Renewable energy in India


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  • India’s financial sector is highly exposed to the risks of the economy transitioning from being largely dependent on fossil fuel to clean energy, says a study in the Global Environmental Change journal


  • As per the International Energy Agency (IEA), ‘Renewable energy is derived from natural processes that are replenished constantly. In its various forms, it derives directly from the sun, or from heat generated deep within the earth.’
  • Included in the definition is electricity and heat generated from solar, wind, ocean, hydropower, biomass, geothermal resources, and biofuels and hydrogen derived from renewable resources.
  • Renewable energy displaces conventional fuels in four areas:
    • Electricity generation
    • Transportation
    • Off-grid energy services
    • Heating


  • As part of the Nationally Determined Contributions (as per the Paris Accord on Climate Change), India made a pledge that by 2030, 40% of installed power generation capacity shall be based on clean sources.
  • India has set an ambitious target of installing 175 GW of renewable energy capacity by the year 2022, which includes: The government later increased this target to 450 GW by 2030.
  • As part of the country’s vision to achieve Net Zero Emissions by 2070, India aims to increase renewables capacity to 500 GW by 2030.


  • Today, India is the world's third largest producer of renewable energy, with 40% of its installed electricity capacity coming from non-fossil fuel sources.
  • Of the total installed capacity of 410 GW, non-fossil fuels account for 175 GW (42.5%).


Installed Generation Capacity (MW)

% Share In Total

Total Fossil Fuel


57.5 %

Renewable sources





11.4 %



10.2 %



15.1 %

Biomass /Cogen


2.5 %

Waste to Energy


0.1 %

Small Hydro Power


1.2 %




Total Non-Fossil Fuel



Total Installed Capacity





  • Combat climate change:
    • Renewables offer a solution to the dichotomy between development and environmental sustainability and help India meet its climate goals.
    • Also, certain renewable sources help in carbon sequestration. Eg: Plants like Jathropha used for bio-ethanol production acts as carbon sinks.
  • Attain energy security:
    • India’s fossil fuel requirements are mostly met by imports. Abundance of solar and wind energy can fulfill India clean energy demands, thereby diversifying its energy basket and reduce import bill.
  • Meet rising energy needs:
    • As per the International Energy Agency’s World Energy Outlook, India is likely to see the world's biggest rise in energy demand this decade. Demand may climb 3% annually due to urbanisation and industrialisation. Renewables are needed to meet this demand.
  • Supplement depleting energy sources:
    • India lacks sufficient petroleum reserves and its coal reserves are poised to be depleted by the end of this century. However, with 300 clear sunny days, perennial rivers, a 7500 km coastline and rich agrarian fields, India has abundant sources of clean energy.
  • Industrial development:
    • India’s energy poverty is a major challenge faced by industries. Clean fuels like hydrogen can reduce the deficit and promote decarbonization of industries.
    • Eg: Ammonia produced from green hydrogen can replace carbon intensive natural gas-based ammonia
  • Facilitate e-mobility transition:
    • The Centre is pushing for mass e-mobility through initiatives like FAME-II and Make in India. To attain this goal, energy needs to be affordable and accessible.
  • Promote energy accessibility: 
    • As they can be setup as standalone off-grid units, renewable energy systems are ideal for areas such as remote and hinterland locations of the country, such as North east India, Ladakh, Kashmir and Left-wing extremism affected areas.
  • Inclusive growth: 
    • Ensuring basic energy services to all is part of the SDGs and clean energy, which is becoming cheaper by the day, can help attain it.
    • Eg: The lowest tariff discovered in wind energy auctions in 2022 was Rs. 2.84.  
  • Women empowerment:
    • Use of biomass such as dung and agricultural waste cause indoor pollution and increase the burden on women.
    • Access to clean energy and the consequent time savings enable women to avail opportunities for their development, like education and skill-training.
  • Employment generation:
    • Clean energy sources require skilled manpower for their production and operation. This is suitable for India’s potential demographic dividend, especially for the technically educated youth.
    • Eg: Ethanol production from farm residue can create jobs in Plant Operations, Village Level Entrepreneurs and Supply Chain Management.



  • National Solar Mission:
    • Part of the National Action Plan on Climate Change, it seeks to establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible.
    • Initially it targeted 20 GW solar power capacity by 2022, which was later expanded to achieve 100 GW grid-connected solar power capacity in the country by 2022.
  • National offshore wind energy policy:
    • With the introduction of the National Offshore Wind Energy Policy, the Centre is attempting to replicate the success of the onshore wind power development.
  • National wind-solar hybrid energy policy:
    • Under the category of wind-solar hybrid power plants, Wind Turbine Generators (WTGs) and Solar PV systems will be configured to operate at the same point of grid connection.
    • The main objective of the Policy is to provide a framework for promotion of large grid connected wind - solar PV hybrid system for optimal and efficient utilization of transmission infrastructure and land.
  • National Biofuel Policy, 2018:
    • The Policy categorizes biofuels as basic and advanced to enable extension of appropriate financial and fiscal incentives under each category.
  • National Hydrogen Mission:


  • Production Linked Incentive (PLI) Scheme for High Efficiency Solar PV Modules:
    • The national programme on High Efficiency Solar PV Modules has provisions for supporting setting up of integrated manufacturing units of high efficiency solar PV modules by providing PLI on sales of such solar PV modules.
  • Green energy corridor project:
    • The project aims at synchronizing electricity produced from renewable sources with conventional power stations in the grid, leading to an integrated grid across the nation.
  • Sustainable Rooftop Implementation for Solar Transfiguration of India (SRISTI):
    • The scheme, part of the larger grid-connected Rooftop Solar (RTS) power programme, aims to bring DISCOMs to the forefront in the implementation of rooftop solar projects.
  • Pradhan Mantri Jaiv Indhan-Vatavaran Anukool fasal awashesh Nivaran (PM Ji-VAN) yojana:
    • The scheme focuses to incentivise 2G Ethanol sector and support the industry by creating a suitable ecosystem for setting up commercial projects and increasing Research & Development in this area.
  • Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM):
    • It aims at boosting farmers’ income by allowing them to sell additional power to the grid through solar plants.
    • Government will incentivize farmers to run solar farm water pumps and use barren land for generating power for extra income.
  • GOBAR-Dhan yojana:
    • GOBAR (Galvanizing Organic Bio-Agro Resources) - DHAN scheme aims to impact village cleanliness and generate wealth and energy from cattle and organic waste.
    • The scheme also aims at creating new rural livelihood opportunities and enhancing income for farmers and other rural people.
  • Perform Achieve and Trade (PAT) scheme:
    • PAT is a flagship programme of Bureau of Energy Efficiency.
    • It is a market-based mechanism in which sectors are assigned efficiency targets and Industries which over-achieve will get incentives in the form of energy saving certificates.
    • These certificates are tradeable and can be bought by other industries which are unable to achieve their targets.
  • Other Initiatives:
    • Ethanol blending:
    • Green bonds:
      • India is expected to launch its first-ever sovereign green bonds soon, with the RBI expected to launch 5-year and 10-year green bonds worth ?40 billion.
    • International Solar Alliance:
      • The ISA is an alliance of more than 120 countries to collectively work for efficient exploitation of solar energy to reduce dependence on fossil-based fuels.
    • Promotion of waste-to-energy plants.
      • Eg: Delhi Metro became the first ever project in the country to receive power generated from a waste-to-energy plant.


  • Infrastructural deficiencies:
    • Large swaths of land are necessary for setting up renewable energy plants such as wind and solar.
    • Lack of necessary transmission infrastructure and efficient power storage facilities such as batteries hinders smooth integration between renewable and conventional energy sources.
    • Lack of capable transport facilities is a major hindrance to wind energy plants in India. For eg: Indian roads are not wide enough to carry large size windmill blades. This restricts the capacity of plants that can be set up in an area, especially rural areas.
  • Institutional challenges:
    • Capital costs: The upfront expense of building and installing solar and wind farms are very high. Hence it is unviable for state-run DISCOMs with fragile financial health to take up such projects.
    • Weak private investments: Cut-throat competition among producers is forcing cost of renewables to decline to unsustainable levels. This, along with the NPA crisis, is creating shortage of capital for private investors.
    • Unpredictable government policies:
      • Rules, regulations and taxes are imposed without much discussions or warnings. This significantly affects the profitability of power plants. Eg: The introduction 5% GST on solar panels has forced several under-construction projects to run into troubles of profitability.
      • Also, certain states have backed out of Power Purchase Agreements (PPAs), creating further uncertainty in the sector.
    • India’s domestic content requirement clause is facing legal challenge at WTO.
  • Financial constrains:
    • To support India’s commitment of net-zero emissions by 2070, financing to the order of at least a trillion dollars is needed.
    • However, analysis of individual loans and bonds found that 60% of lending to the mining sector was for oil and gas extraction, while one-fifth of manufacturing sector debt is for petroleum refining and related industries.
  • Geographical constrains:
    • Most of the major renewable sources are location specific in nature. Remoteness of generating source, especially off grid locations, makes periodic maintenance difficult
  • Import dependency:
    • Over 80 % of solar cells and modules are imported from China. Also, the COVID 19 pandemic and border disputes have disrupted production and transport of key equipment.
  • Environmental concerns:
    • Renewable sources are not fully ecofriendly. Eg: Solar plants increase the albedo, thereby affecting its microclimate of the region. Also, used solar cells are e-wastes, the disposal of which poses a major challenge. 
    • India’s e-waste problem:
  • Human resource shortages:
    • There is a shortage of experts in India’s financial institutions with expertise to appropriately advise the institutions on lending for energy transition.  
    • Shortage of trained technicians for installation, periodic repair and maintenance in acute in India.


India’s future is heavily dependent on how well it can develop on renewable energy. The government needs to sort out its internal issues which are hindering the nation to achieve its target to tap potential energy resources.

  • Import substitution:
    • Import dependency in renewable energy sector, especially for Rare Earth Minerals (REMs), should be reduced. India has several potential sources of REMs, such as in the beach sands along Kerala coast. What is needed now is a focused mission to efficiently utilize them. 
  • Storage technology:
    • Efficient energy storage facilities are vital for improving the reliability on renewable sources. Hence, research should be encouraged in the development indigenous storage facilities.
  • Stable policy support:
    • The industry should be consulted while formulating rules, regulations and taxes related to the sector. Also, the power purchase agreement structure needs to be strengthened further to make renewable energy projects more bankable.
  • Explore full potential:
    • India is blessed to have a huge potential in renewable energy resources and the country should exploit this to the maximum extent so as to meet its on-going energy deficit issues and reduce its dependence on other countries.
  • Promote energy efficiency practices:
    • In order to remain energy positive and make the most of renewable energy sources, focus equally on aggressive promotion of energy efficiency practices. This can include measures such as smart metering, efficiency rating for appliances, mandating green building codes etc. 


Q. India has set ambitious targets in developing its renewable energy capacity. Discuss the challenges in attaining these targets. What measures have been taken by the government in this regard?