Renewable Energy Investment in India: Current Paradigms

In the face of an oil price shock that threatened to destabilize economies worldwide, the focus has turned to renewable energy as a potential solution. In India, over $25 billion (Rs 2 lakh crore) of investment is planned for the production of energy using sunlight, water, and air. The government of India has been aggressively promoting the adoption of electric vehicles, the production of green hydrogen, and the manufacturing of solar equipment and energy storage as part of its goal to reach 500 GW of renewable capacity by 2030.

Current Renewable Energy Capacity in India

India currently has approximately 173 GW of non-fossil fuel-based clean energy capacity, including 62 GW of solar, 42 GW of wind energy, 10 GW of biomass power, 5 GW of small hydro, 47 GW of large hydro, and 7 GW of nuclear power. To meet its target of 500 GW by 2030, the country must add at least 25 GW of renewable energy capacity per year for the next eight years.

Investment in Renewable Energy

According to Union power and new & renewable energy minister R K Singh, the investment in the renewable energy sector in 2023 could be around $25 billion. To achieve the goal of adding 25 GW of renewable energy capacity per year, an investment of approximately $15-16 billion (Rs 1,25,000 crore) will be required, taking into account the estimated cost of $5 crore per MW of capacity added. The government is also focusing on green hydrogen production through the National Mission on Green Hydrogen, with bids for electrolyzer manufacturing expected in the coming year.

Incentives for Renewable Energy Production

In 2022, the government provided an additional allocation of $2.6 billion (Rs 19,500 crore) to the production-linked incentive (PLI) scheme for the development of high-efficiency solar PV modules. The PLI, introduced in 2021 with a budget of $620 million (Rs 4,500 crore), aims to support and promote the manufacturing of components such as cells, wafers, ingots, and polysilicon for solar PV modules. This initiative is expected to reduce India's reliance on imports in the solar PV sector.

Challenges and Opportunities

There are several challenges and opportunities in the renewable energy sector in India. Solar imports, which account for 80-90% of the market and were worth $460 million in FY22, continue to be a major issue. Additionally, the price of raw materials for domestic solar panels has increased by 50%. On the other hand, the investment in India's renewable energy sector grew more than 125% year-on-year to a record $14.5 billion in FY22, and the country has already installed 11 GW of capacity in the first nine months of 2022-23.


The government of India is committed to increasing its reliance on renewable energy and reducing its carbon footprint. With a target of 500 GW of renewable capacity by 2030, the country is investing heavily in solar, wind, hydro, and hydrogen energy production. While there are challenges to overcome, such as high levels of solar imports and rising raw material costs, the renewable energy sector in India presents significant opportunities for growth and investment.

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