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In August 2022, India submitted to the UN Framework Convention on Climate Change its target to reduce the emissions intensity by 45 per cent by 2030 (compared to 2005 levels), and to achieve 50 per cent of cumulative electric power capacity from non-fossil fuel sources by 2030. This is part of the country’s Nationally Determined Contributions (NDCs) for achieving climate goals set out in the Paris Agreement. In addition, the country has increased its target for installed non-fossil energy capacity to 500 GW by 2030, from 175 GW renewable energy by 2022. According to the Union Ministry of Power, this translates into the 50 per cent non-fossil energy target pledged under the NDC. In other words, India aims to have 50 per cent “clean” energy infrastructure by the end of this decade, displacing the current “king” of energy—coal-based power plants.
What is not clear is how the government defines this “clean” energy. The Union Ministry of Power uses the term “non-fossil energy”, which includes large hydropower projects and nuclear power along with renewable energy. But this is often interchanged with renewable energy, suggesting that solar, wind, biomass and small hydropower would need to add up to 500 GW by 2030. Then in March 2019, the Union government included large hydropower projects as renewable energy source. However, for the purposes of this piece, we have categorised the sector into “new renewables”, which include solar, wind, biomass, small hydel and others, and “non-fossil energy”, which includes new renewables and large hydel and nuclear power.
It is also not clear what percentage of the generated power—or electricity we consume—would be renewable or non-fossil-based.
Understanding this is important to assess the country’s energy future and its ability to transition out of fossil fuels, even as the demand for energy soars. Estimates in the “Economic Survey 2023-24” show that India’s energy demands will surge by 2-2.5 times by 2047 to meet its growing economic needs. We also know that millions of households do not have access to energy, let alone clean energy. So, it is a challenge for the country to augment power infrastructure, to make it clean and to supply reliable electricity at affordable rates.
In 2023, the Central Electricity Agency (CEA) updated its scenario for optimal energy mix for the country by 2030. It says that the energy demand will increase to 2,440 billion units (BU) in 2030, from 1,255 BU in 2022. This will require 777 GW of installed capacity, but the growth will come primarily from new renewable sources.
As per the data, by the end of this decade, India will make a big switch in its modal share of energy generation. The 500 GW capacity of non-fossil energy would supply 44 per cent of the electricity demand.
By March 2024, fossil fuels—coal, gas and lignite—added up to 54 per cent of the installed capacity but were generating 77 per cent of the electricity. Fossil fuel-powered electricity will not disappear under this plan—its share in total electricity generation would still be 56 per cent in 2030. But what would change, and drastically, is that new renewables, which generate almost 13 per cent of the electricity today, would contribute up to 32 per cent.
As per CEA, the country would need to install 426 GW of new renewables, including 293 GW of solar energy. If this is done, solar power would be the driver of this clean energy future; it would supply 23 per cent of the electricity generated in the country by 2030. Clearly, this is ambitious but will provide the green energy transformation that India desperately needs.
So it’s time we deliberated on what the country needs to do to increase the installed and generation capacities of clean energy, so that future needs can make the transition out of fossil fuels. It is not about replacement of coal, but about dis-placement of coal by non-fossil energy sources.
Coal is still the king in terms of electricity generation. But new renewables, mainly solar power, have shown an impressive growth
By October 2024, India ranked fourth in the world for renewable energy capacity addition, with a total capacity exceeding 190 GW. It has the fifth largest solar power capacity and fourth largest wind power capacity globally.
In the past decade—2014 to 2024—the share of non-fossil energy has increased from 32 per cent to 45 per cent of India’s total installed capacity. These sources, driven primarily by solar energy, have increased from 87 GW to 198 GW. This is impressive, even though the installed capacity of fossil fuel-based electricity has also increased during this period—from 187 GW to 243 GW. Coal is still the “king”, with 218 GW installed capacity (of the total 441 GW), but it is losing its place. Its share is now below 50 per cent of the installed energy mix of the country, down from 60 per cent at the beginning of this decade. Conversely, the share of new renewables (primarily solar and wind energy) has gone up from 14 per cent of the installed capacity to 32 per cent.
The objective of this transition is clearly to move consumers to use more clean energy. But how much of this installed power is leading to the great switch in terms of clean energy consumption? India does not have a stated target for the percentage of generation of non-fossil energy in the electricity mix. But an analysis of data related to electricity generation between 2014-15 and 2023-24, shows the following trends:
Total electricity from all sources has increased 1.5 times—from 1,089 billion units (BU) to 1,731 BU; in this, fossil fuel-based energy has kept pace, also increasing by 1.5 times.
Old renewables—large hydel plants and nuclear—which are also classified as non-fossil energy sources have slipped in their growth trajectory. The share of hydropower has reduced in the energy mix in 2023-24. This could be an aberration due to hydrological conditions, but trends show that this energy source is not growing in the mix. Nuclear energy generation has also stalled.
What is leading the charge of electricity generation from non-fossil energy is new renewables, which have increased by a huge 64 BU to 225 BU—a 3.5 times increase in this period. Solar power has been the driver of this change, going up from 7 BU to 116 BU. This is no mean achievement. It is important to note that while installed capacity of solar (82 GW) includes ground and rooftop solar, no data is available for the generation from rooftop systems, which account for 17 per cent of India’s installed solar capacity. Despite this:
Coal is still dominant source of energy generation. In 2023-24, share of fossil energy in our electricity mix was nearly the same as in 2014-15, at 76 per cent.
The share of new renewables in electricity generation mix stood at 12 per cent, which is a doubling from 2014-15, but still not close to where it needs to be.
If we add hydropower and nuclear power to this, the share of non-fossil energy in electricity mix is 24 per cent in 2023-24.
At present, 143 GW of installed capacity of new renewables generates 226 BU, while 243 GW of fossil energy (coal, lignite and natural gas) capacity generates 1,324 BU.
The analysis shows the share of non-fossil energy must increase in total electricity generation to displace coal. Exis- ting non-fossil energy sources must also optimise their installation capacity.
Much has been done to improve regulatory environment for scaling up clean energy. But hiccups remain
There is no doubt that India is committed to expand its clean energy portfolio. The government has set ambitious targets and much has been done to improve the regulatory environment for scaling up the industry. The Union Ministry of New and Renewable Energy (MNRE) has plans to ensure annual bids of 50 GW of new renewable capacity until 2027-28. It has also designated agencies to implement the programme. Initially, three Renewable Energy Implementation Agencies (REIAS) had been nominated: the National Thermal Power Corporation (NTPC), the Solar Energy Corporation of India (SECI) and the National Hydroelectric Power Corporation (NHPC). These agencies were to function as intermediaries in this business to bid for projects, select developers and sell the energy to distribution companies. In April 2023, SJVN—formerly known as Satluj Jal Vidyut Nigam—was added to this list of REIAs.
The sector had already been awarded the advantage of being in the “Must-Run” category under the Electricity Act of 2003—meaning, among all the energy sources, renewable energy will be given priority dispatch. But this is often not the case. For instance, wind energy is often curtailed since units are required to back down from energy generation due to lack of transmission or because utilities find the cost of the power too high—particularly in the case of old power purchase agreements. So in 2021, the Union Ministry of Power notified the Electricity (Promotion of Generation of Electricity from Must-Run Power Plant) Rules, which set out the compensation that would be awarded to renewable energy plants if they were required to be curtailed.
This sector is also exempt from paying inter-state transmission charges for projects commissioned by June 30, 2025. Furthermore, the Renewable Purchase Obligation (RPO) followed by the Renewable Consumption Obligation (RCO) has been notified till 2029-30—this mandates all consumers to buy and consume a defined proportion of their energy from renewable sources and attracts penalties for non-compliance.
But perhaps the most critical and game-changing governance innovation was to create a mechanism to remove the uncertainty of payments and risks associated with renewable energy projects. The Solar Energy Corporation of India (SECI) plays a key role as an implementer of renewable energy projects. SECI issues tenders for solar and wind projects and awards these to developers based on a tariff-ruled competitive process. It then issues a letter of intent to the developer. But this process does not end here.
SECI, to de-risk the sector, then takes on the work to find buyers for this successful bid. It signs 25-year power supply agreements (PSAs) with state distribution companies (DISCOMs) and other utilities. Once this is done, it awards the power purchase agreement (PPA) to the developer of the project. SECI is thus the country’s key power trader in the renewable sector. It buys power from the developer of solar and wind projects and then sells it to state DISCOMS. According to its 2022-23 Annual Report, SECI has cumulatively signed PSAs of 48.352 GW capacity—which is roughly 40 per cent of the total installed renewable energy capacity in 2022-23 and 72 per cent of the installed solar capacity.
By being an intermediary, SECI takes on the risk of non-payment of dues by state DISCOMs—notorious as they are for this. This becomes more cumbersome as SECI takes on the burden of developer claims under the “change of law” clause, which is invoked when there are additional charges of tax or other regulatory changes. SECI is required to pay developers for the power purchased, regardless of the payments received from state DISCOMs. This is beneficial for de-risking the projects of developers, but it does put a question mark on financial health of SECI.
To de-risk SECI and other REIAs, the government has created a payment security fund, a capital reserve to provide interest-free payments to compensate for delays in these payments from DISCOMs. In addition, there is the provision of tripartite agreements signed between the Union government, state government and the Reserve Bank of India, under which payments can be withheld if there are dues, or other penalties.
However, little official information is available about whether this system is working. This information is important, not just to understand implementation of the renewable energy programme, but also to review the functioning of such a financial de-risking mechanism. For instance, the payment security fund has also been established for the electric bus programme in cities, with the provision that in the case of default by city bus companies, the private bus operators will be paid through this fund and recovery will be made through the tripartite arrangement with the Reserve Bank of India.
SOLAR POWER: CHEAPER, YET FEW TAKERS
In India’s clean energy transition, the most ambitious target is for solar power, which would need to install an additional 211 GW by 2030—roughly 40 GW a year over the next five years. The good news is solar energy installations are increasing. As per Bengaluru-based market intelligence firm Mercom, in the first nine months of 2024, the country commissioned 16.4 GW of solar energy—this is a 16 per cent year-on-year increase that has brought India’s installed solar capacity to 89.1 GW. Another 127.2 GW of utility-scale solar energy projects had been tendered or were pending auction by September 2024. Meaning, if these fructify, the country would have installed some 217 GW of solar capacity in the coming years, bringing it close to its target of 293 GW by 2030.
However, this “sunny” picture needs to be understood further. The November 20, 2024 chargesheets by the US Securities and Exchange Commission (SEC) against Gautam Adani and Sagar Adani, executives of Adani Green Energy Ltd, and Cyril Cabanes, an executive of Azure Power Global Ltd, has raised concerns about the renewable energy sector in India. According to the SEC’s allegations, “the bribery scheme was orchestrated to enable the two renewable energy companies to capitalize on a multi-billion-dollar solar energy project that the companies had been awarded by the Indian government. During the alleged scheme, Adani Green raised more than $175 million from U.S. investors and Azure Power’s stock was traded on the New York Stock Exchange.”
Without getting into the legal arguments or into the merits of the case, the question is why there should be a need to “bribe” officials to accept solar energy contracts.
The fact is, delivered solar energy costs are cheaper than coal-based thermal power—it is estimated that new coal projects (without being greenfield and taking land into account) would deliver energy at `5-5.50 per unit. In addition, this conventional energy source has to pay for inter-state transmission costs. In comparison, solar energy costs `2.60-2.80 per unit. Given this cost advantage, there should be no reason why solar energy is not preferred. There is clearly some problem, as data from the SECI website shows, and this needs to be understood so that the pathway ahead can be cleared.
The data for June 2024 for projects being implemented by SECI shows that large capacities of solar, wind and hybrid projects have not been commissioned. What is of concern are the projects where the effective PPA date is way past. Even assuming that the projects that have effective PPA dates for 2023 and 2024 will be commissioned soon, there is a backlog of over 12.5 GW of solar projects that have not been commissioned till date. In addition, there are another 5.9 GW of wind projects and 3.9 GW of hybrid projects with PPA dates of 2022 and earlier, that have not been commissioned, till the last data was available for June 2024 (for solar), November 2024 (wind) and September 2024 (hybrid plants). Overall, there is 18.4 GW of solar, 9.6 GW of wind and 6.5 GW of hybrid projects—adding up to 34.5 GW—for which PPAs have been signed, but the projects have not been commissioned.
As per the available information, the “effective PPA date” means the date on which the power purchase agreement begins. In this case, all these projects should have been commissioned on the date PPA began—but 34.5 GW is pending commissioning and has missed the date on which it should have begun operating and sold power to the utility through SECI.
As per procedure, SECI and other implementing agencies sign the power supply agreement (PSA) with utilities before signing the PPA with a project developer. PPA, therefore, means that the PSA has been signed, but power is not being sold and delivered to the utility. However, there is no public information that links PSA and PPA—something which is required to build confidence and transparency in this sector. This would have allowed for better understanding of the cost to the utility as agreed on in the project (PSA), and the link to the project and its developer (PPA) who would supply this electricity.
The not-commissioned projects range from inter-state solar to hybrid to round-the-clock solar and wind. The category of solar plants linked to manufacturing of solar components is the highest not-commissioned category. Most developers have projects that are delayed—Adani Power is at the top of the lot, but this could be because it is the largest in the country today and has ventures on manufacturing of solar components as well, which are being developed as integrated projects.
There also seems to be few takers for this cleaner and cheaper energy source. According to Mercom, SECI has released data that as of December 2024, “there are 9.2 GW of renewable energy capacity—solar, wind-solar hybrid, solar with battery energy storage and firm and dispatchable renewable energy (FDRE) across 33 projects, which is stranded for want of offtakers.” Adani Green Energy accounts for the highest inventory of unsold power at 1.799 GW, with a tariff of `2.42 per kWh discovered in the reverse auction. Azure Power is next with 0.967 GW at a tariff range of `2.42-`2.54 per kWh. There is another estimate that shows the bid to PPA ratio is only 16 per cent.
Over and above this are “stuck” projects of other REIAs—data for this is not available. But Mercom data shows that as of June 2024, NTPC Green’s pipeline of projects, for which there is no supply or purchase agreement, adds up to nearly 11 GW. Yet another report suggests that the unsigned contracts may add up to 30 GW, including the 9 GW of SECI. This suggests a clear challenge because without PPAs, the renewable energy future is not going to succeed.
The price of power is not the issue—at least, not in terms of the cost as compared to coal power—even with the SECI trading margin of `0.07 per kWh added. As per Mercom’s analysis of SECI data, the tariffs for unsold capacity range from `2.42 to `4.99 per kWh—the higher end being for hybrid and FDRE projects. But if these estimates are correct, then roughly 34 GW of renewable energy projects are not commissioned after signing PPA and another 30 GW are in limbo because of lack of PPAs.
While little information is available in the public on the state of affairs energy sector, Delhi-based think tank Centre for Science and Environment’s (CSE’s) interactions with sector experts throws by the following challenges.
Power utilities (DISCOMs) are hesitant to sign PSAs because the price of solar projects in particular has been volatile—in fact, it has been dropping. They do not want to be bound down with a higher price for next 25 years.
DISCOMs find that though Levelised Cost of Electricity (LCOE) of renewables is lower than that of fossil fuel energy, its intermittency is a problem. The utility continues to purchase coal-based power for its night-time users and for other times when the sun-wind is not available. In addition, they have to pay for the fixed cost of this fossil fuel energy even when there is supply from renewable sources, and this adds to their final bill.
Developers find land availability a constraint. It is estimated that an additional 0.3 million ha is needed for 500 GW. This is a challenge in a country like India, where land is scare; even lands termed as wastelands have habitations and users or have been designated as common resources critical for grazing or forestry. Resolving the land conundrum, thus requires care to compensate landowners, share benefits and also to find other options for scaling up renewables like rooftop solar and canal-top solar.
Transmission lines are required to evacuate the power generated. It is estimated that the average time for commissioning of transmission lines takes three to four years, as compared to commissioning of a solar plant, which takes 1-1.5 years to set up.
That said, there is no obvious reason why project developers should delay commissioning of projects with effective PPAs because it would be assumed that the project viability, including its location and cost, had been determined and agreed upon. No information is available on why these projects are delayed beyond the effective PPA date.
The fundamental flaw with the current policy regime of renewable projects is lack of data and transparency. It is difficult to find complete data of completed projects with capacity utilisation and the link to power sale. This is also because projects are implemented by a variety of agencies—CPSUs and state owned—through private developers. There is no consolidated accounting or monitoring of these projects and their progress.
Ensure that renewable energy is available round the clock. Establish a viable market and reward those who take lead
Given the intermittency of new renewables, it is now proposed that the country should move towards round-the-clock (RTC) projects. In other words, solar and wind projects would include battery or pump storage. The “Economic Survey 2023-24” says the Union Ministry of Power has issued guidelines on tariffs for such projects, terming them as “firm and dispatchable power” from grid-connected renewable projects (FDRE). But will these projects with higher costs be viable for power purchase agreements (PPAs)?
According to the “Economic Survey 2023-24”, while inter-state transmission connected solar PV projects were bid out in the range of Rs 2.6-2.74 per kWh, the cost of RTC projects go up to Rs 6 per kWh (see ‘Cost of renewable projects’, p38 and ‘Output intermittent’, p42). As yet, little information is available about the commissioning of these projects. The RTC project listed under SECI’s hybrid projects, with an effective PPA date of 2021, has not yet been commissioned. Industry insiders are wary of the price of delivered power and whether this will be acceptable to fund-stretched DISCOMs. But there is another view: this price of RTC projects should remain competitive with that of fossil fuels, which score because of their ability to supply power throughout the year and time of the day.
OPTIMISE ON NATIONAL GRID THROUGH RPOS
The Electricity Act, 2003, mandates the Renewable Purchase Obligations (RPOs) as a mechanism to ensure that states with higher potential of renewables would be able to sell this to others; the mechanism makes it mandatory for all DISCOMs to purchase a certain percentage of their energy from renewable sources. As per this mandate, all states are required to meet 43.3 per cent of their total consumption of electricity from renewable sources by 2030.
The underlying idea behind setting RPO targets is twofold: first, to significantly promote power procurement from expanding renewable sources and, second, to establish a viable market for clean energy technologies that are presently not cost-competitive, but do actively contribute to climate action goals. In instances where targets are not met, states can utilise the tradeable renewable energy certificate (REC) mechanism, which holds comparable equivalence to renewable energy-based power. According to the initial notification in 2010, State Electricity Regulatory Commissions (SERCs) are required to determine incremental annual RPO targets based on factors such as renewable energy resource potential, current and projected load-demand shapes and the impact of supplied power on the retail tariff. The RPO trajectory witnessed periodic increases to 23 per cent in 2023 from 2.75 per cent in 2016. In 2023, the Union Ministry of Power revised the RPO targets to reflect the increasing share of renewable energy in generation, aiming for 39 per cent by 2028. These revisions came into effect from April 1, 2024.
An analysis of states based on publicly available data (indiaredata.org and other online resources) reveals a shortfall in nearly 22 out of India’s 28 states in meeting their annual solar RPO targets. The rapid decline in solar power tariffs from 2015 to the present—dropping to around Rs 2.5 per kWh from nearly Rs 6 per kWh—has rendered solar tariffs cost-competitive with conventional thermal power. Ideally, the availability of competitive solar tariffs should encourage greater adoption of solar energy, thereby influencing clean energy investment decisions in the states. However, since most DISCOMs are bound by legacy PPAs for thermal power, their capacity to procure solar-based power gets reduced, thus affecting the overall RPO targets.
Only five states have consistently met their solar RPOs: Karnataka, Andhra Pradesh, Gujarat, Punjab and Uttar Pradesh. The eastern states have performed below 40 per cent since 2014, with several instances of unavailable data (West Bengal and Odisha) and low levels of integration despite potential (Jharkhand, Chhattisgarh and Odisha). Northern states such as Rajasthan, despite highest installed solar capacity, have not met targets from 2014 to 2019, and thereafter have not publicly disclosed their performance. Some states in the region may still be relying heavily on costly thermal PPAs (Delhi and Haryana), which hinder cheaper solar power procurement. It should be noted that several states, such as Telangana, Bihar, Chhattisgarh, Odisha, West Bengal and Tamil Nadu, have not consistently published their data (see ‘Reluctance galore’,).
Previously, the report of the Standing Committee on Energy of the 17th Lok Sabha in 2021 and a Comptroller and Auditor General report in 2015 have highlighted dismal performances by state DISCOMs in meeting RPO targets, as well as the non-enforcement of penalties and the allowance of carry-forward deficits from previous years by respective SERCs. According to a NITI Aayog paper, “Resource Adequacy Planning to Meet RPO targets by States, All India Roadmap 2024”, the current deficits in the targets are also attributed to inadequate generation of solar power. This is evident from the consistent shortfall in meeting RPO targets and the reluctance of utilities to purchase RECS for compensation.
A CEA report—“20th Electric Power Survey of India”—also highlights this generation deficit. It is important to strengthen this mechanism so that it can ensure scaling up of renewable energy projects in the country.
GREEN ENERGY STATES: INCENTIVISE THEM
Some states have moved towards non-fossil energy and are enabling clean energy transition in the country. These states are generators of green energy. For instance, non-fossil energy as a percentage of total generation in the Himalayan states of Himachal Pradesh, Jammu and Kashmir and Sikkim is 100 per cent. These states, with much higher non-fossil energy generation than their total energy consumption, are also suppliers to other states. How can these states be rewarded for this energy transition? One way could be to qualify industries that use clean power for green credits; or to transfer grants to states through the Finance Commission for this achievement.
ENSURE DOMESTIC MAKING: SCALE UP RAW MINERAL SUPPLY
India has an ambitious plan to raise the bar on domestic manufacturing of solar cells and modules. It has a three-pronged approach, much like in many other parts of the world, to wean itself off the Chinese domination on solar components. One, it has imposed a customs duty of 40 per cent on imported solar modules and 25 per cent on imported solar cells. Two, it has created a system to disincentivise the use of imported materials through the requirement of all projects to use domestically produced materials. In addition, there is the Production Linked Incentive (PLI) scheme which provides finances to companies that wish to venture into manufacturing solar components. This scheme, for which MNRE issued guidelines on April 28, 2021, targets manufacturing of high-efficiency solar photovoltaic (PV) modules in the country.
In April 2024, the country reissued the Approved List of Models and Manufacturers (ALMM) that requires that all government or government-assisted projects—which make up bulk of the projects in the country—should source Indian-made modules to be eligible for subsidies. Mercom reports that after ALMM, solar module imports into the country have dropped sharply. Currently, Indian companies are importing from Vietnam and Cambodia, which have a free trade agreement with India.
According to data presented to Parliament (Lok Sabha question no 338), as on October 31, 2024, India’s capacity to manufacture high-efficiency solar PV modules was 60.5 GW. According to the Union Minister of State for New and Renewable Energy Shripad Yesso Naik, this capacity makes the country well-positioned to meet the domestic demand and cater to the global market through exports. But as solar demand increases in the country, will there be a gap between the demand and supply of these solar components and does the price of domestically produced components keep the projects viable? (See ‘Import reliant’,)
Industry observers point to another issue. India is now a growing exporter of solar components and has plans to take advantage of the world’s disenchantment with China’s supply chain. According to a 2024 report by the Institute of Energy Economics and Financial Analysis (IEEFA), the country’s “export value of PV modules has increased by more than 23 times in just two years between FY2022 and FY2024”. The exporters of these modules earn 40-60 per cent higher profits when their products are sold to countries like the US (as compared to India). The report says the top solar component manufacturers—including Waree Energies, Adani Solar and Vikram Solar—exported more than half their annual module production in 2024. Industry observers, however, say this could be an underestimate as the bulk (close to 100 per cent) of the domestic production is bound for exports.
There is no doubt that exports can add to economic growth, bring in foreign exchange and even generate employment through the export of solar components, but will this lucrative export market end up constraining India’s domestic solar ambition? Data from the Union Ministry of Commerce and Industry’s Export-Import Data Bank reveals a trend of declining imports and also of increasing exports of solar modules.
The question is if India can challenge the dominance of China through its manufacture of modules and even cells, given that the basic raw material is still not in its control. China has a complete stranglehold on polysilicon—the first step in the supply chain—as well as on the production of the ingot from the polysilicon and the wafer, which is cut from the ingot. India is now breaking into the cell and module market, but China still controls up to 80 per cent of the world’s supply. As a 2024 paper from Observer Research Foundation (ORF), a think tank, points out, while India is projected to become the largest module manufacturer after China by 2024, it will still need to source its components from China.
WIND REPOWERING: MAKE IT WORK
Wind energy—a critical source of clean power—seems to have peaked in the country. Its growth has been sluggish and new projects are not being commissioned, as seen from the data with SECI. The fact is, wind energy was India’s leader in renewable power and the best wind sites (onshore) have been used up. But wind technology has vastly improved and the same sites can be repowered with a new turbine to generate more electricity. With newer turbines being significantly larger and more efficient than their predecessors, they can have greater electricity output. Repowering presents the opportunity to double or even triple the energy output of a wind farm while utilising the same land footprint. According to the “Indian Wind Power Directory 2021”, the bulk of wind turbines in the country are below 0.5 MW and between 0.5-1 MW. They are also of lower hub heights (25-30 m), which lowers the capacity to generate wind energy. According to the Global Wind Energy Council, newly installed wind turbines are around 3.2 MW. In fact, Adani Wind received certification for India’s largest turbine, a 5.2-MW model with 160-metre rotor diameter.
The National Institute of Wind Energy (NIWE) has assessed the repowering potential in the country to be 25.4 GW, specifically focusing on turbines below 2 MW. This figure unders-cores the untapped potential within India’s wind energy sector. MNRE echoes this estimation in its December 2023 policy regarding national repowering and life extension.
Clearly, wind repowering is not a new idea. The question is why, despite the clear logic, it is not taking off. Data available from various sources indicates that very few old turbines have been replaced. It is only in Tamil Nadu that less than 30 MW has been replaced, with the same aggregate capacity of the farm. Other states are yet to see any development in this sector. The mismatch between policy guidelines and demand from the industry needs to be looked at closely.
A CSE report on Tamil Nadu, which has the highest potential for repowering, highlights policy gaps in this area. The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has a draft policy for repowering and life extension, which aims to optimise on existing wind resources. But there are problems that still need to be addressed: the question of fragmented ownership of existing wind projects and, most critically, the economic incentives for dismantling the existing turbines and their replacement. This is when capacity utilisation factor ((CUF) of existing windmills and the few repowered projects is substantially higher—from 6 per cent to 17 per cent. Therefore, higher energy is generated and this increases viability.
The comparison of greenfield wind projects and repowering reveals—not surprisingly—that there is a cost attached to the dismantling and disposal of old turbines, which is not there in a new project. But this is not the issue—the reason for investing in repowering is the lack of new windy sites and the potential to optimise on current availability of land and other resources. The problem is that the old wind projects have been fully depreciated and there is no real incentive now for developers to repower them. Then there are bottlenecks in transmission infrastructure, which makes evacuation of power difficult. But these barriers are not impossible to overcome—and the opportunity is huge. What needs to be discussed is the agenda moving ahead.
DECENTRALISED RENEWABLES: CAN BE THE GAME CHANGER
The fact is, renewable energy is about a different tomorrow—a tomorrow that is green and inclusive. The technology is also designed to be modular and decentralised. As of today, large-scale renewable transition across the world has been fitted into the grid-based system, which was designed for fossil fuels. In this way, utility-scale solar or wind feed into the same grid and the power is supplied to households and industries through DISCOMs. So, how can this be differently planned and executed? Is this even possible?
First, there is the challenge of electricity supply. The government has an aggressive plan to reach every household with electricity. But even as the grid reaches everywhere, the electricity does not. This is because people are either too poor to pay for electricity, or the distribution company is too poor to supply it, or the market has no way of working with the cashless energy segment. Whatever the reason, millions in the country still live in energy poverty.
Second, there is the challenge of clean energy for cooking. Women across the developing world—including in China and India—are exposed to toxic emissions because of the biomass they burn to fuel their cooking stoves. Globally, it is estimated that 2.6 billion people still rely on biomass for cooking, with 80 per cent of sub-Saharan Africans and 66 per cent of Indian using this inefficient and polluting fuel. This adds up to roughly half the people in the developing world, or about 40 per cent of the global population. The International Energy Agency estimates that even by 2030, 43 per cent of the developing world (33 per cent of the world’s people) will continue to cook using biomass.
Third, there is the limitation of land for renewable projects—by optimising on available land (with farmers) or rooftops (with households and institutions), energy is generated, consumed and even supplied to the grid. It is the ultimate “uber” solution as resources in the hands of people are used to build a new energy future, which would be cheaper and easier to manage. But this is still a work in progress.
The fact is, energy security for vast numbers of the poor requires an energy delivery system that is different. It will require delivering energy, which costs less but is advanced and cleaner, to households that cannot even afford to buy basic fuel or light. It will require cutting the length of supply lines, leakages and losses and everything else that makes energy cost more, so that it is affordable. There is no clear idea what will work. But what is clear is that we have to push the envelope so that renewable energy becomes transformational—an agent of change for the society and environment.
On its dashboard, MNRE categorises decentralised renewable energy as the one that is used for lighting (street and home lighting systems) and agriculture (off-grid solar pumps which are grid-interactive, and solar feeders). Decentralised renewable energy can be a crucial cog in livelihood generation as well, in terms of developing clean energy applications for income generation purposes, besides direct use of electricity.
It is clear that there is huge potential in this sector which puts energy generation in the hands of consumers, who then would be expected to improve demand-side management to optimise their energy. There are also new areas emerging that look at this source of power for livelihoods and agro-photovoltaics. The question now is how this can be scaled up.
ROOFTOP SOLAR: AN IDEA WHOSE TIME HAS COME
The domestic sector consumes roughly a quarter of electricity in the country. Rooftop solar offers a solution to reduce this burden on DISCOMs by enabling households to produce electricity. But the question of viability of this system remains unanswered. Can it provide the electricity that is needed by the building owner—residential or institutional—both in terms of quantum and time of day?
In most solar rooftop systems, people use the DISCOMs to supply excess daytime electricity and buy back electricity at night-time or when the sun is not shining or to meet their larger demands. Therefore, the role and the health of the DISCOM is critical for the growth and success of the distributed renewable system—this is, unless the entire system can be designed to disengage with the utility through standalone batteries for storage and supply.
The Union government has been incentivising rooftop solar programme for over a decade. It has also seen policy innovations as governments work to ensure that the programme delivers to segments that are unable to pay for the capital cost of the system. The problem lies in the fact that under the programme energy costs for households—particularly at the lower income levels—are subsidised, which makes it difficult for more expensive solar-based system to penetrate.
The rooftop solar system has been most preferred as consumers see an obvious cost-advantage in producing their own electricity. The opportunity lies in how governments can use the millions of roofs to put in place an energy system of the future—and this seems to be taking off now. The PM-Surya Ghar (solar house) scheme—also called the free electricity scheme—is designed to reach million rooftops in the country.
As per MNRE’s dashboard, as of October 2024, the country’s solar rooftop system had an installed capacity of 14 GW—this is added to the combined installed solar energy capacity of 80 GW. In other words, solar rooftop constitutes 17 per cent of the total installed capacity for solar. The problem is, while there is data for installation of solar rooftop, the generation from this system is not accounted for. This is because the information is in the hands of consumers or DISCOMs (which receive the energy that is supplied, but do not collate the data).
The India RE-Navigator, a project of Bridge to India, a subsidiary of credit rating agency CRISIL, estimates that the total solar rooftop installed capacity to be 14 GW, of which 10 GW is in the industrial-commercial segment and less than 3 GW is in the residential segment. Interestingly, the data shows the bulk of rooftop solar is in the capital-expenditure (CAPEX) model (9 GW out of 13), in which consumers install the system at their cost or with subsidies from the government. The rest is in the operating-expenditures (OPEX) model, where solar companies put up the capital cost into the system and the “owner” pays for the electricity. According to India-RE Navigator, some 616,019 solar projects have been installed in the country till November 2024.
The case for rooftop solar emerges from its own characteristics: as land-based solar is land-intensive, the use of decentralised solar resources can enhance renewable energy capacity locally, reduce the users’ electricity bills and bring down the need for transmission infrastructure. It is the perfect local-for-global solution. The government has provided schemes for upfront subsidies to underwrite the high capital investment, as well as payment for the solar energy fed into the grid through net metering. Over the years, policies have evolved:
In 2010, the Jawaharlal Nehru National Solar Mission (JNNSM) was launched with a target of 2,000 MW (2 GW) of RTS capacity by 2022. The focus was initially on generation-based incentives. l In 2012, the Union government introduced a net metering policy which would credit the generators for each unit of energy distributed to the grid.
In 2013-14, the OPEX (developer-led) model was introduced in addition to the CAPEX (consumer-led) model.
In 2019, DISCOMs were made the nodal implementing agency for rooftop solar. During this phase, the central financial assistance was also increased to 40 per cent for up to 3 kW and 20 per cent for 3-10 kW capacity for residential owners only. Additionally, incentives were introduced for DISCOMs and developers to encourage more active participation.
The installed capacity increased by 83 per cent between 2019 and 2023, up from 1.8 GW in 2019 to 10.4 GW in 2023.
In 2024, an ambitious the PM-Surya Ghar Programme has been launched targeting the residential sector.
The PM Surya Ghar (Muft Bijli) Yojana of 2024 targets the lower income residential segments. The objective is to leapfrog these households to cleaner energy. This ambitious scheme with an outlay of Rs 75,021 crore aims to reach by 2027, as many as 10 million households with consumption of up to 300 units of electricity per month. The scheme has an online process, from registration to subsidy disbursal, which is sent directly to the bank account of the residential consumer through the national portal. It is estimated by the National Sample Survey Organisation (NSSO) that, on an average, the bulk of Indian households use less than 100 units of electricity per month. The scheme will provide an upfront capital cost of Rs 30,000 for a 2-kW solar rooftop system, which would generate roughly 230 units per month. The catch is that the capital cost is still not fully financed—a 2-kW system would cost Rs 1-1.15 lakh or higher. This means the household would need to pay Rs 90,000-1 lakh—which is a barrier for poor households. The incentive for households is that they then become self-sufficient in energy, with a zero-bill for power consumption, as stated in the scheme’s objective. This, of course, depends on the quality of the rooftop available to these households, as the poor—in most cases—live in unauthorised and slum areas.
The subsidy is capped at Rs 78,000 for systems of 3-kW and above. This system would provide roughly 350 units per month and cost Rs 1.60-1.80 lakh, which means the subsidy would pay for half the cost. According to data provided by the government to the Parliament (Lok Sabha Unstarred Question No 422 answered on November 27, 2024) some 4.2 per cent of the total registrations on the national portal have led to installations of solar rooftops. Therefore, with 14.488 million people registering for the scheme on the portal, it led to applications from 2.5 million and final installation of 0.6 million.
Gujarat reported installation of 281,769 rooftop solar projects out of the 310,845 applications received; Maharashtra reported installation of 120,696, while Uttar Pradesh reported installation of 51,313 installations out of 2.2 million registrations and some 0.5 million applicants. This also suggests a huge mismatch between the applications received and the installations. However, it is not clear how much of the subsidy amount has been disbursed so that the systems can be installed. Replying to Rajya Sabha question no 945 on December 3, 2024, the government said that “subsidy has been released to 0.366 million applicants”. It is however not clear how the government plans to monitor the implementation and commissioning of these projects. It is important to ensure that the subsidy is not misused.
Gujarat has been leading on rooftop solar for some years now and by early 2024, already had close to 2.9 GW installed on its roofs. It is followed by Kerala, Maharashtra, Karnataka, and Rajasthan. These five states make up about 70 per cent of the rooftop solar installed in the country, according to MNRE.
The other option being considered by many states is to aggregate the rooftops so that these become feasible for projects to be taken up in the RESCO (renewable energy service company) or private operator model. Madhya Pradesh is leading on this, its RESCO tender 1 and 2 for rooftop have been oversubscribed and are being implemented in over 100 buildings across the state. Under this, for instance, all medical colleges in the state have taken to solar rooftop with a combined capacity of 2.9 GW. As a result of the combined tender, the price has also been reduced—the Indian Institute of Management (IIM), Indore, for instance, has a plant of just 460 kW, but at a price of Rs 1.38 per unit.
It is clear that the success of the rooftop programme is intrinsically linked to the health of the DISCOMs. In recent years, substantial government effort has been made to address DISCOM finances, particularly concerning their deficits and the necessity for continuing with the state subsidies. Following two significant bailout programmes funded by the Union government, states have worked to improve tariff structures and reduce subsidies to households. With rising electricity bills affecting everyone, including those who were previously cross-subsidised (such as low-income residential consumers who receive up to 200 unit for free or nearly free per month), rooftop solar is increasingly appealing to a broader range of consumer categories beyond commercial and industrial users.
The key is to ensure that while rooftop solar is incentivised, it does not come at the cost of the DISCOMs. Currently, as “paying” customers set up their rooftop generation units, the DISCOMs get less money; this weakens their financial situation further. However, without the DISCOM, the household or institutional solar rooftop owner would not have access to electricity supply during the night or at times when the sun is not shining. They would need to invest in storage systems, which as of now are still costly. Therefore, the DISCOM is the storage-backup for the rooftop owners and this needs to be understood so that both can grow together.
This then raises issues of what would be the best billing policy for DISCOMs and individual roof owners. Currently, the preferred billing system is termed as net-metering, under which the DISCOM adjusts the bill for the units of electricity exported. There is another option to move towards net-billing, which would allow the DISCOMs to pay only for the units exported and at the lower price of day-time electricity. The fact is the incentive system must be changed so that rooftop owners are benefitted if they maximise their consumption—they do not set up the system to “sell” to grid, but to use the generated electricity during the day to its maximum. This lessens load on the DISCOM, which is then used as a “storage” or backup for night-time electricity purchase.
PM-KUSUM: COST IS A KEY CONCERN
The Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan (PMKUSUM) was introduced in 2019 with the objectives of incorporating renewable energy for irrigation; for helping farmers gain access to solar water pumps at subsidised rates; and for giving farmers an avenue to utilise their barren land by setting up solar power plants for energy generation.
PM-KUSUM was divided into three components—A, B and C—with corresponding targets to be met by 2022. Under Component A, farmers or cooperatives can install renewable energy plants up to 2 MW on their lands with the objective of selling generated electricity to DISCOMs. Under this component, procurement-based incentive (PBI) is provided to the DISCOM at Rs 0.40 per kWh to buy renewable power from the farmer or cooperative. In addition there is a component for development of one village in each district of the country as a model solar village—which based on a challenge grant is provided Rs 1 crore to transition to solar. The target was set at 10,000 MW of decentralised ground/stilt-mounted grid-connected solar power plants.
Component B includes installation of off-grid solar water pumps on farmers’ lands. The target for component B was set at 1.75 million standalone solar agriculture pumps. Component C entails solarisation of grid-connected agricultural pumps by installing grid-connected solar pumps on farmers’ lands. Components A and C were supposed to be implemented initially on a pilot mode for 1,000 MW capacity and 0.1 million grid-connected agriculture pumps respectively, while component B was to be implemented in a full-fledged manner with total Union government support of Rs 19,036.5 crore. The scheme was scaled up from its pilot stage in 2021; in August 2022, it was extended till 2026.
The 2019 target was solarisation of one million grid-connected agriculture pumps. In 2020, MNRE introduced feeder-level solarisation (FLS) as a sub-component under component C, in addition to solarisation of existing electric pumps (to be referred to as individual pump solarisation or IPS).
The scheme also offers subsidies for components B and C to encourage its adoption. Under component B, 30 per cent central financial assistance (CFA) is provided on the upfront costs in addition to at least 30 per cent subsidy through the state government. In total, farmers have to contribute some 40 per cent of the costs of their solar water pumping systems. The subsidy in the case of special states (northeastern states, Sikkim, Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Lakshadweep and Andaman and Nicobar Islands) is 50 per cent CFA. Under component C (FLS), developers receive 30 per cent CFA and no additional subsidy is provided from the state.
CSE’S analysis reveals that the three components of the scheme have been planned in a way to enable them to offer benefits to farmers of all categories—marginal, small, medium and large, divided on the basis of landholdings. Component A benefits farmers by giving them access to an extra source of income from their barren land. Farmers can start a solar power plant up to 2 MW and sell the electricity generated to the grid.
Component B targets small farmers who are currently dependent on diesel and off-grid based pumps. The farmers can opt for stand-alone solar water pumps replacing their electric/diesel pumps, which would lead to savings in terms of operational costs such as amount spent on purchasing diesel or paying electricity bills.
Component C is divided into two sub-components. The first is IPS, which involves setting up grid-connected solar water pumps on farmers’ lands. Under IPS, the capacity of the solar power plant can be twice the capacity of the farmers’ existing water pumps (in kW), so that farmers can sell the excess electricity generated back to the grid. The second sub-component, FLS, entails farmers with land located within 5 km from the nearest substation to start a micro-grid—they can use this to sell electricity to the substation and power their agricultural feeders.
According to the national portal on PM-KUSUM, the progress under this scheme is primarily in component B—where roughly 0.5 million solarised pump sets have been installed. Three states are in the lead: Haryana with 136,036 pumps, Maharashtra with 163,906 and Rajasthan with 82,553 solar pumps on their agricultural fields. But even in this component, progress is impeded. CSE’s 2024 study on the implementation challenges of the PM-KUSUM scheme identifies that cost is the key concern. Under the scheme, which provides subsidy, the solar pump system must be procured through manufacturers listed under the “Approved List of Models and Manufacturers (ALMM)”. This list is to ensure that domestically manufactured solar modules are used. These are more expensive than the imported modules.
This increase in solar PV module price has led to an increase in the cost of solar water pumps under PM-KUSUM and, therefore, an increase in the farmers’ upfront costs. The availability of free or nearly free electricity adds to this lack of interest. However, in states, where agricultural electricity is regulated, there is greater demand for solar pumps.
It is also clear that the as groundwater levels go down, farmers will need higher capacity pumps to draw water. Under PM-KUSUM, pumps up to 15 horsepower (hp) are permissible, but subsidy is given only for pumps up to 7.5 hp. This adds to cost of the system. However, in many cas-es, states are combining this programme with the incentives given for drip irrigation, which makes the system work to manage water demand. The problem also is the lack of delivery in rural areas—the sector still lacks entrepreneurs to run operations and maintenance activities in these regions. This needs to be improved.
This is part of the cover story ‘The 500 GW switchover’ on clean energy transition first published in the 16-31 January, 2025 print edition of Down To Earth