The increase in installations helped India reach its highest-ever annual installed capacity of 18.5 GW for the fiscal year ending on 31 March 2024, the study finds.

The growth was primarily in solar installations, up 23% on levels from the 2023 financial year, driven by the commissioning of numerous projects within India’s inter-state transmission system network and ‘ultra-mega' solar park schemes.  

In particular, projects in states such as Gujarat, Rajasthan, Madhya Pradesh and Maharashtra have contributed to this expansion. Notably, Adani Green, the renewable energy arm of Indian conglomerate Adani Group, made significant strides in 1Q2024 by installing approximately 1.6 GW of solar capacity in the Kutch district of Gujarat. This initiative is part of a wider hybrid renewable energy park that will see up to 30 GW of combined solar and wind capacity installed in Khavda in the coming years.

Despite the record growth in renewable energy additions in the recent financial year, India still faces considerable challenges in boosting capacity, according to Rystad. In early 2024, the Indian government moved its renewable energy goal of achieving 500 GW of non-fossil fuel capacity by 2030, to a new target of 2031–2032, in line with Prime Minister Modi’s vision of a self-sufficient India aiming for net zero emissions by 2070.  

To achieve the 500 GW target, India must install around 30 GW of non-fossil fuel energy generation capacity annually, which includes solar photovoltaics (PV), hydropower, onshore wind and nuclear energy. While the recent increase in renewable capacity is encouraging, further additions are imperative to meet the 2032 goal, the study says.

Rohit Pradeep Patel, Vice President of Renewables and Power Research, Rystad Energy, comments: ‘Despite ambitious climate goals to reduce CO₂ emissions, achieving them is only achievable if the country maintains the fervour witnessed in recent months. However, critical challenges persist: ensuring grid stability alongside the higher integration costs that come with introducing more renewable capacity. A strategic solution lies in balancing this clean energy embrace with targeted exports, enabling India’s growth visions for the power sector, without compromising national climate goals.’

On the supply chain side, the ramp-up of solar installations in India has created substantial demand for solar equipment. Of the record 7.1 GW of renewable capacity added in March, more than 6.2 GW was new solar additions. To put this into perspective, the entirety of 2023 saw 7.5 GW of new solar capacity installed.

Historically, Indian developers heavily relied on Chinese imports due to their competitive pricing over domestic manufacturers. Initiatives like the government’s Production Linked Incentive scheme were introduced to empower domestic manufacturers to boost their production capabilities, enhancing their price competitiveness to meet local demand. Additionally, governmental support measures like the Approved List of Models and Manufacturers mandate and customs duty on imported solar modules further assisted in bolstering the domestic solar industry, the study reports.  

Fuelled by its growing solar panel production capacity, hitting 68 GW as of March 2024, India has looked to expand its reach by exporting panels. The US emerged as a major export destination due to its high demand for solar energy. The Uyghur Forced Labor Prevention Act in the US also played a role in this shift towards Indian exports.

Despite millions of panels being shipped from India to the US, demonstrating the country’s export potential, Indian manufacturers encounter stiff competition from their south-east Asian counterparts, who maintain an edge by utilising material inputs from China, resulting in lower costs.

However, exports from India are expected to increase as the US imposes duties on panels from south-east Asian counterparts, which are expected to be as high as 254% from June 2024, making these panels significantly costlier than ones from India.

India currently exports some power to Bangladesh, Nepal and Bhutan, with lower amounts reaching Myanmar. India is also contemplating future renewable power trading. This involves multiple interconnector projects, linking nations like the United Arab Emirates and Saudi Arabia in the Middle East, Sri Lanka to the south and a Myanmar–Thailand connection in the east. There is also potential for further expansion in Singapore.

However, these projects are not expected to be realised until the 2030s due to the capital-intensive nature of interconnector projects. As a result, India’s renewable focus until 2032 will likely revolve around meeting ambitious domestic targets, with minimal short-term impact on accelerating the energy transition beyond its borders, the report concludes.