Powering On, Cautiously: India’s Green Grid Moment
New Delhi: India’s renewable energy (RE) story, long defined by headline-grabbing capacity additions, has reached a turning point. After a decade of exponential expansion — from 35 gigawatts in 2014 to over 197 gigawatts of installed capacity (excluding large hydro) by September 2025 — the challenge is no longer about how much power can be built, but how much can be integrated.
The government’s new strategy, quietly articulated through a Ministry of New and Renewable Energy (MNRE) order on November 4, signals a decisive shift from quantity to quality. It marks the beginning of what officials call the “integration phase” — a phase that prioritises grid readiness, financial prudence, and contractual discipline over raw megawatt targets.
For years, India’s clean energy campaign was powered by the urgency of catching up: aggressive solar and wind auctions, falling tariffs, and a rapid rise in installed capacity that turned the country into the world’s third-largest renewable market. But success brought complexity. Developers raced ahead of distribution companies (DISCOMs), projects outpaced transmission corridors, and contracting frameworks lagged behind market evolution. The result is a system rich in potential but stretched in synchronisation.
At the heart of this recalibration lies the government’s decision not to cancel renewable energy projects awarded under the Renewable Energy Implementing Agencies (REIAs), even when their Power Sale Agreements (PSAs) remain unsigned. Instead, the MNRE has opted for a case-by-case, data-driven approach — one that balances investor confidence with institutional accountability.
The scale of the issue is substantial. As of September 30, 2025, REIAs such as the Solar Energy Corporation of India (SECI), NTPC Renewable Energy Limited, and NHPC had issued Letters of Award (LoAs) for nearly 43.9 gigawatts of capacity for which PSAs with end procurers have yet to be signed. The number represents the residue of an ambitious auction pipeline built over the past two years.
Yet, the same period also witnessed substantial progress: 24.9 gigawatts worth of PSAs were successfully executed since April 2023, indicating that the system, though burdened by complexity, remains functional and evolving. What the government is trying to avoid is the blunt instrument of “blanket cancellations,” which could damage India’s hard-won reputation as a stable, clean energy market.
The new approach, anchored in due diligence, instructs REIAs to review and categorise every unsigned LoA based on three key parameters: the likelihood of securing a PSA, the discovered tariff, and the expected connectivity timeline. Only projects with minimal prospects for contractual closure may be considered for phased cancellation — and even then, only after all feasible alternatives, including reallocation or repurposing, have been exhausted.
This nuanced stance acknowledges a critical structural fact: most investments in renewable projects begin only after Power Purchase Agreements (PPAs) and PSAs are finalised. Hence, the oft-voiced concern that cancellations might jeopardise billions in sunk investments is largely unfounded. In most cases, developers’ early expenditures — on land acquisition or grid connectivity — can be redeployed toward other operational or upcoming projects.
But the reform is not just administrative housekeeping; it reflects a deeper realignment between policy ambition and infrastructural reality. For much of the past decade, India’s renewable buildout outpaced the grid’s ability to absorb variable power. Transmission corridors became congested, and energy-rich states like Rajasthan and Gujarat began facing curtailment during peak generation hours. The government’s ₹2.4 lakh crore transmission expansion plan, linked to the 500-gigawatt renewable energy goal, aims to resolve precisely this mismatch.
Under the plan, new high-voltage corridors will be built across the western, southern, and central regions, with the General Network Access (GNA) framework — introduced in 2024 — allowing developers to draw and inject power across the national grid more flexibly. In effect, it replaces a legacy system of rigid, project-specific connectivity with a dynamic, open-access model.
The integration strategy also responds to changing patterns of demand. Distribution companies have become increasingly wary of contracting plain solar projects, which supply power primarily during off-peak daytime hours when tariffs are lowest. Instead, DISCOMs are now seeking solar-plus-storage and firm, dispatchable renewable energy (FDRE) products — solutions capable of delivering predictable power during evening peaks.
MNRE’s latest guidance to REIAs reflects this shift. Agencies are being encouraged to design tenders that integrate storage or guarantee peak-hour supply, and to move away from traditional “plain solar” bids. This change is not cosmetic. Storage-backed projects, while more capital-intensive, are proving more economically viable over the long run — especially as battery costs continue to fall and the value of reliability rises.
The government has also amended Standard Bidding Guidelines for solar, wind, hybrid, and FDRE projects to allow cancellation of LoAs that remain unexecuted beyond twelve months — a measure designed to ensure market discipline without discouraging participation.
Parallel to these policy changes, the MNRE is addressing a perennial bottleneck: weak compliance with the Renewable Consumption Obligation (RCO) under the Energy Conservation Act. By urging states to meet their renewable procurement targets, the Centre hopes to expand the buyer base for clean power and smoothen the path for PSA execution. To that end, regional workshops have been organised with major procuring states to resolve bottlenecks, standardise contracts, and align procurement calendars.
If the first decade of India’s renewable revolution was about achieving scale, the current one is about managing complexity. Between FY 2024–25 and the first half of FY 2025–26, India added a combined 54 gigawatts of renewable capacity — 29 GW in the last fiscal year and 25 GW in the current half-year alone. This momentum continues despite global headwinds such as rising interest rates, currency fluctuations, and supply chain disruptions in photovoltaic modules.
Investor confidence, remarkably, remains high. Global developers are still bidding aggressively in SECI auctions, though with more sophisticated portfolios that combine generation, storage, and hybridisation. Domestic manufacturers, buoyed by production-linked incentives and import substitution measures, are scaling up solar module and battery capacity to meet both domestic and export demand.
The result is a market that is simultaneously consolidating and diversifying. While large players such as Adani, ReNew, Greenko, and Tata Power Renewable continue to dominate auction volumes, smaller developers are carving niches in niche sub-sectors like distributed generation and corporate power purchase agreements (CPPAs). The commercial and industrial (C&I) segment has emerged as a quiet engine of growth, accounting for an increasing share of new installations as enterprises pursue decarbonization goals independently of state procurement cycles.
Still, the transition to a more integrated system will test India’s institutional endurance. The REIAs, tasked with balancing developer interests, DISCOM constraints, and grid realities, will need to function with greater technical agility and transparency. Their success depends on the alignment of three moving parts: contracting reform, transmission readiness, and market pricing. If any falters, the system risks bottlenecks that could ripple through the supply chain.
Grid reliability remains the sector’s toughest frontier. The Central Electricity Authority’s projections suggest that without accelerated investment in flexible capacity — including battery storage, pumped hydro, and green hydrogen — India could face seasonal imbalances and regional congestion by 2028. That risk is driving the shift toward dispatchable renewable formats and blended contracts.
Equally critical is financial discipline. The power sector’s legacy of delayed payments and weak DISCOM balance sheets continues to affect renewable developers, even as reforms like the Late Payment Surcharge rules and market-based economic dispatch (MBED) models begin to stabilise the cash cycle. For the integration phase to succeed, financial liquidity and contractual sanctity will be as important as technology.
The broader picture, however, remains one of confidence. India’s cumulative 197 GW of renewable capacity positions it among the world’s top three clean energy markets, alongside China and the United States. With large hydro included, the total exceeds 275 GW — nearly 44 per cent of the country’s total installed power capacity. The government’s 2030 target of 500 GW of non-fossil capacity remains within reach, provided that integration keeps pace with additions.
This evolution — from an era of auctions to an era of absorption — reflects a deeper maturity in India’s energy governance. The state is learning to temper ambition with realism, to ensure that every new megawatt built is a megawatt used efficiently.
What distinguishes the current strategy from earlier waves of reform is its pragmatism. Rather than imposing sweeping mandates, the government is applying granular, case-specific judgment — allowing room for flexibility, correction, and market feedback. It is a quiet but significant policy shift, acknowledging that the renewable sector has entered a phase where integration, not expansion, defines success.
India’s clean energy story, once told in the language of targets and triumphs, is now being rewritten in the idiom of systems engineering — one where megawatts matter less than megawatt-hours delivered reliably, affordably, and sustainably. The coming years will test whether this pragmatic phase can deliver on the grand promise of the last one: a decarbonised power sector that is not just growing fast, but growing right.
– global bihari bureau
