2030 Target No Longer Bold Enough, Look Beyond 500 GW

India’s pledge to install 500 GW of non-fossil energy by 2030 was hailed as bold and transformational when announced at COP26 in 2021. However, this target is no longer sufficiently ambitious compared to what the country has potential to achieve, thanks to the overall evolution of the energy landscape through the last few years.  For reference, consider how China has blown past its renewable energy goals by 2024 itself. 

From surging electricity demand and cheaper clean technology to global players now breaking the barriers every other day, the energy industry is adopting the new age of energy at a much faster pace than anticipated. 

Through this article, we understand how booming power demand and improved technology call for more aggressive deployment, and how India risks falling behind the accelerating global renewables race.

We explore five reasons why India’s 500 GW renewable capacity target might be too modest, and need revision, given the realities of 2024–2025. 

#1 New Additions – Not Enough

India’s electricity demand is expected to grow at a compound annual growth rate (CAGR) of 6-6.5 percent over the next three years, stronger than the 2015-2024 average growth rate of about 5 percent.

The renewable energy (RE) capacity is even falling short of this growing demand, let alone easing the existing burden. The International Energy Agency (IEA) notes in its 2024 report that while renewables are set to meet almost half of the country’s demand growth for next two years, one-third is expected to come from coal. In other words, renewables are filling the gap for new demand, but not yet phasing out a significant portion of the existing coal-based supply.

A recent analysis by CSEP shows that if India aims to meet all demand growth by 2030 with new renewables, it would require more than 430 GW of solar and wind power as a part of more than 600 GW of overall non-fossil capacity by 2030 – well above the current 500 GW target. 

Simply put, 500 GW is enough to keep the lights on for a growing economy, but not enough to force a significant coal phase-down. To reach any more expectations, a higher renewables target is warranted.

#2 Costs and State of Domestic Manufacturing More Favorable Now

India set its 500 GW target way back in 2021 when the cost of renewable deployment was more pricier and domestic manufacturing was practically non-existent constraining supply chains. 

At that time, achieving 500 GW by 2030 was pushing the limits and seemed more ambitious than what was feasible for many. Fast forward to 2024–25, renewable energy costs have fallen sharply, and domestic manufacturing capacity has surged, eroding these barriers.

Solar PV costs are lower than ever and every rupee now buys more watts of solar than it did a few years ago. In fact, costs are dwindling at a very fast rate. For instance, the cost of large-scale solar projects decreased for six consecutive quarters till the second quarter of 2024, with an average quarterly decline of 6 percent. Similarly, wind turbine technology and economies of scale continue to improve, bringing down wind energy costs per unit.

At the same time, domestic manufacturing has also expanded at a rapid pace since the announcement of the 500 GW goal. Government initiatives like the Production-Linked Incentive schemes coupled with growing investor interest, India is rapidly building up the capability to produce solar modules, cells, and other components at gigawatt scales.

The best example of this is the swift growth of the domestic solar PV module manufacturing industry. India’s PV module manufacturing capabilities grew from being negligible a decade ago to 80 GW now, and is now expected to expand to 125 GW by the end of current decade, as per the Union Minister of New and Renewable Energy.

To keep the factories running optimally and achieve economies of scale, the domestic market must be large and growing. A higher target would help absorb the domestic supply glut, prevent factory idle time, and drive further cost reductions, creating a virtuous cycle of growth. In summary, today’s renewables are cheaper and easier to deploy at scale than when the 500 GW aim was set.

#3 Falling Energy Storage Prices = Higher Renewable Penetration

One of the classic counter-arguments to ultra-high renewable targets is the variability of wind and solar. Energy storage, especially batteries, is the key to integrating large shares of renewables reliably. The ongoing battery revolution is thus an enabler for aiming for and even going beyond the 500 GW target. 

Until recently, battery storage was very expensive, which put a practical cap on how much wind/solar could be absorbed. Now, the storage industry too has become significantly more favorable with a sharp drop in storage costs, making a renewables-heavy grid far more feasible technically and economically than it was just a few years ago.to faster renewable transition. 

 

As per a BloombergNEF report from December last year, the battery prices saw their biggest annual drop since 2017, dropping 20 percent from 2023 to a record low of USD 115 per kilowatt-hour by the end of 2024. Overall batteries are now over 80-85 percent cheaper compared to just a decade ago. Current prices in India in fact could be closer to $75-90/kWh, following record low prices of $55/kWh in China.

This means cheaper integration of storage with renewables. Cheaper storage solutions not only help solve the variability concerns but also pacing up new renewable deployments. 

In India, the improving economics of storage is already visible. In August 2022, the first government-backed tender for standalone Battery Energy Storage System (BESS) discovered a tariff of INR 10.8 lakh per MW-month. By March 2024, a similar tender in Gujarat saw tariffs crash to INR 4.49 lakh per MW-month – a nearly 60 percent reduction in less than two years.

Measures like India’s National Energy Storage Mission to kickstart the ecosystem are welcome and are expected to have a profound impact on renewable growth as well. In summary, energy storage was the missing piece that limited renewable ambitions until now. With cheaper batteries and new technologies, India can integrate more green energy than previously thought, making the 500 GW target a starting point rather than the end goal.

#4 Untapped Potential Can Give Unexpected Growth When Put to Action

India’s 500 GW target largely focuses on utility-scale, grid-connected renewable projects such as solar parks, wind farms, large hydro, etc. However, a significant portion of India’s renewable opportunity lies outside these parameters. These segments have either underperformed relative to early expectations or were not fully envisioned when the 500 GW target was set.

 

Rooftop solar, for example, is one of the biggest untapped power sources. Considering the original goal of installing 40 GW of rooftop solar by 2022, the progress has been sluggish, limiting it to well below 20 GW by the end of 2024. A CEEW report notes that the country’s total rooftop potential is enormous, exceeding 630 GW technically and a maximum economic potential of about 118 GW. 

Apart from rooftop, India has a host of off-grid renewable programs – solar street lighting, standalone solar pumps for irrigation, micro-grids for remote villages, battery-backed systems for rural health centers, etc. Individually these tend to be small kilowatt-scale systems, but in aggregate they matter, especially with the new paradigm shift in energy storage costs.

Government efforts like the PM Kusum scheme for solar pumps, the Rooftop Solar Phase II subsidies, and the new Surya Grah Yojana are reinvigorating their growth, with a potential to add immensely to the total capacity. Notably, these are not explicitly accounted for in the top-down 500 GW goal.

A silent but potentially huge contributor lurking in uncertainty is the green hydrogen or others of the spectrum. Perhaps the largest new factor not accounted for in the original 500 GW vision is the advent of green hydrogen. 

Producing 5 MMT of hydrogen per year via electrolysis will require on the order of 100–150 GW of new renewable capacity, with the government’s mission document projecting an additional ~125 GW of renewable capacity needed by 2030 to supply the green hydrogen facilities. A more ambitious target considering late comer GH2 aim has the potential to not just go beyond 500 GW but even to go well above 600 GW at the minimum.

#5 India Risks Lagging Behind the Global Peers

The global renewable energy situation has changed dramatically in the past two years. Many peer countries have since upped their renewable targets or blown past their previous goals.

China achieved its 1200 GW target for 2030 six years ahead of the schedule, a feat so monumental that the campaigners are now urging Beijing to literally double its 2030 target to ~2,400 GW given this momentum, something that does not seem unlikely at all, if we consider the 400 GW plus it seems set to add this year.

Australia was long considered a coal-dependent laggard among the major economies. The country has pivoted strongly to renewables under its updated climate policies aiming for 82 percent renewable electricity by 2030, up from roughly 32 percent today. This is a four- to five-fold increase in wind and solar generation compared to 2022 levels. Similarly, analysts expect the US renewables to more than double over 2024-2030 to almost 500 GW, propelled by Inflation Reduction Act. 

Even oil-producing countries have dramatically revised their renewable energy outlook. For instance, Saudi Arabia now targets generating 50 percent of its electricity from renewables by 2030. This translates to about 130 GW of renewable capacity by 2030, a massive 26-fold increase over virtually just 2-3 GW installed a couple of years ago. 

As the goalposts now move on the international stage, it is imperative for India to aim for higher, more reasonable goals than an outdated target of 500 GW by 2030.  To retain climate leadership and economic competitiveness, upping our 2030 target would send a powerful signal and a more ambitious goal of 600 GW (or, even more) would align with the new standards set. 

After all, why do we do average when we have the potential to do the best.