India is producing more green energy - but wasting a lot of it

India is generating more green energy — but wasting much of it

Renewables account for 54% of India’s total 552GW installed power capacity

On a hot July afternoon this year, electricity from renewable sources briefly met more than half of India’s peak power demand — only the second time that has happened. The first was around the same period a year earlier.

Although power from solar, wind, hydro and nuclear sources only briefly exceeded coal-based output, it marked a milestone that reflected the remarkable rise of non-fossil fuels in the country’s electricity mix over the past decade.

“It showed that renewable energy is no longer a marginal source sitting at the edge of the power system,” Sumant Sinha, CEO of ReNew Power, one of India’s largest Nasdaq-listed clean energy companies, told the BBC.

Even so, coal-fired plants still produce 70% of India’s electricity on average, because they operate at a higher load factor, or for more hours than solar or wind. Still, India’s clean energy drive appears to have reached a critical turning point.

A decade ago, India had just 4GW of installed renewable energy capacity. It now stands at 300GW, or 54% of the country’s total 552GW installed capacity — a goal reached five years ahead of schedule.

For a country long viewed as the symbol of dirty coal dependence, this rapid shift represents a striking achievement in decarbonising its grid.

But the progress comes with major challenges.

Electricity generated from renewable energy briefly met over half of India’s peak power demand in July

The biggest problem is a lack of grid capacity. Renewable expansion has far outpaced transmission infrastructure, which is a major concern for policymakers.

“In the first quarter of 2026, transmission constraints accounted for nearly two-thirds of all renewable energy curtailment at 300 gigawatt-hours (GWh),” according to Ember, a global energy think-tank.

In simple terms, much of the clean energy produced in India was wasted because transmission lines have been plagued by missed targets, with one in four inter-state projects delayed by more than a year.

Sinha says the challenge is matching the pace of generation projects with grid expansion.

“Generation projects can be constructed in 18-24 months… Transmission can take much longer because they involve right-of-way, land acquisition, approvals and coordination across many agencies. It is an execution issue that becomes more important as the system gets larger,” he adds.

Vibhuti Garg of the Institute for Energy Economics and Financial Analysis also points to “poor planning” as a cause.

She told the BBC that the grid could absorb new capacity when India was adding 10-15GW a year. But that pace has risen sharply, hitting a record 51GW last year, and the infrastructure can no longer keep up.

The concentration of renewable projects in the north-western states of Gujarat and Rajasthan has also made it harder to move power amid these grid shortages.

Ember analysts now say this widening gap between fast-moving generation projects and slower transmission infrastructure is the “most critical operational risk to the country’s 2030 target of 500 gigawatts (GW) of non-fossil electricity”.

A quick fix would have been to build battery storage systems at renewable pooling stations so the power could be integrated into the grid.

“Had that been the case, India could have stored the energy and used it during evening hours rather than wasting it,” Garg says.

But storage capacity has not expanded because battery prices have surged, raw material shortages have emerged due to the war in the Middle East, and the Indian currency has fallen, pushing up financing costs for Indian companies.

“Many storage projects that were meant to come up fell through as a result,” Garg adds.

Indian renewables projects are concentrated in the north-western states of Gujarat and Rajasthan

Finance is not only a problem for storage projects, but for the industry as a whole.

Although there is plenty of global capital for the green transition in the developed world, Indian clean energy companies still struggle to access it, despite the country’s progress on renewables commitments.

Estimates suggest India will need $400-$500bn to reach its 500GW renewables target by 2030.

At present, about 83% of India’s climate mitigation finance comes from domestic sources, according to the government’s economic survey. And while the Paris Agreement clearly required developed countries to provide $100bn a year through 2025 to developing countries for climate action, that funding has been difficult to secure.

“Emerging and developing economies outside China receive only around 15% of global clean-energy investment, despite accounting for roughly two-thirds of the world’s population,” Sinha says.

He says India does not necessarily need developed countries to fund the entire transition, but it does need cheaper loans, guarantees and protection against currency losses to encourage more private investment.

Experts say closing these gaps in finance, transmission infrastructure and storage will be crucial, given that this transition is unfolding at a pivotal moment.

Transmission shortages are said to be the most critical operational risk to India’s renewables build-up

India is the world’s third-largest emitter of greenhouse gases and is facing a sharp rise in electricity demand, which has grown at a compounded rate of more than 7% each year. Demand is expected to accelerate further as industries such as data centres and chip manufacturing expand.

, external predicts India’s electricity demand will rise by 80% by 2035, the sharpest increase among emerging economies. It also credits the country’s strong expansion of renewables as a major factor in slowing emissions in the developed world this year, even as energy-related CO2 emissions rose more sharply in advanced economies for the first time since the 1990s.

How successfully India meets its targets on time will therefore have an outsized effect on the world’s ability to achieve its climate goals.