Share of Clean Energy in India’s Electricity less than 30% despite 50% of installed Capacity

Syllabus: GS3/ Environment

Context

• India has reached 50% of its total installed electricity capacity from non-fossil fuel sources, achieving its NDC target five years early.
  • However, these sources contribute less than 30% to actual power generation.

India’s Renewable Energy Capacity

• Overall Renewable Energy Growth: 
  • Record capacity addition: 29.52 GW added in FY 2024–25.
  • Total installed RE capacity: Reached 220.10 GW as of March 2025 (up from 198.75 GW).
  • Target: Progressing toward 500 GW non-fossil fuel capacity by 2030 under Panchamrit goals.
• Solar Energy:
  • Leading contributor: 23.83 GW added in FY 2024–25 (vs. 15.03 GW in previous year).
  • Total installed solar capacity: 105.65 GW.
• Wind Energy:
  • New capacity addition: 4.15 GW in FY 2024–25 (up from 3.25 GW).
  • Total installed capacity: 50.04 GW
• Bioenergy & Small Hydro:
  • Bioenergy total capacity: 11.58 GW, including 0.53 GW from off-grid/waste-to-energy.
  • Small Hydro capacity: 5.10 GW, with 0.44 GW under implementation.
• Project Pipeline:
  • Projects under implementation: 169.40 GW
  • Projects tendered: 65.06 GW
  • Emerging solutions: 65.29 GW from hybrid, (Round-the-Clock) RTC, peaking power, and thermal+RE bundling.
• India stands 4th globally in Renewable Energy Installed Capacity, 4th in Wind Power capacity & 5th in Solar Power capacity (as per REN21 Renewables 2024 Global Status Report).
  • The leading states in India for renewable energy capacity are Rajasthan, Gujarat, Tamil Nadu, and Karnataka.

What are the Challenges?

• Low Capacity Utilisation Factor (CUF): Clean energy sources are intermittent and weather-dependent. Hence, their actual output is much lower despite high capacity.
  • Eg: Solar CUF: ~20%, Wind CUF: ~25–30%, Coal CUF: ~60%, Nuclear CUF: ~80%.
• Base Load Dependency on Coal: Coal continues to supply over 75% of India’s electricity demand, especially at night when solar isn’t available.
  • India’s grid still depends heavily on thermal sources for round-the-clock (RTC) power.
• Storage and Transmission Limitations: Lack of grid-scale battery storage prevents storing surplus daytime solar energy.
  • Transmission planning is not in sync with the pace of RE (renewable energy) installation.
• Time-Insensitive Tariff Structures: India currently lacks time-of-day (ToD) pricing, discouraging daytime solar consumption.
  • Uniform tariffs provide no incentive for consumers or discoms to shift loads to peak solar hours.
• Land and Regulatory Constraints: Land aggregation issues for large-scale solar or hybrid projects.
  • Delays in regulatory clearances, especially for hybrid renewable systems and storage infrastructure.

Why is there a need to increase Capacity Utilisation Factor?

• Energy Security: India’s energy demand is expected to double by 2040. Inefficient use of clean energy slows diversification and increases coal dependence.
• Climate Commitments: Under its updated NDCs (2022), India committed to:
  • 50% of total installed capacity from non-fossil sources by 2030 (already achieved) and Reduction in emissions intensity by 45% (from 2005 levels).
  • Yet, current clean energy usage (~28%) risks undercutting actual emission reduction.
• Air Pollution and Public Health: Continued coal dominance contributes to air pollution, with India housing 13 of the world’s 20 most polluted cities. 
• Economic Impact: Inefficient RE usage leads to underutilisation of investments in solar/wind, poor returns for developers, and higher electricity costs for discoms.

Government Initiatives to Improve Clean Energy Utilisation

• Green Energy Corridor (GEC): Aims to strengthen the transmission infrastructure to evacuate renewable energy efficiently from generation points to demand centres.
• PM-KUSUM Scheme: Promotes installation of solar pumps and grid-connected solar power plants in rural areas to reduce diesel usage and support farmers.
• National Green Hydrogen Mission: Seeks to promote the production and use of green hydrogen to reduce reliance on fossil fuels in sectors like refining, steel, and fertilisers.
• Production Linked Incentive (PLI) Scheme: Provides financial incentives for domestic manufacturing of high-efficiency solar photovoltaic (PV) modules and advanced battery storage systems.
• Renewable Energy Hybrid Policy: Encourages setting up of projects that combine solar and wind energy in the same location to increase capacity utilisation and reliability.

Way Ahead

• Grid Modernisation and Smart Management: Invest in smart grids with real-time demand-supply balancing.
  • Enable time-of-day pricing, especially to promote daytime solar usage.
• Battery and Storage Infrastructure: Accelerate deployment of Battery Energy Storage Systems (BESS) through VGF (Viability Gap Funding) or PLI.
  • Hybrid Projects (solar-wind-hydro with BESS) should be fast-tracked.
• Decentralised Renewable Energy: Promote rooftop solar, solar pumps, and mini-grids to relieve base-load pressure.
• Revamp Tariff and Market Design: Introduce differential tariffs for peak vs off-peak periods.
  • Set up green power markets on energy exchanges with open access for industries.
• Land and Transmission Reforms: National portal for land aggregation and clearance tracking.
  • Integrated transmission planning to synchronise RE project pipelines with grid readiness.
• Policy Predictability: Ensure long-term Power Purchase Agreements (PPAs).
  • Reduce DISCOM risks through payment guarantees or tripartite mechanisms.

Source: TH