Record Solar Growth, But India's 2030 Target Remains a Challenge

Despite a record-breaking year for India's power sector, the nation faces a significant hurdle in achieving its 2030 renewable energy targets. In 2024, India added nearly 35 GW of new capacity, with solar photovoltaic (PV) installations leading the charge, accounting for a remarkable 71 percent of all new capacity.

Global Energy Monitor’s (GEM) latest Global Integrated Power Tracker data highlights a robust pipeline of renewable projects, potentially set to exceed operating coal capacity within two years. However, despite impressive capacity additions, renewables accounted for only one-fifth of the total increase in power generation, while fossil fuels remained dominant.

GEM further shows that the 2024 capacity additions, reaching a historic high of 34.7 GW, were primarily driven by solar PV, with 24.5 GW installed, exceeding the combined additions of the previous two years. Wind capacity also experienced growth, adding 3.4 GW, bringing the total operating wind capacity to 48 GW, surpassing large-scale hydropower. However, the continued reliance on fossil fuels, particularly coal, is evident in the net coal plant additions, which reached a five-year high, fuelled by surging electricity demand.

This demand is a consequence of India's economic rebound following COVID-19 lockdowns, coupled with intense summer heat waves. GEM's analysis reveals a robust pipeline of renewable projects, with utility-scale solar and hydropower in development poised to overtake operating coal capacity.

Specifically, utility-scale solar projects comprise nearly half of all renewables in development, with more capacity in the construction phase than for coal projects. The geographical distribution of these installations reflects India's diverse resources and state-level policies. Wind farms are concentrated in the 'windy states' of Gujarat and Tamil Nadu, while solar farms are more widespread, with significant clusters in Rajasthan's Thar Desert.

However, the gains of these leading states are not enough to shift the national picture, where fossil fuels still account for two-thirds of the year-on-year increase in electricity generation.

To achieve India's ambitious target of 500 GW of non-fossil power capacity by 2030, annual renewable deployments must double over the next five years. Replicating 2024's renewable deployment would only result in 378 GW of renewable capacity by 2030, leaving a 100 GW shortfall.

Closing this gap necessitates annual capacity additions growing by approximately 15 percent year-on-year, effectively doubling the current deployment rate. This accelerated growth faces numerous challenges. Infrastructure limitations, including a lack of electricity transmission and energy storage capacity, pose significant obstacles. Regulatory hurdles, such as widespread non-compliance with renewable purchase obligations, and financial constraints, including high financing costs for project developers, further complicate the situation. Additionally, just transition concerns, encompassing conflicts over land access and livelihood impacts on coal-related industries, must be addressed.

Despite these challenges, the high construction rate of in-development wind and utility-scale solar projects, exceeding 30 percent, indicates continued capacity growth. If wind and solar capacity additions replicate similar record levels (~30 GW), and under-construction hydropower projects come online to schedule (~5 GW), renewables alone will likely eclipse operational coal capacity within the next two years.

However, increasing the renewable energy share of total generation from the current one-fifth to truly challenge coal's dominance will require utilisation rates to improve. While coal plants average 70 percent utilisation, wind and solar average 17-22 percent. Achieving the 500GW goal by 2030 will require a doubling of 2024's record deployment and continued year-over-year growth.