Why in news?
India has built roughly 44 gigawatts (GW) of renewable energy projects – mainly solar and wind – that are ready to generate electricity but remain stranded because state distribution companies (discoms) have not signed power purchase agreements. This paradox illustrates how supply‑side progress can falter without matching demand and supportive infrastructure.
Background
Over the past decade India has rapidly expanded renewable capacity through initiatives such as the National Solar Mission and wind bidding schemes. The government aims to reach 500 GW of non‑fossil fuel capacity by 2030 and achieve net‑zero emissions by 2070. Falling technology costs, production‑linked incentives and viability gap funding have attracted developers. However, coal still dominates India’s power mix, and many states rely on long‑term coal contracts.
Supply‑demand mismatch
- Ready projects, no buyers: Around 44 GW of projects have land, permits and equipment in place. They could deliver inexpensive clean power but cannot proceed without assured buyers.
- Discom finances: State utilities are often burdened by losses, high debts and tariff caps. They hesitate to sign renewable contracts because of payment obligations and fear of stranded coal assets.
- Grid inflexibility: The current grid is designed around coal. Integrating variable renewable power requires storage, flexible generation and smart transmission lines, which are still limited.
- Policy uncertainty: Frequent changes in tariffs, rules on open access and renewable purchase obligations make investors wary. Some states have cancelled auctions or reneged on contracts.
Towards a balanced energy transition
- Demand creation: Encourage green open access so that industries and households can buy renewable power directly. Mandating higher renewable purchase obligations for discoms and large consumers can also boost demand.
- Grid upgrades: Invest in energy storage (batteries, pumped hydro) and flexible peaking plants. Modernise transmission networks with smart technologies to handle intermittent supply.
- Financial reforms: Restructure discom finances through loss reduction, tariff rationalisation and timely subsidies. Separating content (retail supply) from carriage (grid operation) can improve efficiency.
- Stable policies: Provide clear long‑term signals on tariffs, auctions and carbon pricing to build investor confidence. Integrating renewable projects with electric mobility and green hydrogen can create new demand centres.
Addressing these structural issues will help India convert its renewable capacity into actual generation, reduce coal dependence and meet its climate commitments while maintaining energy security.