India made significant progress in the renewable energy (RE) sector in 2024 with total RE capacity reaching 205.5 gigawatt (GW) as of November in the current fiscal year 2024-25. To achieve the target of 500 GW non-fossil fuel capacity, the government has adopted multifaceted strategy. Apart from rapid RE capacity addition, this includes streamlining the supply chain, bringing in hybrid and storage solutions, and strengthening the domestic production of raw materials.
However, even as meeting peak demand looks a lot easier, grid integration of RE emerged as a critical challenge, with variable generation exceeding 30% in several states, necessitating sophisticated grid management systems and enhanced forecasting capabilities. Also, the debt of electricity discoms is still on the rise.
Major capacity additions were bolstered by solar power projects which stood at 94.17 GW as of November, data from the Central Electricity Authority showed.
“2024 marked a transformative phase for India’s power and renewable energy sector, achieving 125 GW in renewable capacity, with solar exceeding 60 GW and wind reaching 45 GW,” said Sanjay Gupta, CEO, Apollo Green Energy. “What’s particularly significant in this year is the sector’s evolution in grid integration capabilities – the successful deployment of hybrid renewable systems with advanced storage solutions has helped achieve grid frequency stability in the 49.90-50.05 Hz range, a critical technical milestone,” he said.
The distributed energy segment also added 8 GW in rooftop solar with the rising efficiency standards. New installations achieved 21-23% module efficiency compared to the earlier 15-17%, as per industry experts. Battery storage integration has seen costs drop to around $100/kWh, making round-the-clock RE power increasingly viable, Gupta highlighted.
“By 2025, the country plans to develop 50 solar parks, with a cumulative capacity of approximately 38 GW. This ambitious objective is further supported by initiatives such as the Production Linked Incentive (PLI) scheme and the solar park scheme,” said Abhay Adya, Business Head-Renewables, ZETWERK.
The country successfully met a peak demand of 250 GW on May 30, despite a sharp growth in peak demand in the recent past. According to Anujesh Dwivedi, Partner, Deloitte India, the calendar year 2024 is likely to have seen 30 GW generation capacity addition, which would be a record.
Other key achievements for the power sector includes around 1 billion tonnes of coal production, 50% increase in foreign direct investment in RE, award of contracts for 11.37 crore smart meters under Revamped Distribution Sector Scheme and reduction of ACS-ARR gap to Rs. 0.21/ kWh in FY24 (vis-à-vis Rs. 0.62/ kWh in FY21).
“Reform focus of the RDSS Scheme, accompanied by other reform measures such as Additional Borrowing Scheme, Prudential Lending Norms, LPS Rules and Corporate Governance norms have led to an improvement in timeliness of finalization of annual accounts, filing of tariff petitions, issuance of tariff orders at the state level,” Dwivedi said.
The government, during the year, also came out with important guidelines in new and emerging areas such as incentive scheme for green ammonia production (under SIGHT Component-II); Viability Gap Funding for off-shore wind energy projects; and revenue sharing model for EV charging stations.
“2024 has seen several other major policy interventions including launch of PM Surya Ghar: Muft Bijli Yojna; Central Financial Assistance for Biomass Pellet manufacturing; budgetary support for development of Advanced Ultra Supercritical (AUSC) technology in thermal generation; and introduction of Bharat Small Reactors, including PPP in Nuclear,” Dwivedi said.
PM Surya Ghar: Muft Bijli Yojna has seen encouraging response resulting in release of over 6.3 lakh installations in just nine months since the launch of the scheme.
As per data from Deloitte, outstanding debt of discoms stood at Rs 7.14 lakh crore at the end of FY23 and is likely to have increased further in FY24.
The financial health of discoms continues to be a pressure point, despite improvements in AT&C losses. “The solution lies in accelerating smart meter deployment (targeting 250 million meters by 2025), implementing time-of-day tariffs, and strengthening payment security mechanisms. Digital collection systems and analytics-driven loss reduction programs are showing promising results in addressing these challenges,” Gupta said.
Amid increasing policy interventions, the sector also saw a significant inflow of investments as the country aims to achieve a net-zero target by 2070. In 2024, investment in the renewable energy sector saw a significant surge, with project finance growing by 63%, reaching Rs 30,255 crore ($3.66 billion), according to Gupta.
“This increase highlights growing investor confidence in India’s renewable energy potential, with solar power projects leading the charge, accounting for 49% of the total renewable energy deals,” he said.
As per Deloitte, FDI in the renewable sector increased by 50% to $3.76 billion in 2023-24. Cumulative disbursements by PFC, REC, and IREDA reached Rs 3,14,200 crore in 2023-24, up 71.1% on year. During the same period their sanctions grew by 27.3% to Rs 6,78,170 crore.
“RE generation capacity addition in India has historically been led by private sector players. Of late, CPSUs have also emerged as a leading player in addition to RE capacities in the country,” Dwivedi noted.
Looking ahead, the industry believes that the sector’s transformation hinges on three key interventions: rapid deployment of storage solutions including pumped hydro, modernization of grid infrastructure with emphasis on dynamic load management, and market-based mechanisms for better resource allocation.
Naveen Khandelwal, CEO, BrightNight India said that there is a need for a little bit of predictability and medium term visibility instead of short term announcements. “If we can announce 2 or 3 years in advance, the developers can plan a bit better.” Khandelwal expects the country to cross at least 40 GW of capacity addition across all RE in 2025. “With battery costs projected to decline further and energy density improving, storage integration at both utility and distributed levels will likely accelerate,” Gupta said. “Success in 2025 will largely depend on several critical factors in the present global scenario. A primary concern is the availability of raw materials for manufacturing, which is crucial for streamlining project supplies.”
Furthermore, commissioning of upcoming domestic solar module manufacturing capacities under the PLI initiative is likely to help accelerate the pace of RE generation capacity in the country. This will need to be accompanied by an uptick in creation of commensurate transmission systems, Dwivedi said.
“Given the sharp reduction of ~65% in discovered price for BESS projects vis-à-vis 2022 levels, it is expected that 2025 and the period beyond will witness a sharp rise in offtake of BESS projects,” said Dwivedi. “Given the continued accumulation of losses and outstanding debt in DISCOMs, it is expected that listing of state utilities and private sector participation will gain further momentum.”