India’s Renewable Energy Sector Faces Challenges Amid Weak Demand and Project Cancellations
India’s renewable energy sector is currently facing significant challenges, including weak demand for tenders, delays in power purchase agreements, and project cancellations. According to a report by the Institute for Energy Economics and Financial Analysis (IEEFA), in 2024, a total of 73 gigawatts (GW) of renewable energy tenders were issued. However, 8.5 GW of these tenders went unsubscribed, primarily due to complex bidding structures and delays in preparing interstate transmission infrastructure.
The report also highlights that over 40 GW of cumulative capacity lacks power purchase agreements (PPAs), with 12 GW attributed to the Solar Energy Corporation of India (SECI). Additionally, between 2020 and 2024, 38.3 GW of capacity was canceled due to issues related to bid design, location, or technical constraints. These challenges could deter investor interest and limit access to low-cost financing, jeopardizing India’s goal of achieving at least 500 GW of non-fossil fuel capacity by 2030.
Despite these setbacks, some developments indicate progress. For instance, Vikram Solar has announced plans to establish a 1-gigawatt-hour (GWh) fully integrated solid-state cell and battery manufacturing facility, aiming to support India’s renewable energy and climate objectives. Moreover, the Indian government is finalizing a $1 billion subsidy plan to bolster domestic solar manufacturing, aiming to reduce reliance on imports and strengthen the local supply chain.
However, the sector continues to face obstacles such as land acquisition issues, regulatory hurdles, and financial constraints. For example, Tata Power’s plan for a 100-megawatt solar development in Maharashtra has encountered protests from local farmers, highlighting the complex land disputes that can arise with large-scale renewable projects. Additionally, allegations against major industry players like the Adani Group have raised concerns about the sector’s integrity and could impact investor confidence.
To overcome these challenges and meet its ambitious renewable energy targets, India needs to address these systemic issues, streamline regulatory processes, and enhance investor confidence through transparent and consistent policies.
