Renewable Energy Sector in India- An Overview

What is renewable energy?

Energy generated from renewable sources (which are constantly replenished) is known as renewable energy. Example: solar power, wind energy, tidal energy, geothermal energy etc.

Status of Renewable Energy in India


Estimated renewable energy potential: 900 GW from commercially exploitable sources


  1. Wind: 102 GW (at 80 metre mast height);
  2. Small Hydro – 20 GW
  3. Bio energy – 25 GW
  4. Solar-750 GW solar powers

Assumption: 3% wasteland is made available.

Installed Capacity (as of March 2017)

Trend in growth– Capacity Addition (12th Plan period- 2012-17)

Government Policy Initiatives in the Renewable Energy Sector

India’s Intended Nationally Determined Contribution:

The GoI in its submission to the UNFCC on Intended Nationally Determined Contribution (INDC) has stated that India will achieve 40% cumulative Electric power capacity from non-fossil fuel based energy resources

GoI has set a target of achieving 175GW of renewable energy capacity by 2022. This includes:

  1. 60 GW from wind power,
  2. 100 GW from solar power,
  3. 10 GW from biomass power
  4. 5 GW from small hydro power

Issues and Challenges in achieving India’s INDC:


  1. 1. Dependence on Imports:
  • Lacks manufacturing base for solar components and systems
  • Heavy dependence on imported solar cells and modules, mainly from China
  • China dumps cheap thin film solar cells to capture the Indian market in the absence of any anti-dumping duty imposed by India.
  • The manufacturers of Photo Voltaic cells have demanded a 70% safeguard duty on Chinese PV imports.

Safeguard duty is duty payable on import of goods which is already being manufactured in India but cost of which is high compared to import price

  • This would adversely affect the solar power suppliers who heavily depend on Chinese hardware and might affect the growth of the solar power sector.

Issue of Renewable Purchase Obligation (RPO):

  • There is lack of enforcement of RPO regulations and absence of penalties when obligations are not met.
  • Many of the state DISCOMs (distribution companies) do not comply fully with their RPO targets.
  1. Rooftop Solar:
  • Homeowners at large have not been installing solar panels at roof top. This is because small deployments naturally cost more than grid-scale farms. Homeowners do not generally consume all the energy it generates and are being unable to sell it.
  • This is primarily because most of the states do not have‘net-metering’ policy- allowing selling electricity back to the grid.
  1. Investment:
  • Issues such as uncertainty around import duties and future tax rates around purchasing power agreements (PPAs) have hampered investment
  • Another issue which decreases investment is state governments trying to renegotiate PPAs due to lower tariffs post signing of PPAs
  1. Technological challenges- e.g. temperature sensor failures in PV cells, grid instability
  2. Land scarcity hindering establishment of large solar parks
  3. Fall in prices- Due to government incentives the price of solar power has been falling. This has disincentivised the producers.

Wind Energy:


  • Lack of transmission infrastructure.
  • Estimation of effective turbine capacity not deterministic.
  • Electricity produced by wind power sometimes fluctuates in voltage and power factor, which can cause difficulties in linking.


  • Lack of coordination due to involvement of too many agencies such as Ministry of New Renewable Energy (MNRE), Indian Renewable Energy Development Agency (IREDA), etc.
  • Land acquisition problem for exclusive installation.
  • Lack of appropriate regulatory framework to facilitate purchase of renewable energy from outside the host state.

Investment related:

  • Capital investment required is much more as compared to conventional sources.
  • Good wind sites are often located in remote locations, far from cities, where the electricity is needed.

Environmental and social:

  • Turbine blade could damage local wildlife. Birds have been killed by spinning turbine blades. In Rajasthan, for instance, transmission lines and spinning blades have reportedly led to increasing mortalities of the critically-endangered Great Indian Bustard.
  • Noise made by rotating wind machine blades can be annoying to nearby neighbor and thus their resistance.
  • Land acquisition and displacement issues


  1. Competition with other fuel substitutes available in the market. Several factors like the assurance of fuel supply ease of procurement, fuel price, and household income impact household fuel choices
  2. Social and cultural barriers
  3. Regulatory Issue:
  • A top-down approach is adopted in the NBMMP program.
  • The program is inefficiently targeted as ownership of 2–3 cattle is one of the criteria to gain the capital subsidies provided under the program to install a biogas plant.
  • Since the majority of low- income households in rural areas does not own 2–3 cattle, it is very difficult for them to get a capital subsidy which hinders the adoption of biogas technologies
  1. Lack of coordination:
  • Multiple agencies are involved in the implementation of the national biogas development program. Lack of coordination and competition between them for the incentives is a major problem
  1. Technological and infrastructural issues
  2. Information barriers- lack of awareness

Small Hydro Projects:

  1. Challenges in setting up of projects in difficult and remote terrains; security issues
  2. Environmental
  • The draft Small Hydro Power Mission states that for small hydro power projects dams need not to be constructednearly all SHPs, especially those above 1 MW, entail dams
  • Example: small projects like 3 MW Beedalli Project in Karnataka which is in the buffer zone if Pushpagiri Wildlife Sanctuary has a dam.
  • Construction of dams has ecological impacts and impact on communities

Way ahead:

  1. To support growing renewable energy, the expansion of transmission infrastructure, for both
    intra and inter-state should be strengthened
  2. It should be carefully assessed to ensure that domestic content requirement does not hinder the growth of solar capacity
  3. Investment in R&D programmes, as well as human resource development is necessary in addition
    to local content requirements
  4. Initiatives to be taken for encouraging investment in the renewable energy sector
  5. Nation-wide net metering so that homeowners can sell excess energy. This would incentivise installing solar rooftops
  6. Strengthen the institutional structure to facilitate effective flow of central financial
  7. Mandate conditions such as meeting a minimum level of Renewable Purchase Obligation (already discussed)
  8. Proper project studies before installing power projects to assess environmental impact and mitigate the same
  9. Strengthen institutional structure to monitor implementation of Government policies and programmes
  10. Citizen awareness to encourage use of renewable energy
  11. Draft Energy Policy- which calls for reducing the dependency on fossil fuels and develop renewable energy for achieving sustainable development.
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