The Renewable Energy Paradox: India’s Path to Green Power

India is facing a “Green Energy Paradox”, where renewable energy (RE) capacity exists but remains underutilised due to systemic barriers.
Currently, 44 GW of renewable energy capacity is ready for deployment, yet demand-side weaknesses, financial constraints, and lack of Power Purchase Agreements (PPAs) prevent its effective use.
This paradox highlights a mismatch between supply readiness and demand absorption, impeding India’s energy transition and climate goals.

Definition: A situation where renewable energy capacity exists but is underutilised due to structural, financial, and policy challenges.
In India, supply-side expansion of renewables is rapid, but demand-side absorption and grid integration are lagging.

Coal Dependency: Coal and lignite contribute ~79% of domestic energy (FY23).
Low Renewable Share: Excluding large hydro, renewables account for only 3.8% of domestic electricity production.
Import Dependence: India imports >85% of oil and ~50% of gas, increasing energy vulnerability.
Idle RE Capacity: 44 GW of renewable projects remain unutilised due to lack of PPAs.
Reliability Deficit: Power interruptions (SAIDI ~600 minutes/year) are much higher than regional peers (Thailand 35 mins, Malaysia 46 mins).

A. Supply-Side Readiness

Project Completion: Large-scale solar and wind projects are ready but idle without PPAs.
Tariff Challenges: Global solar and wind costs are falling, yet Indian tariffs remain high due to policy and financial barriers.
Government Incentives: Schemes like Production-Linked Incentive (PLI) and Viability Gap Funding (VGF) aim to reduce costs and attract investment.
Storage Costs: Battery or pumped hydro storage raises tariffs to ₹6.6–₹9/unit, making RE less competitive than coal.

B. Demand-Side Weaknesses

Discom Reluctance: Distribution companies prefer long-term coal PPAs due to predictable costs.
Integration Costs: Adding variable RE strains the grid, increasing frequency balancing and transmission expenses.
Grid Inflexibility: Lack of smart meters and demand-response systems limits real-time load adjustments.
Slow Electrification: Weak adoption of EVs, electric cooking, and industrial electrification keeps RE demand low.

Structural:

Environmental:

Long-term coal PPAs lock states into high emissions, affecting net-zero goals.
Idle RE projects delay emission reduction and waste built infrastructure.

Economic:

High capital costs due to duties, GST, and expensive borrowing inflate tariffs beyond global averages.
Storage technologies are cost-prohibitive without large-scale subsidies.

National Solar Mission & Hybrid Policy: Expand solar capacity and promote wind-solar hybrids.
India Semiconductor Mission (ISM): Supports storage and electronics ecosystems aiding RE integration.
PLI for Batteries: Incentivises domestic battery manufacturing to reduce costs and import dependence.
Renewable Purchase Obligations (RPOs): Legally mandate states to procure a minimum share of power from RE.
Green Open Access Rules 2022: Allow industries to directly procure RE bypassing discoms.
National Green Hydrogen Mission: Promotes hydrogen as storage medium and clean fuel for RE adoption.

Enhance Storage Ecosystem:

Accelerate Demand Electrification:

Boost EV adoption and charging infrastructure.
Promote electric cooking and industrial electrification to expand RE demand.

Smart Grid & Market Reforms:

Discom Reform:

Differentiated RPO Trajectories:

Set state-specific RPO targets considering local grid capacity and renewable resources.

India’s Green Energy Paradox demonstrates that energy transition is not just about capacity addition, but also about systemic absorption and demand-side reforms.
Without improvements in grid flexibility, storage, and discom viability, renewable energy will remain stranded.
Aligning green growth with affordability, reliability, and energy security is crucial for India to meet its climate and economic goals.

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