India’s green energy sector is experiencing unprecedented growth, with the industry currently valued at around US$ 10 billion and projected to reach US$ 20 billion by 2025, potentially soaring to US$ 50 billion by 2030. This rapid expansion is driven by ambitious government targets, including the goal to achieve 500 gigawatts of renewable energy capacity by 2030
The sector’s growth is reflected in the surge of renewable energy stocks and initial public offerings (IPOs). Companies like NTPC Green Energy are planning large-scale IPOs, with NTPC Green Energy’s issue size estimated at around Rs 100 billion.
This influx of capital is fueling capacity additions, with India expected to add 28-30 GW of renewable energy capacity in the fiscal year 2025, primarily in solar energy.
The country’s commitment to sourcing half of its energy demand from renewables by 2030 and reducing 1 billion tonnes of projected greenhouse emissions by the same year is attracting significant global investment, with an estimated $75 billion already invested in Indian renewables.
Government Policies Driving Growth
India’s government has implemented various policies and initiatives to drive growth in the renewable energy sector, positioning the country as a global leader in green energy. The National Green Hydrogen Mission, with an outlay of INR 19,744 crore ($2.4 billion), aims to produce 5 MMT of annual green hydrogen/ammonia by 2030.
Additionally, the Production-Linked Incentive (PLI) Scheme for High-Efficiency Solar PV Modules, with a total allocation of INR 24,000 crore ($2.9 billion), is expected to boost domestic manufacturing capacity and create significant employment opportunities.
Key policy measures include:
- Waiver of Inter-State Transmission System charges for solar and wind power projects commissioned by June 30, 2025.
- Allocation of INR 10,000 crore for the Centrally Sponsored Scheme for Solar Power (Grid) in the 2024-25 Union Budget, a 110% increase from the previous year.
- Launch of PM-Surya Ghar Muft Bijli Yojana with an outlay of INR 75,000 crore to promote rooftop solar installations.
- Exemption of Basic Customs Duty on imports of 25 critical minerals essential for renewable energy sectors
- Setting up of Ultra Mega Renewable Energy Parks to provide land and transmission infrastructure to developers.
These policies have created a favorable environment for green energy investments, driving the sector’s growth and attracting both domestic and foreign investors to India’s renewable energy market.
Challenges in Renewable Financing
Despite the promising growth in India’s renewable energy sector, financing remains a significant challenge. High upfront costs and long payback periods deter many investors, particularly for large-scale projects.
The cost of capital in emerging economies like India is often two to three times higher than in advanced economies, making projects less financially attractive.
Key financing challenges include:
- Delayed payments from power distribution companies (discoms), with overdue amounts reaching $10.42 billion as of June 2024.
- Land acquisition difficulties and infrastructure availability issues cause project delays and cost overruns.
- Rising interest rates increase financing costs.
- Risk of contract renegotiations creating uncertainty for investors.
- Limited access to capital, especially for small and medium-sized developers.
- Stringent local content requirements increase investment costs by 30-45% for solar modules.
To address these challenges, India needs to improve the financial health of discoms, streamline land acquisition processes, and introduce innovative financing solutions to attract more private capital to the renewable energy sector.
Emerging Renewable Powerhouses
India’s renewable energy landscape is witnessing the rise of new players poised to lead the industry in the future. Greenko Group, a rapidly expanding clean energy company, is developing innovative integrated renewable energy storage projects to provide round-the-clock renewable power, addressing intermittency issues in solar and wind generation.
ReNew Power, another prominent player, has shown impressive growth in its solar and wind portfolio and recently announced plans to invest $8 billion in green hydrogen and renewable energy projects by 2030.
Additionally, Azure Power Global is gaining traction with its focus on utility-scale solar projects and long-term power purchase agreements, positioning itself for significant growth in India’s booming solar sector.
These emerging leaders are not only expanding their renewable capacities but also investing in cutting-edge technologies, setting the stage for India’s next phase of green energy development.
Public vs Private Renewables
India’s renewable energy sector features a dynamic blend of government-owned and private companies, each playing vital roles in the country’s green energy transition.
Government entities like NTPC Renewable Energy, a subsidiary of NTPC, are making significant strides with plans to achieve 60 GW of renewable energy capacity by 2032.
These state-owned enterprises benefit from robust government backing and access to public funding, enabling them to undertake large-scale projects and pioneer new technologies in energy storage and hydrogen.
Meanwhile, private companies like Adani Green Energy Limited and Tata Power are driving innovation and rapid expansion. Adani Green Energy is targeting 25 GW of renewable energy capacity by 2025, while Tata Power has become India’s largest integrated solar company, with over 3 GW of solar modules shipped worldwide.
Private players often exhibit greater agility in project execution and are more adept at attracting foreign investments.
However, both government and private entities face shared challenges, including land acquisition difficulties and delayed payments from power distribution companies.
The synergy between public and private sectors, supported by policies like the Production-Linked Incentive (PLI) Scheme, is essential to achieving India’s ambitious renewable energy goals.
As India moves closer to its renewable energy goals, the sector offers major economic opportunities, with the green energy market expected to reach $80 billion by 2030. However, achieving success will require solving key challenges such as upgrading infrastructure, making the power grid more flexible, and introducing creative financing solutions to support this ambitious shift.
FAQ Related to the Green Energy
What is India’s renewable energy target for 2030?
India aims to achieve 500 gigawatts (GW) of renewable energy capacity by 2030. This target is part of India’s Panchamrit framework, announced at COP26, which also includes a goal for 50% of the country’s total energy mix to come from renewable sources by 2030.
What is the current status of India’s renewable energy capacity?
As of October 2024, India’s renewable energy capacity stands at 203.18 GW, reflecting an increase of 24.2 GW compared to the previous year. This includes solar, wind, and hydroelectric power.
What are the key components of India’s renewable energy strategy?
- Solar Park Scheme: Approval for 55 solar parks with a combined capacity of 40 GW.
- Green Hydrogen Initiative: Targeting the production of 5 million tonnes of green hydrogen annually by 2030.
- PLI Scheme: Supporting domestic manufacturing of high-efficiency solar PV modules.
- Green Energy Corridor: Enhancing transmission infrastructure for renewable power transfer.
- Viability Gap Funding: Encouraging offshore wind projects.
What are the main challenges in achieving India’s renewable energy goals?
- Increasing annual installation rates by over 2.5 times the current level.
- Securing sufficient investments to reach the 500 GW target.
- Overcoming regulatory and infrastructure bottlenecks.
- Addressing energy poverty and inequality during the transition.
How is India positioning itself globally in the renewable energy sector?
India ranks 4th globally in total renewable power capacity, 4th in wind power, and 5th in solar power. It also leads international efforts through initiatives like the International Solar Alliance (ISA), which seeks to mobilize $1 trillion for solar energy worldwide.
What economic opportunities does the green energy transition present for India?
- Reducing the average cost of power supply to Rs 5.25–5.4/kWh by 2050.
- Lowering dependence on fossil fuel imports, cutting the import bill.
- Generating new industries and jobs in renewable energy sectors.
- Attracting investments, with an estimated need of $7.2 trillion in green investments by 2050.
How is the private sector contributing to India’s renewable energy goals?
Leading companies are setting ambitious capacity targets: NTPC aims for 60 GW, Adani Green Energy for 45 GW, and Tata Power, ReNew Power, and Acme Solar are each targeting 25 GW.
What role does green hydrogen play in India’s renewable energy future?
Green hydrogen is a cornerstone of India’s energy strategy. The National Hydrogen Mission, with an investment of Rs. 197.4 billion, supports the production, use, and export of green hydrogen. It is expected to decarbonize industries and heavy-duty transport, contributing significantly to India’s sustainability goals.
