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Context

Two government-owned green energy companies in India, NHPC and NTPC Green Energy, plan to raise Rs 4,500 crore in domestic bonds to fund renewable energy projects. NTPC Green Energy will make its debut in the local bond market, while NHPC maintains its bond strategy. This strategy is consistent with India's renewable energy aspirations and benefits from low financing rates.

What is Green Energy? 

Definition

• Green energy refers to energy produced from natural, renewable, and sustainable sources.
  
  
• Also termed as clean energy or sustainable energy.
  

Key Characteristics

• Renewable Source Origin:
  
  
• Derived from resources that are naturally replenished (e.g., sunlight, wind, water).
  
  
• Low Environmental Impact:
  
  
• Generates little to no greenhouse gas emissions.
  
  
• Minimizes ecological footprint during energy production and usage.
  
  
• Sustainability:
  
  
• Supports long-term energy security without resource depletion.
  
  
• Essential in combating climate change and reducing pollution.
  

Primary Green Energy Sources

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• Solar Energy
  
  
• Utilizes sunlight through photovoltaic cells or solar thermal systems.
  
  
• Most abundant and widely accessible form.
  
  
• Wind Energy
  
  
• Produced using wind turbines that convert wind flow into electricity.
  
  
• Suitable for both onshore and offshore setups.
  
  
• Geothermal Energy
  
  
• Harnesses heat from the Earth’s interior to generate electricity or direct heating.
  
  
• Reliable and continuous energy supply.
  
  
• Biogas
  
  
• Generated from organic waste via anaerobic digestion.
  
  
• Includes agricultural waste, manure, municipal waste, plant material, and sewage.
  
  
• Low-Impact Hydroelectricity
  
  
• Electricity generated from small-scale hydroelectric dams or run-of-river projects.
  
  
• Has minimal disruption to river ecosystems.
  
  
• Qualified Biomass Sources
  
  
• Energy derived from plant or animal material, sustainably sourced.
  
  
• Includes wood pellets, agricultural residues, and specially grown energy crops.
  

Why is the Green Energy Transition Significant for India?

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Combating Climate Change and Air Pollution

• High Greenhouse Gas Emissions
  
  
• India is the third-largest emitter of greenhouse gases after China and the US.
  
  
• Green energy can drastically reduce India’s carbon footprint.
  
  
• Health Hazards Due to Air Pollution
  
  
• As per the 2022 State of Global Air Report, 1.6 million deaths in India in 2019 were linked to air pollution.
  
  
• Transitioning to clean energy sources like solar and wind will improve air quality and public health outcomes.

Ensuring Energy Security and Reducing Import Dependence

• Growing Energy Demand
  
  
• India is projected to contribute to 25% of global energy demand growth over the next two decades.
  
  
• Reliance on fossil fuel imports makes the country vulnerable to global price volatility and geopolitical risks.
  
  
• Example: Russia-Ukraine War Impact
  
  
• The conflict disrupted energy markets, leading to a surge in oil prices and impacting India’s energy costs.
  
  
• Green Energy for Stability
  
  
• Renewable sources like solar, wind, and hydro provide stable pricing, domestic availability, and reduced strategic dependence.
  
  

Attracting Investments and Establishing Global Leadership

• Investment in Sustainable Technologies
  
  
• There is a global shift in capital toward sustainable and clean energy projects.
  
  
• India can leverage this trend to become a hub for green investment.
  
  
• Global Clean Energy Leadership
  
  
• By scaling green infrastructure, India can position itself as a leader in climate action, enhancing diplomatic and economic influence.
  
  

Unlocking Opportunities in Emerging Technologies

• Development of New Solutions
  
  
• The transition paves the way for adoption and innovation in areas like:
  
  
• Energy storage systems
  
  
• Smart grids
  
  
• Green hydrogen
  
  
• EV charging infrastructure
  
  
• Fostering Technological Innovation
  
  
• Encourages research, development, and entrepreneurship in clean energy solutions, placing India at the forefront of the global green tech revolution.

Key Achievements of India’s Renewable Energy Sector 

Fossil Fuel Subsidy Reforms

• Gradual Phasing Out of Subsidies (2010–2017):
  
  
• Petrol and diesel subsidies reduced progressively from 2010 to 2014.
  
  
• Incremental taxation introduced on fuels till 2017.
  
  
• Sharp Reduction in Fossil Fuel Subsidies:
  
  
• Subsidies fell by 85% – from USD 25 billion in 2013 to USD 3.5 billion in 2023.
  
  
• Cited in the Asia–Pacific Climate Report 2024.
  
  
• Demonstrates India’s shift toward clean energy investments.
  
  
• Reallocation of Revenue:
  
  
• Saved subsidy funds were used for:
  
  
• LPG expansion in rural areas (clean cooking fuel).
  
  
• Investments in solar parks, electric mobility, and grid upgrades.
  
  

Role of Taxation in Funding Clean Energy

• Coal Cess (2010–2017):
  
  
• Imposed cess on domestic coal production and imports.
  
  
• Revenue used to fund clean energy initiatives.
  
  
• National Clean Energy and Environment Fund (NCEEF):
  
  
• Received around 30% of coal cess collections.
  
  
• Supported:
  
  
• Green Energy Corridor project.
  
  
• National Solar Mission.
  
  
• Off-grid solar and research initiatives.
  
  
• Impact:
  
  
• Boosted the Ministry of New and Renewable Energy’s (MNRE) budget.
  
  
• Helped reduce the cost of solar power generation.
  
  

Installed Capacity & Growth (2023–2024)

• Overall Renewable Energy Growth:
  
  
• Increased by 24.2 GW (13.5%) in one year.
  
  
• Total RE capacity reached 203.18 GW in Oct 2024 (from 178.98 GW in 2023).
  
  
• Non-Fossil Fuel Capacity (including nuclear):
  
  
• Rose to 211.36 GW in 2024, from 186.46 GW in 2023.
  
  
• Solar Energy:
  
  
• Added 20.1 GW (27.9%) growth.
  
  
• Capacity reached 92.12 GW in 2024 (from 72.02 GW in 2023).
  
  
• Potential: Estimated at 748 GW (by National Institute of Solar Energy).
  
  
• Wind Energy:
  
  
• Increased by 7.8%, from 44.29 GW to 47.72 GW.
  
  
• Large Hydro Projects:
  
  
• Added 46.93 GW to the renewable portfolio.
  
  
• Nuclear Energy:
  
  
• Contributed 8.18 GW to non-fossil fuel capacity.

Global Standing in Renewable Energy

• India’s Global Rank (as of 2025):
  
  
• 4th in total renewable power capacity.
  
  
• 3rd in wind power capacity.
  
  
• 5th in solar power capacity.
  
  
• Significance:
  
  
• Recognized as a global leader in clean energy transition.
  
  
• Enhances India's soft power and climate diplomacy.
  
  

Renewable Energy Targets and Climate Goals

• Renewable Energy Target (by 2030):
  
  
• Achieve 500 GW of installed renewable energy capacity.
  
  
• Part of India’s Panchamrit commitments made at COP26.
  
  
• Energy Mix Goal:
  
  
• Ensure 50% of total power generation comes from renewable sources by 2030.
  
  
• Climate Commitments:
  
  
• Reduce carbon intensity by 45% by 2030 (compared to 2005 levels).
  
  
• Achieve net-zero emissions by 2070.
  
  

Green Hydrogen Mission

• Strategic Focus:
  
  
• Development of green hydrogen as a future clean fuel.
  
  
• Target:
  
  
• 5 million tonnes (MT) of green hydrogen production annually by 2030.
  
  
• Supported by 125 GW of renewable energy dedicated for hydrogen production.
  
  
• Significance:
  
  
• Essential for decarbonizing hard-to-abate sectors like:
  
  
• Industry
  
  
• Heavy transport
  
  
• Power generation
  
  
• Positions India as a global leader in clean hydrogen technology.

Key Schemes & Initiatives to Boost India’s Renewable Energy Sector

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Union Budget 2024–25 Provisions

• Increased Budget Allocation for Solar Power (Grid):
  
  
• Rs 10,000 crore allocated under the Centrally Sponsored Scheme for Solar Power (Grid).
  
  
• Marked increase of 110% from the previous budget allocation (Rs 4,757 crore).
  
  
• PM-Surya Ghar Muft Bijli Yojana:
  
  
• Launched in February 2024 with a total outlay of Rs 75,000 crore.
  
  
• Rs 6,250 crore allocated in the current budget.
  
  
• Promotes adoption of rooftop solar systems in residential households.
  
  
• Custom Duty Exemption on Critical Minerals:
  
  
• Basic Customs Duty (BCD) exempted on imports of 25 critical minerals.
  
  
• Aims to support domestic manufacturing of renewable technologies.
  
  

PM-KUSUM Scheme (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan)

• Objective:
  
  
• Promote the use of solar energy in agriculture.
  
  
• Key Features:
  
  
• Installation of solar pumps and solar-powered feeders.
  
  
• Reduction in reliance on diesel and grid electricity for irrigation.
  
  
• Target of 34.8 GW solar capacity through decentralized solar projects.
  
  
• Supports sustainable and energy-secure farming practices.

National Green Hydrogen Mission

• Budget: Rs 19,744 crore
  
  
• Objectives:
  
  
• Develop a competitive green hydrogen ecosystem in India.
  
  
• Promote large-scale production and application in:
  
  
• Industrial decarbonization
  
  
• Heavy transport
  
  
• Energy storage
  
  
• Significance:
  
  
• Supports India’s climate goals.
  
  
• Expected to generate employment and boost economic growth.
  
  

Solar Park Scheme

• Capacity Approved: 55 solar parks with a cumulative capacity of 40 GW.
  
  
• Key Features:
  
  
• Pre-developed infrastructure and land made available for solar developers.
  
  
• Simplifies land acquisition and attracts private investment.
  
  
• Plays a critical role in scaling India’s solar power capacity.

Production-Linked Incentive (PLI) Scheme for High-Efficiency Solar PV Modules

• Objective:
  
  
• Reduce dependence on imported solar modules.
  
  
• Promote domestic manufacturing.
  
  
• Target:
  
  
• Create 65 GW of manufacturing capacity for high-efficiency solar PV modules by 2026.
  
  
• Focus Areas:
  
  
• Efficiency enhancement
  
  
• Competitiveness in global solar manufacturing
  
  

Green Energy Corridor

• Objective:
  
  
• Strengthen transmission infrastructure for renewable energy.
  
  
• Key Features:
  
  
• Facilitates the evacuation of power from RE-rich regions to consumption centers.
  
  
• Phase I: Covers 8 states with high renewable energy generation potential.
  
  
• Phase II: Expansion to additional states for wider integration with the national grid.
  
  

Viability Gap Funding (VGF) Scheme for Offshore Wind

• Objective:
  
  
• Develop offshore wind power projects along India’s coastline.
  
  
• Target:
  
  
• Install 30 GW of offshore wind capacity by 2030.
  
  
• Primary Focus Areas:
  
  
• Gujarat and Tamil Nadu identified as initial development hubs.
  
  
• Encourages private investment and public infrastructure support.
  
  

International Leadership in Renewable Energy

• International Solar Alliance (ISA):
  
  
• Co-founded by India and France.
  
  
• Aims to mobilize USD 1 trillion in solar investments.
  
  
• Target: Deploy 1,000 GW of solar energy by 2030.
  
  
• One Sun, One World, One Grid (OSOWOG):
  
  
• Proposed by India in 2018 at the first ISA Assembly.
  
  
• Envisions a global interconnected grid for renewable power.
  
  
• Three Phases:
  
  
• Phase 1: India’s grid connectivity with neighboring regions (SAARC, Middle East, Southeast Asia).
  
  
• Phase 2: Expand connections to Africa.
  
  
• Phase 3: Full global interconnection by 2050.

What are the major challenges in India’s green energy transition?

High Dependence on Fossil Fuels

• Dominance of Coal:
  Around 55% of India's electricity generation still comes from coal-based thermal power plants.
  
  
• Obstacle to Transition:
  This entrenched reliance on fossil fuels makes it difficult to shift towards cleaner, renewable energy sources.

Siloed Policy and Governance

• Fragmented Institutional Structure:
  Different ministries handle fossil fuels (Ministry of Coal) and renewables (Ministry of New and Renewable Energy) separately.
  
  
• Lack of Coordination:
  This siloed approach leads to inefficiencies in planning, resource allocation, and goal alignment.
  
  
• Contradictory Actions:
  For example, coal mine expansion initiatives may undermine renewable energy targets set by another ministry.

Vulnerability in Green Technology Supply Chains

• Dependence on Imports:
  India imports a large share of its green technology, primarily from China.
  
  
• Solar Dependency:
  Nearly 70% of India’s solar power infrastructure relies on China-made solar panels.
  
  
• Geopolitical Risks:
  This dependence makes India vulnerable to supply chain disruptions, price fluctuations, and geopolitical tensions.
  
  

Grid Integration Challenges

• Intermittent Nature of Renewables:
  Solar and wind energy are variable and unpredictable, leading to grid stability issues.
  
  
• Power Reliability Issues:
  Managing supply-demand balance becomes difficult without effective storage and backup mechanisms.
  
  

Limited Energy Storage Capacity

• Early-Stage Development:
  Technologies like battery storage systems (BESS) and pumped hydro are still nascent in India.
  
  
• Insufficient Peak-Time Support:
  Inadequate storage makes it difficult to store surplus energy and use it during peak demand.
  
  
• Target Impact:
  A robust BESS ecosystem is essential to meet India’s 500 GW non-fossil energy goal by 2032.
  
  

Waste Management of Renewable Energy Infrastructure

• Growing Solar and Wind Waste:
  With rising adoption, solar panels and wind turbines are generating considerable end-of-life waste.
  
  
• Current and Future Projections:
  India generated about 100 kilotons (kt) of solar waste in FY 2022–23, projected to rise to 600 kt by 2030.
  
  
• Lack of Recycling Infrastructure:
  Inadequate systems exist for safe and sustainable disposal or recycling of solar and wind components.

Water-Energy Nexus Challenges

• Water-Intensive Technologies:
  Technologies like Concentrated Solar Power (CSP) require large volumes of water for cooling.
  
  
• Water Scarcity Concerns:
  With reservoir levels down to 23% (as per Central Water Board), deployment of such technologies in water-stressed areas becomes unsustainable.
  
  
• Policy Implications:
  Renewable energy expansion must align with water resource availability to avoid competing demands.

Status of Clean Energy

Global Shift Towards Clean Energy

• Total Installed Capacity: By 2025, the global installed renewable energy capacity has surpassed 3,000 GW, accounting for approximately 30% of the world's total electricity generation capacity.
  

Leading Sources:

• Solar Power: Approximately 1,200 GW, making it the largest contributor to renewable energy capacity.
  
  
• Wind Power: Around 900 GW, with both onshore and offshore installations contributing significantly.
  
  
• Hydropower: Over 1,100 GW, though growth has slowed due to environmental and social concerns.
  
  
• Bioenergy and Geothermal: Combined capacity of approximately 300 GW, with bioenergy being the dominant source.

Policy Support

• International Agreements:
  
  
• The Paris Accord encourages nations to reduce carbon emissions through clean energy transitions.
  
  
• National Policies:
  
  
• Many countries have set net-zero or renewable energy targets for the coming decades.
  
  
• Governments are offering subsidies, tax incentives, and mandates for clean energy development.

India’s Renewable Energy Status

Installed Renewable Energy Capacity

• Total Capacity: As of March 2025, India's total installed renewable energy capacity stands at approximately 201.45 GW, accounting for 46.3% of the country's total installed power capacity.
  
  
• Solar Power: Solar energy leads with an installed capacity of 90.76 GW, making India the third-largest producer of solar power globally.
  
  
• Wind Power: Wind energy follows closely with 47.36 GW, contributing significantly to the renewable energy mix.
  
  
• Hydropower: Hydroelectric power contributes 46.92 GW, with small hydro projects adding another 5.07 GW.
  
  
• Bioenergy: Biomass and biogas energy sources contribute 11.32 GW to the national grid.
  
  

Government Initiatives and Policies

• National Hydrogen Mission: Launched to promote the production of green hydrogen, aiming for a capacity of 5 million tonnes by 2030.
  
  
• Production-Linked Incentive (PLI) Schemes: Introduced to boost domestic manufacturing of solar photovoltaic (PV) modules, with allocations totaling approximately 48 GW.
  
  
• Green Energy Open Access Rules: Implemented to facilitate the generation, purchase, and consumption of green energy, including from waste-to-energy plants.
  
  
• Financial Support: The government has allocated ₹75,000 crore for the PM Surya Ghar Yojana, aiming to enhance solar energy adoption.
  
  

State-Level Contributions

• Top Solar States: Rajasthan, Gujarat, and Maharashtra lead in solar energy installations, with Rajasthan alone contributing over 18 GW.
  
  
• Wind Energy Leaders: Tamil Nadu, Gujarat, and Maharashtra are at the forefront of wind energy production, collectively accounting for over 80% of the country's wind capacity.
  
  
• Emerging States: States like Uttar Pradesh and Madhya Pradesh are rapidly increasing their renewable energy capacities through targeted policies and investments.

Way Forward

Green Social Entrepreneurship and Grassroots Innovation

• Promoting Local Green Ventures:
  
  
• Support green social entrepreneurship at the grassroots level.
  
  
• Provide seed funding, incubation, and regulatory frameworks to empower local entrepreneurs.
  
  
• Encourage innovative clean energy solutions tailored for rural and underserved areas.
  
  
• Examples of Innovation:
  
  
• Micro-hydropower plants in hilly regions.
  
  
• Community-owned solar farms for rural electrification.

Energy Democracy and Community Empowerment

• Distributed Generation Models:
  
  
• Promote community participation in renewable energy production.
  
  
• Encourage models like energy cooperatives and community-owned solar/wind plants.
  
  
• Case Study:
  
  
• Dhundi Solar Project, Maharashtra – A village collectively owns and operates a solar power plant, offering a replicable model.

Circular Energy Economy

• Resource Efficiency in Clean Energy:
  
  
• Promote reuse, repurposing, and recycling of solar panels, wind turbines, and batteries.
  
  
• Integrate circular economy principles to reduce waste and extend component lifespans.
  
  
• Examples:
  
  
• Attero and Cygni Energy – Leading Indian companies in lithium battery recycling and reuse.

Integrating Green Energy with Agriculture

• Agrivoltaics (Agro-Photovoltaics):
  
  
• Combine agriculture with solar power generation by installing panels above croplands.
  
  
• Enables dual land use: energy production + crop cultivation.
  
  
• Pilot Project:
  
  
• Jodhpur, Rajasthan – Demonstrated sustainable farming and energy synergy using agrivoltaic systems.

Renewable Energy Storage Parks

• Enhancing Grid Stability:
  
  
• Establish large-scale renewable energy storage parks.
  
  
• Integrate diverse technologies: batteries, pumped hydro, and thermal storage.
  
  
• Objective:
  
  
• Ensure energy security and higher renewable energy grid integration.

Green Gig Economy and Skill Development

• Building a Green Workforce:
  
  
• Upskill and reskill youth and existing workers for green jobs in:
  
  
• Solar panel installation
  
  
• Wind turbine maintenance
  
  
• EV repair and battery management
  
  
• Platform for Freelancing & Learning:
  
  
• Use digital tools like Skill India Digital Hub (SIDH) to connect workers with gig-based opportunities.

Merging Coal and Renewable Energy Ministries

• Proposal for Unified Energy Governance:
  
  
• Merge fossil fuel and renewable energy ministries into a single Ministry of Energy.
  
  
• Benefits:
  
  
• Improved policy coherence and resource planning.
  
  
• Harmonize targets and reduce conflict between coal expansion and renewable energy goals.

Source: Down to Earth