Renewable Energy Growth Faces Infrastructure Challenges in India

India’s renewable energy sector is witnessing rapid expansion, supported by policy initiatives and rising electricity demand. Rating agencies Moody’s and ICRA have highlighted both growth opportunities and structural constraints.

Renewable energy, including large hydro projects, is expected to increase its share in electricity generation. However, infrastructure and execution challenges could impact the pace of this transition.

Renewable Capacity Expansion and Growth Outlook

Renewable energy is projected to contribute around 38% of India’s electricity generation by FY30, rising from nearly 26% in FY26. This growth is expected to be driven by the addition of approximately 170 GW of capacity between FY27 and FY30.

Government policy support, corporate sustainability goals, and competitive tariffs have supported capacity expansion. The sector has also seen increased participation from private developers and institutional investors.

Transmission Infrastructure

Transmission infrastructure remains a key bottleneck in scaling renewable energy capacity. Many renewable projects are located in remote regions where grid connectivity is limited.

Delays in building transmission networks can restrict the flow of generated power to demand centres. ICRA has noted that such delays are already slowing capacity additions in certain regions.

Energy Storage and Intermittency Challenges

Renewable energy sources such as solar and wind are inherently intermittent due to dependence on natural conditions. As their share in the power mix increases, the need for energy storage solutions becomes more critical.

Technologies such as battery storage and pumped hydro are essential for ensuring grid stability. However, storage deployment in India is still at an early stage and faces challenges including high costs and financing constraints.

Grid Stress and Supply Chain Risks

India’s power system is facing increasing stress during peak demand periods, which recently exceeded 270 GW during heatwave conditions. Despite growth in renewable capacity, coal continues to account for more than 70% of electricity generation due to reliability concerns.

Localised outages during high-demand periods have highlighted balancing challenges within the grid. Additionally, dependence on imports from China for solar modules, battery components, and related equipment introduces supply chain risks and potential cost pressures.

Read More: India May Introduce Incentives to Scale Floating Solar Panel Projects.

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Conclusion

India’s renewable energy sector is positioned for significant growth in the coming years, supported by large-scale capacity additions. However, the pace of expansion may depend on the development of supporting infrastructure such as transmission networks and energy storage systems.

Addressing grid stability concerns and supply chain dependencies will remain important for sustained growth. The evolving landscape reflects both strong long-term potential and near-term execution challenges.

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