and exploit vast untapped potential, India is strategically moving into the high-capacity factor, higher-cost domain of offshore wind, which requires substantial government support.  
  • This pioneering step opens a new vector for clean energy, especially along the coasts of Gujarat and Tamil Nadu, simultaneously catalyzing a new domestic manufacturing and supply chain for large turbines and structures.  
  • The government recently approved a VGF scheme of ₹7,453 crore for India's first 1 GW of offshore wind projects, targeting a potential of 30 GW by 2030. 

What are the Major Challenges Hindering India’s Renewable Energy Transition? 

• Grid Instability and Curtailment due to Low Storage Capacity: The core challenge is the intermittency of solar and wind power, which is severely restricted by the lack of sufficient grid-scale energy storage and the inflexibility of traditional coal power plants.  
  • This mismatch between daytime supply and evening demand forces operators to curtail or waste clean energy, undermining the economic viability of new projects and necessitating fossil fuel use during peak hours.  
  • Recent data shows solar power curtailment rates in some regions rose to as high as 12% in late 2025, and on certain days, up to 40% of solar output was denied access to the grid due to oversupply, proving that capacity addition is outpacing grid readiness. 
• Pervasive Counterparty Risk and Financial Distress of DISCOMs: The financial health of state-owned Distribution Companies (DISCOMs) poses the single largest credit risk to renewable power developers, stemming from delayed payments for procured electricity.  
  • These poor financials are rooted in high Transmission & Distribution (T&D) losses, poor billing/collection efficiency, and unrecovered costs due to subsidized tariffs, driving up the overall Cost of Debt for clean energy projects. 
  • Also, Many distribution companies require 8 to 17 months of payment support to achieve a viable credit rating. 
• Deep Reliance on Imported Components and Raw Materials: Despite ambitious 'Make in India' and PLI schemes, the renewable energy supply chain, especially for solar and battery storage, remains heavily dependent on imports for crucial upstream components and critical minerals.  
  • This import dependency exposes the sector to geopolitical risks, currency fluctuation, and global supply chain disruptions, threatening the long-term goal of energy sovereignty.  
  • According to CEEW, India continues to rely heavily on imports of solar modules and lithium-ion batteries, with China accounting for nearly 80% of its battery imports in 2023. 
• Need for Massive and Affordable Climate Finance Mobilization: The transition requires colossal cumulative investment, and the domestic financial ecosystem, despite positive steps like Green Bonds, still lacks the depth and long-term, low-cost capital needed for capital-intensive, high-risk, emerging technologies like Green Hydrogen and Offshore Wind.  
  • Without innovative blended finance and risk-sharing mechanisms, the cost of capital will remain high, making the transition significantly more expensive than planned.  
  • To achieve its Net-Zero 2070 target, India is estimated to require $10 trillion in cumulative investments, yet it faces a huge long-term financing gap of approximately $3.5 trillion that must be bridged by external and innovative capital. 
• Regulatory and Contractual Inconsistencies Across States: The renewable energy framework is often hampered by inconsistent policy implementation and retroactive changes at the state level, creating significant regulatory uncertainty for investors and developers.  
  • Ambiguities in areas like curtailment compensation, land acquisition rules, and Green Open Access implementation lead to prolonged legal disputes and deter much-needed long-term private investment.  
  • Recent reports show that Renewable Energy Implementing Agencies have issued Letters of Award (LoAs) for over 43 GW of capacity where Power Sale Agreements (PSAs) with end procurers remained unsigned, reflecting market misalignment and uncertainty regarding project execution. 
• Land Acquisition Concern and End-of-Life Waste Management: The transition to utility-scale renewable energy is highly land-intensive, creating unavoidable conflicts over land use—often leading to the displacement of communities, diversion of grazing/agricultural land, and contentious land acquisition processes that raise issues of inadequate compensation, consent, and transparency. 
  • Furthermore, the future challenge of managing e-waste from retired solar panels and batteries is a ticking environmental time bomb that requires the immediate scaling up of national recycling infrastructure to avoid future ecological damage.  
  • According to the International Renewable Energy Agency (IRENA), India currently generates around 100,000 tonnes of solar waste, but by 2030 this figure could swell to 600,000 tonnes. 
• Critical Shortage of a Skilled Green Workforce and Training Mismatch: Despite the promise of "green jobs," the rapid scaling of the sector is severely constrained by a significant skills gap and a mismatch between academic curricula and cutting-edge industry needs.  
  • This shortfall affects everything from highly-specialized manufacturing and R&D roles to basic project installation and maintenance, leading to project delays and sub-optimal operational efficiency.  
  • India is projected to face a critical shortage of 1.2 million skilled workers in the renewable sector by 2030, directly impacting project timelines and costs. 
• Regional Disparities and Energy Access: Some regions will face far greater social and economic impacts during the clean-energy transition than others.  
  • For example, coal-dependent states such as Jharkhand, Chhattisgarh, and Odisha may experience job losses and revenue decline, while renewable-rich states like Rajasthan, Gujarat, and Tamil Nadu stand to gain from increased investment and green jobs.  
  • This uneven distribution complicates the goal of ensuring a nationally just and balanced transition. 
• Weak Data Governance and Transparency: Inadequate, inconsistent, or delayed energy-sector data severely limits informed policy-making and undermines efficient market functioning.  
  • The absence of real-time, verified data on generation, storage, transmission capacity, and state-level transition progress reduces accountability, weakens investor confidence, and restricts the ability to design evidence-based interventions. 
  • Also, lack of standardization and granularity provides fertile ground for "greenwashing," undermines the credibility of climate commitments, and increases due diligence costs for investors trying to accurately assess portfolio-wide environmental, social, and governance (ESG) risk.

What Steps Can India Take to Fast-Track Its Renewable Energy Transition? 

• Implement Performance-Linked Financial Discipline for DISCOMs: Financial viability of Distribution Companies (DISCOMs) must be secured through a non-negotiable performance-based funding model, moving away from past bailout failures.  
  • This requires a strict, enforced linkage of central government funding (like RDSS) to tangible, measurable reductions in Aggregate Technical & Commercial (AT&C) losses, full cost-reflective tariffs, and mandatory Direct Benefit Transfer (DBT) of subsidies.  
  • The measure involves mandating real-time digital monitoring of loss reduction targets and strictly enforcing the Late Payment Surcharge (LPS) Rules to ensure timely payments to generating companies (GENCOs), thus dramatically reducing counterparty risk for private investors. 
• Establish a National Grid Flexibility Market and Storage Mandate: Treat grid flexibility and energy storage as a standalone, essential service, rather than a mere ancillary component of solar and wind projects, to incentivize rapid deployment and manage intermittency.  
  • This requires launching a market mechanism for fast-response resources and dynamic dispatch, fully valuing the services provided by Battery Energy Storage Systems (BESS), Pumped Storage Projects (PSP), and gas-peaker plants.  
  • This measure involves the Central Electricity Regulatory Commission (CERC) issuing a National Energy Storage Obligation (NESO) framework, replacing the current Renewable Purchase Obligation (RPO) system, with targets that explicitly define the MWh storage capacity required for Round-the-Clock (RTC) power. 
• Launch a Green Hydrogen Demand Creation Mandate: To realize the ambitious Green Hydrogen Mission, the government must strategically create anchor demand by mandating blending quotas in key high-carbon industries, providing the crucial offtake certainty needed for massive project financing.  
  • This policy signal de-risks early investments in large-scale electrolyser manufacturing and downstream infrastructure, accelerating cost decline curves through guaranteed economies of scale.  
  • The measure involves notifying a mandatory Green Hydrogen consumption quota for core "hard-to-abate" sectors, starting with fertilizer production, petroleum refining, and steel, alongside Viability Gap Funding (VGF) schemes targeted specifically at early commercial-scale Green Ammonia export facilities. 
• Enable Virtual Net Metering and Decentralized Energy Trading: Rooftop solar growth must transition from individual house installations to a community-wide, virtual model to overcome physical rooftop limitations and fully leverage the potential of distributed generation across urban areas.  
  • This requires enabling regulatory frameworks for Peer-to-Peer (P2P) energy trading and Virtual Net Metering (VNM) across multiple locations owned by one entity or within cooperative societies. 
  • The measure involves the Ministry of Power (MoP) amending the Green Open Access Rules to allow aggregated VNM for commercial and residential complexes, incentivizing land-constrained entities to invest in off-site or shared community solar projects, drastically increasing the urban adoption rate. 
• Create Single-Window Mega-Site Clearances for RE Zones: Long-standing delays in land acquisition, Right-of-Way (ROW), and inter-state transmission clearances remain the biggest execution bottleneck, necessitating a radical simplification of the permitting process. 
  • A dedicated, fast-track mechanism for nationally significant projects would cut down the time from tender award to commissioning, dramatically improving project execution timelines.  
  • This measure involves establishing "Renewable Energy Investment Zones (REIZ)" with pre-cleared land banks, pre-approved environmental permits, and a Single Project Clearance Board comprising Central and State representatives, reducing the average project approval cycle from over 18 months to less than 6 months. 
• Upskill Human Capital through Specialized Green Technology Institutes: Current engineering and vocational training pipeline is insufficient for the demands of highly technical, next-generation renewable technologies like high-efficiency TOPCon cells, large-scale BESS deployment, and offshore wind maintenance. 
  • A coordinated national effort to create a specialized workforce is essential for sustained growth and true self-reliance (Atmanirbhar Bharat).  
  • The measure involves launching a National Green Skill Development Mission to create Centres of Excellence (CoEs) in partnership with industry leaders, focusing on Electric Vehicle (EV) charging infrastructure, Green Hydrogen plant operations, and Advanced Metering Infrastructure (AMI) deployment and data analytics. 
• Mandate Retrofit Flexibility in Existing Coal Power Fleet: The argument is that instead of outright immediate retirement, a cost-effective and immediate strategy for grid stability is to mandate technical retrofits (e.g., boiler modifications) in the existing coal power fleet to enable flexible operation and two-shift cycling capability.  
  • This ensures that traditional plants can ramp up and down quickly to support high variable Renewable Energy (RE) penetration, effectively serving as a synthetic energy storage solution until BESS costs decline further.  
  • The measure involves the Central Electricity Authority (CEA) issuing new technical standards that make flexible operation mandatory for all thermal power plants older than 15 years, penalizing plants that fail to meet minimum ramp rates and offering incentives for fast part-load operation. 
• Accelerate Bioenergy Deployment Across Sectors: Bioenergy provides both waste-management solutions and clean energy. India can scale up by: 
  • Converting agricultural residues (e.g., crop stubble) and municipal solid waste into energy, reducing pollution while generating power 
  • Producing liquid biofuels like ethanol and biodiesel to decarbonize road transport 
  • Expanding gaseous biofuels such as Compressed Biogas (CBG) under initiatives like SATAT for use in vehicles, shipping, and aviation. This supports circular economy goals and reduces reliance on fossil fuels. 
• Deepen International Collaboration and Cross-Border Energy Cooperation: India’s leadership in global platforms must be leveraged further: 
  • International Solar Alliance (ISA), Mission Innovation, and India’s climate leadership during G20 have positioned India as both a provider and recipient of green technology and finance 
  • Strengthen regional electricity trade with ASEAN, SAARC, BIMSTEC, and emerging green hydrogen partnerships with the Middle East 
  • Promote joint R&D, battery storage innovation, and low-cost finance through multilateral cooperation. This accelerates technology diffusion and lowers financing costs. 
• Promote Community Participation and Gender Inclusion: A people-centric transition ensures long-term success. This includes: Community ownership models, local co-operatives, and revenue-sharing frameworks for solar and wind projects 
  • Gender-focused interventions that increase women’s workforce participation, leadership roles, and access to green livelihood opportunities. 
  • Such measures build trust, improve adoption rates, and make energy transitions socially sustainable. 
• Towards Just Transition: India must ensure that coal-dependent states and vulnerable workers are not left behind. This includes: Reskilling and redeployment of coal-sector workers, diversifying state economies (e.g., Jharkhand, Chhattisgarh, Odisha) 
  • Without a just transition, rapid shifts may trigger social resistance, widening regional inequalities. 
  • Even well-intentioned policies—such as the E20 fuel policy or Delhi’s vehicle scrappage policy—risk backlash if introduced without adequate preparedness, supply-chain readiness, or public awareness. 
    • India must ensure phased rollouts, stakeholder consultations, infrastructure readiness, and affordability safeguards to avoid disrupting livelihoods and mobility.

Conclusion:

India’s renewable energy transition stands at a decisive inflection point driven by technological advances, strong policy backing, and falling costs. Yet, realizing its full potential demands financial innovation, institutional reforms, and grid modernization. Accelerating this shift will not only secure energy independence but also generate green jobs and inclusive growth. Aligned with SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation, and Infrastructure), SDG 13 (Climate Action), and SDG 12 (Responsible Consumption and Production), India’s transition embodies the path toward a sustainable and resilient future.