The renewable energy sector in India has witnessed remarkable growth over the years. Installed capacity, which stood at just 15.4 GW (excluding large hydro) in 2010, has surged to 188 GW by July 2025. Costs have also fallen dramatically. Renewable energy is no longer an indulgence from climate change considerations; it has become the rational economic choice.
A little over a decade ago, renewable energy sources were still struggling to find a meaningful place in India’s electricity supply basket on cost considerations. Solar electricity tariffs, just a decade ago, were of the order of US $0.15 (Rs 13) per unit (at an exchange rate of 1 USD = Rs 88), significantly higher than the price of new coal-based electricity.
Policymakers, utilities, and even sections of society questioned whether it made sense for a developing country to lock itself into high-cost electricity when coal was abundantly available to produce electricity at affordable tariffs. That debate now feels distant.
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The cost factor
Solar electricity tariffs in India have fallen to USD 0.028 (Rs.2.50) per kWh, with record lows that are not only far less than the price of electricity from new coal-based plants but also undercut even the cheapest existing coal plants.
Wind energy tariffs after witnessing a declining trajectory untill 2017-2018, touching USD 0.028 (Rs 2.43) per kWh before rising close to USD 0.043 (Rs 3.75) per kWh.
This transformation was driven by global technology improvements, economies of scale, and appropriate policy choices—ranging from clear short and long-term targets, aggregation of demand and competitive auctions to facilitating regulatory support.
The resolution of the “cost equation” marked a turning point. As costs declined, however, other concerns came centre-stage.
Land and environmental concerns
During 2016–2024, record low tariffs were discovered for mega-solar parks in Rajasthan, Gujarat, and Karnataka. While solar parks gave a thrust to large-scale renewable energy capacity addition, it gave rise to a number of concerns in view of their large areas.
The stakeholders’ concern is about loss of land — a reliable asset and source of permanent income. Large solar parks involve displacement of communities and an impact on biodiversity and fragile ecosystems.
Decentralised renewable energy, dual-land use renewable energy options such as agrivoltaics which combine agriculture and solar energy generation, floating solar, and building integrated photovoltaics are emerging as promising options to reduce pressure on land.
Rooftop solar which was not progressing at the required pace got a fillip through PM Surya Ghar Muft Bijlee Yojana. A good number of AgriPV pilots’ projects are providing learning for scaling them up.
Variability and round-the-clock power
Coal power plants provide round-the-clock, dispatchable generation, while solar and wind are variable and intermittent. “What happens when the sun doesn’t shine, or the wind doesn’t blow?” became the next critical concern.
Green energy transmission corridors were developed to make full use of renewable energy by facilitating its delivery to demand centres. Hybrid renewable energy projects combining wind and solar, reaping the benefit of their complementarity, offered a better bouquet.
Time-of-day tariffs and enhanced flexibility of conventional power plants assumed importance. And most importantly, energy storage found a place in the discussion in a big way.
This phase underscored an important reality: the transition to clean energy is not merely about clean energy generation, but also its utilisation matching the demand profile across the year.
The energy storage imperative
Today, the dominant concern in the context of integration of renewable energy are energy storage and reliability of supply. Critics argue that without affordable energy storage, India risks overbuilding renewable capacity that cannot be fully utilised.
Just as solar costs were once thought to be prohibitively high but fell rapidly with scale, energy storage is also expected to follow a downward cost trajectory as it finds use for various applications with recognition of the value proposition BESS offers, new technologies mature, and innovation accelerates.
Global battery prices are declining faster than anticipated. Battery Energy Storage System (BESS) costs in India have declined 80 percent since 2015. The standalone BESS prices fell significantly from US $ 0.11 (Rs. 10.18) per kWh in 2022 to US $ 0.025-0.05 (Rs. 2.21 – 4.41) per kWh in 2024.
The viability gap funding announced by the government in June for developing 30 GWh of BESS capacity is expected to address the affordability concerns.
Domestic manufacturing is being incentivised in the country through the Production Linked Incentive for advanced chemistry cell battery storage and high efficiency solar photovoltaic modules. Cost-effective long-duration energy storage is the next frontier.
Beyond technology: People and transition
Alongside cost reduction and technological advancement one of the most critical concerns remains to be addressed: the human dimension of the energy transition. As coal-dependent regions confront the reality of declining coal production, concerns of jobs, livelihoods, and regional development loom large.
A “just transition” approach—ensuring that workers, communities, and vulnerable segments are not left behind—has begun to shape policy and public discourse. This shift signals the recognition that technology alone cannot drive the change; it must be embedded in a people-centric framework.
The turnaround and the outlook
India’s renewable energy journey began in the 1980s with early wind projects in Tamil Nadu. The small-scale solar applications were supported by the then Department of Non-Conventional Energy Sources. The real turning point came with the launch of the National Solar Mission in 2010, which brought solar to the centre stage and became the heart of India’s energy development and transition strategy.
From these modest beginnings, the country has now built one of the world’s largest renewable energy markets, with solar leading the way.
The scale has, in a matter of 15 years, dramatically tilted towards solar power as compared to coal-based power. Solar power had to be bundled with thermal power to make it an attractive proposition for the DISCOMs. This is no longer the case. The tariff of electricity from ground-mounted solar power plants and wind is of the order of US $ 0.028 (Rs. 2.50) per kWh and US $ 0.039 (Rs. 3.50) per kWh, respectively.
The cost of electricity from hybrid wind-solar plants in recent years has ranged from US $0.038-0.039 (Rs. 3.35 to Rs. 3.45) per kWh. A combination of solar-wind hybrid (to be used alternatively when either sun or wind are not available) along with storage is making round the clock renewable energy achievable at attractive tariffs – US $ 0.048 and 0.056 (Rs. 4.00 to 5.00) per kWh during 2023-2025.
The falling costs of storage, along with low-cost hybrid plants, make renewable electricity not only cheaper but also more reliable—helping India’s energy transition by reducing dependence on fossil fuels while ensuring round-the-clock power.
Looking ahead, solar power with longer-duration energy storage is expected to become cost-effective, emerging as an economically viable option for consumers as well as energy distribution companies. Skilling and re-skilling of workforce which is directly or indirectly dependent/ engaged in coal mining and transportation is a prerequisite for effective clean energy transition.
AK Saxena is Senior Fellow & Senior Director, and Arunendra Kumar Tiwari is Fellow, Electricity & Renewable Division, Energy Programme, The Energy and Resources Institute (TERI), New Delhi. Originally published under Creative Commons by 360info
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