Renewable Energy

India to almost double its renewable power capacity in next 5 years: IEA report

Solar PV accounts for three-quarters of renewable energy growth, followed by onshore wind with 15% and hydropower providing almost all the rest  

By Seema Prasad
Published: Friday 09 December 2022
The Production Linked Incentive scheme sanctioned 9 GW of PV manufacturing capacity to provide an ecosystem of local manufacturing. Photo: iStock

Renewable energy will comprise 90 per cent of global electricity capacity expansion in the next five years and much of it will be in India, according to a new study by the autonomous intergovernmental organisation, International Energy Agency (IEA).

China, the European Union and the United States will be three other geographies contributing majorly to this upward trend besides India. This is primarily owing to the favourable policies and market reforms in all four.

Renewable energy’s installed power capacity addition will grow to 2,400 gigawatts (GW) between 2022 and 2027, according to the study. The forecast said this expansion was 85 per cent faster than the previous five years and will be equal to the entire installed power capacity of China today.

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“With the addition of 145 gigawatt (GW), India is forecast to almost double its renewable power capacity over 2022-2027. Solar photovoltaic (PV) accounts for three-quarters of this growth, followed by onshore wind with 15 per cent and hydropower providing almost all the rest,” the IEA report said.

Solar, wind and discoms

The report said consistent policy support from the Indian government may enable this transition, particularly by promoting local manufacturing of solar modules. This is because there are bottlenecks in the supply chain from China.

Two such policies came to effect in 2022: 

  • The duty on imports was increased to 40 per cent for PV modules from 15 per cent and to 25 per cent for solar cells in April 2022. This was done to reduce dependence on China and increase domestic manufacturing. The report said this is expected to add 16 GW of PV capacity, 60 per cent higher than last year.
  • The Production Linked Incentive (PLI) scheme sanctioned 9 GW of PV manufacturing capacity to provide an ecosystem of local manufacturing. This programme aims to expand India’s solar PV cell and module manufacturing capacity to over 70 GW in this decade, including 29 GW of manufacturing capacity fully integrated across the whole supply chain, the report said.

Astha Gupta, India consultant for the IEA, told Down To Earth: “Two policy measures that India has adopted to promote domestic manufacturing in the solar PV sector include the PLI scheme and raising import duties on modules.”

She added that these measures are expected to meet the growing demand of the renewable energy industry and help in the diversification of supply chains in the long term.

“Secure and resilient supply chains could play an integral role as India plans for 500 GW of non-fossil capacity by 2030,” Gupta said.

Almost a quarter of the capacity awarded since 2021 has been contracted through hybrid auctions. These auctions are thus expected to be an increasingly important growth driver as the penetration of wind and PV technologies in India’s power system grows and grid integration challenges emerge, the report said.

“Hybrid projects refers to innovative combinations of solar and wind power at a site. It can include solar, wind, and battery or pumped hydro storage. Bundling coal with renewables is also another option,” Gupta said.

She added that storage will play a key role in the hybrid project, particularly to overcome the intermittency of RE and enhance grid balancing.

Clean energy transitions are driving down the costs of energy storage technologies, expected to reduce further with an increase in scale and innovations, Gupta noted.

Policy changes in the wind energy sector were also made to accelerate the transition to renewables. In July 2022, the Indian government suspended reverse bidding in wind auctions.

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Currently, the government is considering closed-envelope submissions. The IEA report said this could raise tariffs for wind energy and make it a more competitive market.

“On the demand side, higher renewable purchase obligations, which were announced in July 2022 and specify targets for wind, hydro, and other renewable energy sources (solar, bioenergy), should further encourage power utilities (DISCOM) to procure renewable energy,” the report read.

Vibhuti Garg, south Asia director of, the Institute for Energy Economics and Financial Analysis told Down to Earth: “Suspending reverse bidding was a positive thing because for a good four or five years, it did not lead to higher wind capacity addition.”

Wind energy is a different ball game compared to solar because the good sites are only located in coastal states. Even within a coastal state, there are tier 1, tier 2, and tier 3 sites depending on the wind intensity, according to the expert.

“Another aspect not working under the reverse bidding mechanism was the differences in costs. For instance, land procurement was expensive in Tamil Nadu as the land is mostly privately held. Whereas in Gujarat, the land was provided by the government and the cost was cheaper,” Garg added.

“Closed envelop bidding may lack transparency and may not be the only way ahead. One has to look at different mechanisms in combination such as accelerated depreciation, generation-based incentives, or feed-in tariffs,” Garg said.

The report said raising the capability of DISCOMs to procure more renewable energy will be crucial to achieving faster growth.

To this end, improving the financial performance of DISCOMs and increasing penalties for non-compliance with renewable purchase obligations should limit delays in signing PPAs with auction winners, making developers and investors more willing to undertake new utility-scale projects.

In addition, offering DISCOMs financial and regulatory incentives to increase rooftop PV deployment in their grids should encourage them to attract tens of millions of potential prosumers by facilitating investment, thereby tripling main-case distributed PV deployment for 2022-2027, the report added further.

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