India is leading the renewable energy revolution, with a strategic emphasis on solar power to meet its growing electricity needs. The 14th National Electricity Plan (NEP14), introduced in May 2023, aims to double the country's electricity generation capacity by 2032, with solar energy poised to play a pivotal role. This blog provides an insightful overview of India's energy landscape, highlighting the significant growth of the solar sector, underscored by government initiatives and the potential for future development. It outlines solar energy's environmental and economic benefits, the government's strategies to boost solar adoption, and the anticipated impact on the global clean energy market.
India's coal-to-clean energy transition led by solar
India has undergone a notable transformation in its power landscape since 2017, when solar energy constituted merely 1% of its power mix. Envisaging a substantial departure from the coal-dominated trajectory of the past decade, the NEP14 outlines ambitious targets for India. If successfully realised, the plan anticipates a surge in solar power's share from 5% to 25% between 2022 and 2032, marking a pivotal period of expansion. India plans to more than double its electricity generation capacity from 399.5 GW in 2022 to approximately 849 GW by 2032. The NEP14 emphasizes a robust focus on renewable energy, particularly solar power, which is projected to grow from 66.78 GW in 2023 to 366 GW by 2032, constituting half of the total growth. India’s solar capacity is expected to increase at a CAGR of 22.7% through 2023–27 to achieve its initial target of installed capacity of 185.6 GW until 2027, which is further expected to increase to 364.6 GW by 2032, as per NEP14.
Source: Central Electricity Authority, Central Electricity Regulatory Commission
The graph shows a big shift to cleaner energy, with solar capacity jumping 24 times in the last nine years, hitting 66.7 GW in May 2023, thus contributing 16% to the overall installed capacity. The government has set a target to elevate this share to 43% of the total installed capacity, as illustrated in the graph above. This is the opposite of what has been seen in the past decade. Until 2022, coal was driving India’s power growth. Total power generation, including imports, shot up by 564 TWh between FY2012 and FY2022 (928 TWh to 1,492 TWh). Notably, 83% of this growth (467 TWh) came from more coal power.
Multi-faceted benefits of solar energy
Solar energy offers varied benefits, making it an important player in the pursuit of sustainable and efficient power sources.
The utilisation of solar panels not only facilitates electricity savings but also contributes to environmental preservation and technological progress, marking a significant shift towards a sustainable energy future.
Government initiatives to navigate the challenging landscape
The expansion of solar power in India necessitates considerable growth in domestic solar module manufacturing and the production of upstream raw materials, currently reliant on imports from Europe or China. To address this issue, the government has launched schemes such as the Production Linked Incentive (PLI) and the Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS) to stimulate local manufacturing. Additionally, India’s grid infrastructure needs an overhaul to handle the variable nature of renewable energy. To this end, the government has announced a US$ 35 billion (Rs. 2.8 lakh crores) package to enhance the inter-state transmission network for renewable energy evacuation. Financing is as another critical determinant of NEP14’s success. In order to tackle this, the Reserve Bank of India (RBI) has prioritised financing for the renewable energy sector by including it in the priority lending sector.
The government is actively promoting the transition to solar power as a key strategy for addressing environmental concerns and meeting the country’s growing energy needs. This proactive approach reflects India’s dedication to reducing its carbon footprint and embracing cleaner, more environmentally friendly alternatives to conventional energy sources. Some of the initiatives are mentioned below:
An integrated capacity of 8,737 MW has been added under the PLI (Tranche I). The Indian government has approved a substantial expansion in domestic solar PV module manufacturing, allocating a capacity of 39,600 MW across 11 companies under the PLI Scheme for High-Efficiency Solar PV Modules (Tranche II). With an investment of US$ 1,686.2 million (Rs. 14,007 crores), this initiative is set to unfold in phases: 7,400 MW by October 2024, 16,800 MW by April 2025 and the final 15,400 MW by April 2026. This move, expected to attract US$ 11,200.3 million (Rs. 93,041 crores) in investment, would significantly boost the sector, creating over 101,487 jobs, including 35,010 direct and 66,477 indirect roles, and marking a pivotal step towards India’s sustainable energy future.
India’s bold vision for solar energy leadership
India possesses a significant solar energy potential, with an annual incidence of approximately 5,000 trillion kWh across its landmass, where most regions receive 4–7 kWh per square meter daily. Recognising this, the National Institute of Solar Energy has evaluated the country’s solar potential of about 748 GW, assuming 3% of the wasteland area will be covered by solar PV modules.
During its G20 presidency, India unveiled the ‘Roadmap of Solar Energy for Universal Energy Access’, highlighting solar energy’s critical role in ensuring widespread access to electricity and driving socio-economic progress. The Interim Union Budget for 2024–25 further underscores this commitment by considerably increasing funding for green infrastructure. Specifically, the budget for the central sector scheme on grid-connected solar power has seen a substantial increase to US$ 1,204 million (Rs. 10,000 crores) in 2024–25, up from the revised estimate of US$ 572.6 million (Rs. 4,757 crores) in 2023–24, demonstrating the government’s strong support for solar energy development.
The Indian government has ambitious goals for 2030, targeting 500 GW of non-fossil-fuel-based capacity, which includes 280 GW of solar and 140 GW of wind power. To achieve these targets, the government plans to auction approximately 50 GW of renewable energy capacity annually over the next five years, with central renewable energy agencies such as Solar Energy Corporation of India Limited(SECI), National Hydroelectric Power Corporation (NHPC), and Satluj Jal Vidyut Nigam Limited (SJVN) playing key roles in this initiative. The solar energy sector is expected to be a key driver of this green transition, supported by favourable policies, robust manufacturing capabilities and a skilled workforce. India aims to position itself as a global leader in clean technology manufacturing, with projected investments of US$ 350–400 billion annually by 2030, as reported by KPMG, highlighting significant investment opportunities for global investors in the Indian solar energy market.
In pursuit of its 2030 objectives, India is not only focused on expanding its solar energy capacity but also on ensuring that 50% of its total energy needs are met through renewable sources. This ambitious strategy aligns with global climate objectives and establishes India as a key player in the global effort to combat climate change. The growth of the solar power sector in India is seen not just as a pathway to energy security but also as a driver of economic growth and job creation, with the potential to generate 5–6 million jobs by 2030 and possibly 9–10 million by 2047, thereby boosting the national economy.
Conclusion
India's commitment to enhancing its solar energy capacity is a key component of its sustainable development and energy independence strategy. India is well positioned to execute its plans to leverage solar power to meet a substantial portion of its energy needs by 2032, backed by government initiatives and investment in technology. As India advances towards meeting its renewable energy goals, the solar sector is expected to drive not only environmental benefits but also economic growth and job creation, underscoring India's role in the global transition to renewable energy.