5 Challenges For India’s 500 GW Clean Energy Target

India’s aim to achieve 500 GW of non-fossil fuel-based clean energy capacity target by 2030 may be one of the most ambitious goals for the decade across the globe. Yet, the probability of this happening may be bleak considering the factors adversely affecting the new capacity additions – comparatively sluggish progress, regulatory challenges, uncertainty in market, trade wars, etc. – slowing down the overall growth momentum of the sector.

With a record annual capacity addition of 29.5 GW, the total installed renewable energy (RE) capacity in the country reached over 220 GW by the end of FY2025. Notably, solar energy contributed the most to the year’s capacity expansion, with about 23.8 GW added in FY 2024–25. The wind energy sector is also witnessing sustained progress, with 4.15 GW of new capacity added last fiscal. 

Despite rapid progress in recent years, India’s huge target faces some big challenges ahead. In fact, in addition to making strides in renewable addition, India is concurrently planning to add 80 GW of new coal plants by 2032 as insurance for reliable supply. This is a clear sign that policy makers themselves recognize that current frameworks may not adequately support a 500 GW RE-only approach.

Here’s why.

#1 Transmission Bottlenecks

Technical limitation of India’s grid infrastructure to absorb and distribute massive RE capacity.is one of the major bumps on the route to 500 GW clean energy future by end of the decade. India’s renewable-rich regions, like the sunny region of Rajasthan and Gujarat, windy regions of Tamil Nadu and Karnataka, are often far from the major demand centers, such as Delhi-NCR, Maharashtra. 

Transmission expansion is not keeping pace with generation growth and even curtailment in some cases. For instance, solar-rich Rajasthan experiences solar fluctuations that create grid instability, forming the “duck curve”—with excess generation at midday and shortfalls in the evening. This increases reliance on fossil fuel plants. Rajasthan’s 23 GW solar capacity often overloads transmission infrastructure, causing 5-10 percent curtailment during peak sunlight hours.​

RE projects have traditionally not been able to be installed even after commissioning due to a lack of transmission infrastructure to evacuate the generated power. Often, transmission capacity installation follows renewable energy auctioning, and given the longer construction time of the former, the renewable energy capacity installation suffers.

The administration acknowledges this problem and is taking measures to clear this bottleneck of RE growth. India aims to add interstate transmission capacity worth INR 6.6 trillion (USD 76.9 billion) and intrastate capacity worth INR 2.5 trillion (USD 29.1 billion) between 2022 and 2032, as per the National Electricity Plan (NEP).

#2 Stability and Flexibility Challenges

The Indian grid operates in a tight frequency band ranging 49.9-50.05 Hz. This means that imbalances can cause instability. Large swings from renewables – sudden drops in wind output or sharp solar ramp-down at sunset – put stress on maintaining frequency. This was best demonstrated by the recent blackout in Spain and Portugal, where an imbalance caused by a transmission line from France caused automatic shutdown of renewables, leading to a catastrophic collapse of the whole grid due to the high share of renewables. 

Grid flexibility measures, such as energy storage, fast-ramping backup, and load management, may help but are currently insufficient. Without significant improvements like better forecasting, energy storage for grid balancing, and flexible operation of conventional plants, each additional gigawatt of intermittent renewables becomes harder to integrate. 

In the long term, this problem may limit the usable RE potential well below 500 GW even if that much capacity is built. Just like grid infrastructure betterment and expansion, strengthening grid integration capabilities is urgent – otherwise the 500 GW target may result in a plethora of idle or underutilized renewable assets due to evacuation constraints.

#3 Financial and Investment Limitations

Achieving 500 GW of new capacity in less than a decade is a capital-intensive undertaking. India needs a total investment of about USD 300 billion by 2032 to meet its renewable energy targets as per 14th National Electricity Plan (NEP-14).  

This means annual financing for renewable energy, storage and transmission must grow by 20 percent each year, reaching USD 68 billion by 2032, or about USD 47 billion by 2030, from USD 13.3 billion in FY 2024, according to a new report from Ember. Thus, the inflow in the industry needs to increase multifold as soon as possible compared to the last half a decade.

India’s green investments totalled nearly USD 70 billion between 2019 and 2024, as per a recent report by S&P Global’s India subsidiary Crisil. This will need to go up to USD 350 billion in the next five years if it is to meet its green energy targets. 

However, factors like perceptions of low-carbon projects as being high-risk, longer gestation periods, and changing regulatory policies resulting in an unpredictable business environment, makes it an uphill task. These factors can potentially render the 2030 target unachievable if not taken care of soon.

#4 Policy, Regulatory, and Institutional Inconsistencies

Even when technology and infrastructure are available, policy and regulatory hurdles have often impeded India’s renewable deployment. The RE sector has seen frequent changes, uncertainties, and institutional challenges that undermine investor confidence and slow progress. 

For one, India’s renewable policy has occasionally sent mixed signals. The abrupt imposition of basic customs duties on solar imports is a great example which, while beneficial for Make in India in theory, caught many developers off guard financially. Similarly, frequent changes in rooftop solar net metering rules have slowed the distributed solar segment’s growth​

Unstable regulatory environment threatens India’s energy transition goals. For example, the Central Electricity Regulatory Commission (CERC) recently rejected a petition to approve the tariff for Solar Energy Corporation of India’s (SECI)’s first standalone BESS project of 500MW/1,000MWh. This decision underscores an underlying issue in India’s RE sector – the awarded projects often fail to secure buyers, risking cancellation under standard tender rules. 

This hampers progress towards achieving the 236.22 GWh of BESS capacity. The said capacity is needed to integrate the planned renewable energy under the Central Electricity Authority’s NEP-2023. As of March 2024, India had only 0.2 GWh BESS installed capacity.

Furthermore, the state-owned distribution companies (DISCOMs) have a track record of delaying the signing of Power Purchase Agreements for awarded RE projects, or attempting to renegotiate contract terms. Developers have often expressed frustration over the bureaucratic hurdles and regulatory delays that are stalling progress. 

As a result, many projects remain in limbo, unable to move forward despite having secured bids and clearances. The backlog of unassigned PPAs delays project commissioning and creates uncertainty for renewable energy developers, impacting revenue, cash flow and financing. The issues erode investor confidence and discourage stakeholders from investing in new RE projects. 

#5 Energy Storage, Hybridization, and Demand Mismatch

The goal of 500 GW non-fossil fuel-based energy means not only to install the said capacity but also to make efficient use of it and reach the national energy demand. But intermittency of renewables leads to a fundamental issue of demand-supply misalignment that must be solved by energy storage, flexible operation, and hybrid systems. 

For instance, Tamil Nadu’s wind power peak in the months of May to September often oversupplies the grid at night, forcing up to 20 percent of wind energy to be curtailed because it cannot be stored (or transmitted). Conversely, during low renewable periods (e.g. windless days or evenings), the grid falls back on coal and hydro reserves. 

In 2024, over two-thirds of the increase in India’s electricity demand was met by fossil generation, not renewables​, partly because renewables could not deliver during critical hours, as per a Global Energy Monitor (GEM) report. 

Without adequate storage and balancing resources, the value of additional renewable capacity diminishes – calling into question the practicality of a 500 GW of non-fossil fuel based clean energy target delivered mostly by variable sources.  

The gravity can be explained by Ministry of New and Renewable Energy (MNRE) data which states that the energy storage capacity requirement is projected to increase to 79.3 GW or 411.4 GWh (175.18 GWh from PSP and 236.22 GWh from BESS) in the year 2031-32. Compared to the current non-existent capacity, this is a mammoth addition. Failing this, the grid integration problem will worsen the case of clean energy enthusiasts.

If storage and integration solutions do not catch up, a 500 GW renewable system could be an operational nightmare – massive swings requiring frequent curtailments to maintain grid stability. That would undermine the economics of renewables (curtailed energy brings no revenue) and potentially force large write-offs or bailout needs if many projects can’t sell their expected output. 

Thus, before the 500 GW target is even considered, these challenges must be solved to keep the clean energy future practical in the long run.