Can India achieve its ambitious target of 500 GW non-fossil fuel capacity by 2030?

February 7 was an important day in India’s energy transition journey. The country achieved 100 GW installed solar capacity—a milestone on the path towards a greener future. This paves the way for the much bigger target of 500 GW non-fossil fuel capacity by 2030. However, the road is long and mired in challenges. The electricity system in India faces the complex challenge of ensuring continuous and reliable power, while keeping costs affordable and reducing carbon emissions. India’s efforts to ramp up renewable energy (RE) capacity over the last decade led to the country having the 4th largest installed capacity in 2023. It now has 211GW of RE installed capacity. By 2030, India is set to have the world’s third-largest total installed renewable capacity, following only China and the US. There is also a target of 15GW of installed nuclear power capacity by 2030 from the present 8GW. And efforts to reduce dependence on petroleum imports are apparent. For the first time, the Indian government has opened the nuclear sector to private participation; the companies can now invest in small and modular nuclear reactors. The government’s National Green Hydrogen Mission (NGHM) is also an instrumental step. Keeping in mind the energy requirements of sectors like ammonia, steel and cement, the NGHM lays a road map for providing green hydrogen at an economical cost for industrial decarbonisation beyond 2032. Another important factor is energy storage, which is a critical component of reliable energy supply and grid stability. To address the challenge of intermittency of renewable power, the government has ensured that the majority of recent renewable—solar and wind—tenders have a mandatory inbuilt battery storage capacity target. According to the Central Electricity Authority (CEA), India needs 336 GWh of storage by 2030, to be met largely by battery systems (208.25 GWh), with the rest being served by pumped hydro storage projects. As of September 2024, 211 MWh of BESS, or battery energy storage system, capacity is operational in India; 1.8 GWh of BESS is to be added in 2025. India’s Energy Demand India’s energy demand is seeing an unprecedented surge. Over the last three years, demand has grown at an accelerated rate, far exceeding historical averages. Nomura has projected robust growth for India’s power sector, anticipating a compound annual growth rate (CAGR) of over 7 per cent in electricity demand from FY24 to FY27. These mark a significant uptick compared to the moderate growth rate of 4–6% in the pre-pandemic years. Pranav Master, Senior Practice Leader and Director, Consulting—Energy &amp; Sustainability at independent research firm Crisil Intelligence, says RE capacity (excluding large hydropower) has grown at 13% CAGR between 2019 and 2024. It was over 143 GW at the end of FY24. Favourable policy, falling solar equipment prices and a strong thrust on decarbonisation in the industrial segment have been the key drivers for this growth. “Going forward, total renewable capacity additions (solar and wind energy) are expected to be robust at 250-270 GW over FY25-29. This growth will be led by utility-scale projects driven by continued favourable economics, aggressive plan to award 50 GW annually (till FY28), ambitious technology-wise RPO targets as well as policy and regulatory support,” Master tells Business Today. RPO is renewable purchase obligation. The rooftop solar market, led by favourable economics and strong government support through the PM Surya Ghar scheme, is also expected to encourage healthy installations. The FY26 Union Budget has allocated `20,000 crore for the scheme. India’s annual fuel import bill is around $150 billion, and alternative sources of energy can play a big role in reducing it keeping in mind the abundance of solar and cost economics in favour of renewables. Nikhil Dhingra, CEO of solar energy company ACME Solar Holdings, says renewables will play a major role in years to come, keeping in mind the country’s huge fuel import cost. He says India has not been able to set up renewable capacity because of cost competitiveness. “Both on the commercial and environmental front, renewable will rank as the most optimal form of energy in which India can be competitive and benefit manufacturing, consumers and producers like us,” Dhingra tells BT. ACME has contributed to 5% of India’s total solar capacity of 100 GW. On the changing course of renewable power, Dhingra says the industry is working to solve the peak demand problem to compete with round-the-clock power in non-renewable hours. “The adoption of renewables is set to increase very fast in the next 5-10 years as we are solving the peak demand problem. We have been doing hybrid power, battery-based contracts and firm and dispatchable renewable power,” he adds. Journey of transitioning to green sources A recent report by FICCI titled ‘Powering India’s Energy Transition’ points out that meeting India’s target of 500 GW non-fossil fuel capacity by 2030 will require more than incremental changes. The complexity of integrating large-scale renewable energy, ensuring grid reliability, and keeping costs manageable requires a comprehensive approach across three critical pillars: policy, infrastructure, and financing. On the policy front, India has already laid a strong foundation with its comprehensive policy frameworks, which have driven growth for renewables. The report says the country has seen substantial successes through policy initiatives to address demand-side and supply-side issues, and in overall ecosystem development. When it comes to infrastructure, the pace of deployment is increasingly constrained by land acquisition challenges and transmission infrastructure bottlenecks. Streamlined land acquisition processes and proactive evacuation planning will be crucial, modelled after successes in states such as Gujarat and Karnataka. Thirdly, in financing, the money required to meet India’s energy goals—estimated at `30–32 lakh crore by 2030—demands an enhanced focus on mobilising capital. “Scaling up financing through green bonds, domestic institutional investments, and international funding will be essential going forward. Empowering NBFCs such as IREDA, PFC, and REC to play a more significant role in financing renewable projects and encouraging banks to increase lending to the sector will help bridge the funding gap,” the report says. Master also flags that as India embarks on a large-scale capacity buildout, a few areas will need strong focus to ensure sustained growth in investments. “Long-term policy visibility and certainty is important to ensure adequate participation from developers, financial investors and lenders. Appropriate policy interventions to efficiently aggregate land parcels as well as streamline contractual and tendering processes of transmission projects would be essential,” he says. Another important task would be ensuring technology and economic competitiveness of the equipment manufacturing ecosystem through rationalisation of tax and duty structures, budgetary allocation, and tax exemptions with partial recovery mechanisms for R&amp;D activities. “As we expect cumulative investments of `14-15 lakh crore between FY25 and FY30 in building capacities, conventional sources of finance are expected to be inadequate. Diversifying the available pools of capital would go a long way to support project development. For instance, deepening of bond markets would nurture fixed and long-term finance,” adds Master. Some of the reforms that the industry players recommend for expediting scaling up of renewable capacity are availability of government land, ramping up transmission capacity in large producing states in the next five years, and cheaper rate of financing by reducing tariffs to boost adoption of renewables. The next phase of India’s green journey will depend on addressing infrastructure bottlenecks and securing affordable financing to ensure India remains on track to meet its ambitious targets. What remains an open question is if India can lead the world in this transition. @richajourno

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Can India achieve its ambitious target of 500 GW non-fossil fuel capacity by 2030?

India's ambitious target of 500 GW non-fossil fuel capacity by 2030 will require extensive effort. Can it be achieved?