OPINION: India’s 2025 renewable energy ambitions face a reality check

India’s aspirations to lead the global renewable energy transition are ambitious, with the nation on track to deliver 238 gigawatts (GW) of renewable capacity by 2025 and pushing to achieve a 50% renewable share in its energy mix by 2030. These goals, driven by sustained investment and progressive policies, make the country a pivotal player in the global energy shift. Yet, while the momentum appears unstoppable, fundamental challenges risk undermining the pace and stability of this transition.

Achievements and the role of policy

India’s renewable energy growth has been remarkable, with installed capacity pushing past 200 GW in 2024 – a 170% increase in capacity in more than a decade. Solar photovoltaics (PV) led the charge, with 98 GW added by the end of last year, supported by initiatives such as PM Surya Ghar Muft Bijli Yojana (PM-SGMBY) and PM Kisan Urja Suraksha evam Utthaan Mahabhiyan Yojana (PM-KUSUM). Meanwhile, onshore wind capacity sat at 48 GW by the end of last year. Hydropower development is picking up in northeast India, leveraging the region’s vast hydro potential. The Indian government, keen to boost domestic solar manufacturing, has also enforced local sourcing mandates for module developers, with phase two of this approach looking to be imposed after June 2026 – a strategic move to reduce dependence on imports and build domestic capability.

The stringency of these policies, however, presents a two-sided challenge. The impending expiration of the inter-state transmission system (ISTS) charge exemption in June this year threatens to disrupt progress. This exemption, which has been crucial in reducing costs for renewable developers, has played a key role in expanding renewables across state borders. Industry stakeholders are calling for an extension to sustain momentum. The outcome of the ISTS decision will either create an opportunity to resolve key policy bottlenecks or risk undermining the growth trajectory of renewables.

Mixed blessing of auctions

India’s 500-GW renewable energy capacity target by 2030 hinges on large-scale project allocations, primarily through auctions. Significant progress was made last year when 47 GW of solar capacity auctions were awarded, bringing the country closer to its annual 50-GW target. However, 51 GW remains unallocated, with Rystad Energy estimating this capacity will be awarded this year. Hybrid, and firm and dispatchable renewable energy (FDRE) auctions have also gained momentum, highlighting the increasing focus on storage-backed renewables to ensure a reliable, round-the-clock power supply.

However, many awarded projects remain in limbo due to the absence of power supply agreements (PSA). Approximately 10 GW of projects, mostly solar, are stuck due to lack of contractual clarity, which is adding to a growing backlog. This delay in financial closure erodes investor confidence and raises questions about whether India’s ambitious targets rest on shaky commercial foundations.

The storage dilemma

India’s renewable ambitions are constrained by a lack of energy storage infrastructure. Battery energy storage systems and pumped storage solutions have not yet been scaled up to meet requirements from renewable energy capacity, with the former reliant on costly imports and the latter constrained by long project timelines and capital expenditure (capex) intensity. Domestic

manufacturing is insufficient, and regulatory delays could push operations of planned storage projects far into the next decade. Renewables will suffer from intermittency issues without robust storage, forcing distribution companies (DISCOMs) to fall back on thermal generation to ensure a dependable supply.

This limitation has kept renewables’ generation share stuck around 20% despite capacity gains. Dedicated green energy transmission corridors, which are under development especially in eastern and northeastern regions, also face delays. Consequently, thermal power remains the bedrock of India’s energy system. It is essential for a reliable supply as peak demand climbs, with this demand projected to hit 270 GW this year. The reality is stark: renewables will struggle to meet India’s growing power needs without scalable storage solutions.

Persistent role of thermal power

Thermal power continues to play a critical role even as renewables accelerate. Coal-fired plants, deemed more dependable by DISCOMs, dominate the energy mix with substantial government backing. India plans to add 80 GW of coal capacity by 2030 and recently lifted a suspension on decommissioning thermal plants until the same date. New peak demand records have

underscored this dependence, prompting the government to activate gas-fired plants during heatwaves and ramp up coal production.

This duality ensures a stable power supply in the short term and highlights the inherent tension in India’s energy transition. Renewables, on the one hand, promise long-term sustainability and reduced emissions and, on the other, thermal power secures immediate energy reliability – a balancing act that places policymakers in a difficult position.

Global implications

India’s renewables mission has implications far beyond its borders. The country’s approach to balancing its rapid adoption of renewables with the reliance on fossil fuels mirrors the challenges faced by other major economies. Its successes or failures will set a precedent for addressing intermittency, navigating infrastructure limitations and reconciling economic growth with decarbonization goals. Furthermore, India’s pivot away from high Chinese imports amid rising protectionism highlights the emerging geopolitics of clean energy supply chains. As many countries also have protectionist policies in place with respect to Chinese imports, India stands to gain as a reliable and cost-effective participant in the global solar supply chain. India has since emerged as a trusted import partner to the US.

The gap between ambition and reality also offers lessons. It underscores the need for comprehensive, long-term policy frameworks that secure financing, incentivize innovation and resolve infrastructure bottlenecks. The Indian market remains attractive for investors and developers, but it is rife with risks tied to regulatory shifts and market inconsistencies.

The road ahead

India must focus on addressing its structural hurdles to sustain its renewables push when looking to this year and beyond. Extending the ISTS charge exemption, expediting storage projects and ensuring swift financial closure for auctions will be essential. At the same time, the government must recognize that an over-reliance on coal risks undermining its broader goals,

both domestically and globally. If India truly aspires to be a leader in the global energy transition, the path forward demands ambition and action that aligns policy, politics and practicality. Whether India navigates this transition effectively will shape not only its own energy future but also the dynamics of the global clean energy race. The stakes have never been higher, and the

world is watching.

[This piece was written by Uttamarani Pati, Analyst, and Sushma Jagannath, Vice President, Renewables & Power, Rystad Energy]