India has achieved a key clean energy milestone five years ahead of schedule. As of June 30, 2025, non-fossil fuel sources account for 50.1% of the country’s installed electricity capacity. This development marks a major step forward in India’s climate journey and reflects the country’s strong push towards clean energy.

When the Paris Agreement was signed in 2015, India had pledged to achieve 40% installed capacity from non-fossil fuel sources by 2030. In 2022, this target was revised upward to 50% by 2030. Achieving this target in 2025 signals accelerated progress, especially in solar and wind energy deployment.

Global Standing in Renewables: By 2024, India ranked fourth globally in total renewable installed capacity (including large hydro), behind:

1.     China

2.     United States

3.     Brazil

Rapid Renewable Growth and Grid Challenges

Between April 2020 and June 2025, India added 95 GW of solar and wind capacity. These sources now account for 35% (168 GW) of installed electricity capacity.

However, the growth of renewables has outpaced storage development, causing grid instability. On May 30, 2024, India’s peak demand of 250 GW was hard to meet due to:

• Low renewable generation
• Inadequate thermal backup
• No substantial storage capacity

Similarly, zero solar prices were recorded in May 2025 during periods of low demand and high generation, highlighting the mismatch and inefficiencies in power dispatch.

Energy Storage: Storage systems allow excess solar/wind energy to be stored and used during low generation or peak demand. As of 2024:

• Pumped Hydro Storage: 4.75 GW
• Battery Storage: 110 MW
• Total Storage Capacity: <5 GW

Key Enablers and Constraints in Utilising Clean Energy

India’s baseload power demand—electricity needed continuously throughout the day—is still met predominantly by coal, which contributes around 75% of actual electricity generation.

Solar power helps reduce coal demand during daylight hours, especially in summer, but this benefit disappears after sunset. Without adequate storage, clean energy sources are unable to serve as reliable baseload power.

1. Grid Flexibility and Battery Storage

·         Current grid infrastructure lacks the flexibility to absorb large volumes of variable renewable energy.

·         Battery storage is underdeveloped. As of 2024, India had:

o    4.75 GW of pumped hydro storage

o    Just 110 MW of operational battery storage

Without storage, solar energy produced during the day is often underutilised, especially when demand is low.

2. Uniform Tariffs and Market Inefficiency

Electricity pricing in India is largely flat, regardless of time of day. Experts suggest the need for time-of-day pricing:

·         Encourage higher consumption during periods of high solar generation (e.g., afternoon)

·         Reduce stress on the grid during peak hours (e.g., evening)

However, this requires smart metering, differential tariff structures, and grid modernisation—which are currently at early stages.

3.    Understanding Capacity Utilisation Factor (CUF)

One of the main reasons for the gap between installed capacity and generation lies in the Capacity Utilisation Factor (CUF):

·         Solar energy CUF: ~20%

·         Wind energy CUF: ~25–30%

·         Coal energy CUF: ~60%

·         Nuclear energy CUF: ~80%

This means that even with similar or higher installed capacity, solar and wind power generate less electricity over time compared to coal or nuclear power, which can operate continuously.

4.    Transmission and Grid Infrastructure Bottlenecks

The Inter-State Transmission System (ISTS) waiver for solar and wind projects expired on June 30, 2025. While it earlier allowed developers to set up projects in high-irradiation states (like Gujarat and Rajasthan) without paying transmission charges, it also led to:

·         Project clustering in a few regions

·         Transmission congestion during peak demand

·         Long-distance power transfers, increasing inefficiency

Now, with the waiver gone, developers may build projects closer to demand centres, easing pressure on transmission lines and improving grid stability.

Policy Push for Storage

• Co-located storage mandate: The Central Electricity Authority advised that future solar projects include co-located storage.
• Viability Gap Funding (VGF): Battery storage supported with 30 GWh (in addition to 13 GWh already in progress), with Rs 5,400 crore in support.
• Pumped Hydro Targets: 51 GW expected by 2032
• Transmission Charge Waiver for storage extended till June 2028

Despite these moves, project execution remains slow due to:

• High upfront costs
• Import duties
• Domestic content requirements
• Global supply chain dependence (especially on China)

Way Forward

1. Strengthen Grid Flexibility and Invest in Storage

·         Co-locating storage with solar/wind projects should be mainstreamed in tendering.

·         The government’s expansion of the Viability Gap Funding (VGF) scheme to support battery storage is a positive step, but faster implementation is needed.

·         Promote development of pumped hydro storage, with 51 GW targeted by 2032.

2. Promote Hybrid Energy Projects

·         Encourage hybrid tenders (solar + wind + storage) to smooth out supply fluctuations.

·         Provide support for land pooling, storage subsidies, and better transmission planning to scale such projects.

3. Decentralise Generation via Rooftop Solar

·         The PM Surya Ghar Yojana can help reduce transmission losses and improve reliability through localised generation.

·         Targeting 27 GW of rooftop solar by 2027 is ambitious but necessary for easing pressure on the grid.

4. Introduce Time-of-Day Pricing

·         Differential tariffs can:

o    Encourage daytime consumption of solar power

o    Disincentivise peak-time usage when thermal plants bear the load

·         Smart meters and dynamic pricing policies are essential to make this viable.

5. Resolve Pending PPAs and Regulatory Delays

·         States must be nudged to finalise PPAs for stranded projects.

·         Fast-track clearances and approvals to avoid delays in commissioning.

6. Boost Domestic Manufacturing of Storage Tech

·      Incentivise domestic production of battery components under schemes like PLI (Production Linked Incentive).

·         Reduce import dependence, especially amid rising global competition for rare earth elements and battery materials.

Conclusion:

India’s clean energy journey is at a critical juncture. Achieving 50% installed capacity from non-fossil fuel sources is a landmark, but the next big goal is to translate capacity into dependable, round-the-clock electricity supply.

This will require a paradigm shift—from building capacity to building smart, flexible, and resilient infrastructure that supports sustainable and equitable energy growth. With bold reforms and focused execution, India can deliver on its promise of 70% round-the-clock clean energy by 2030—at lower cost, and with greater climate resilience.