Policy and Economics of Renewable Energy in India

Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11(I)| November 2025 135 Policy and Economics of Renewable Energy in India. Dr. Bhavna H. Parmar M.A., M.phil., Ph.D Assistant Professor People Education Society’s Dr. Ambedkar College of Commerce and Economics, Wadala, Mumbai, Maharashtra. Manuscript ID: JRD -2025-171129 ISSN: 2230-9578 Volume 17 Issue 11 (I) Pp. 135-137 Nov. 2025 Submitted:15 Oct. 2025 Revised: 25 Oct. 2025 Accepted: 10 Nov. 2025 Published: 30 Nov. 2025 Abstract This paper reviews India’s renewable energy (RE) policy framework and examines the economic drivers, constraints, and implications of the country’s energy transition. It synthesizes official policy documents, government statistics, and recent academic/industry analyses to: (1) map India’s policy instruments and targets; (2) evaluate cost and investment trends in solar, wind, storage, and green hydrogen; (3) analyze institutional and market barriers (DISCOM finances, transmission, RPO compliance, intermittency); and (4) provide policy recommendations to accelerate a just, affordable, and resilient transition. Key findings: India has set ambitious non-fossil targets (500 GW by 2030), net-zero by 2070, and launched major schemes (PM-KUSUM, Green Hydrogen Mission) — all of which are transforming investment flows and technology priorities, but success depends on financing reforms, grid and storage scale-up, and stronger market signals. Keywords: renewable energy, India, policy, economics, solar, wind, storage, green hydrogen, RPO, DISCOM. Introduction: India’s energy sector is at a structural inflection point: rising renewables additions, falling RE costs, growing interest in storage and green hydrogen, and sustained policy activism. This paper aims to (i) summarize the policy architecture that governs RE deployment in India; (ii) assess the economics underpinning recent capacity additions and tariffs; and (iii) identify policy and market reforms needed to meet national targets while preserving system reliability and affordability. Methodology This is a policy-oriented, secondary-data study that synthesizes (i) official government sources (MNRE, PIB, policy pages), (ii) reputable news agencies and industry think-tanks (Reuters, IEA, CEEW, Ember, RMI), and (iii) open data portals (data.gov.in, Prayas). The approach combines descriptive policy analysis with economic discussion of cost trajectories, investment needs, and institutional constraints. (Sources used are listed in References.) Policy framework 1. National targets and international commitments  500 GW non-fossil (by 2030): India has set a target of around 500 GW of non-fossil capacity by 2030 (including solar, wind, hydro, nuclear) as part of an ambitious decarbonization push.  Net-zero by 2070: Announced at COP26, India targets net-zero emissions by 2070. 2. Major national instruments and programs  MNRE leads policy and schemes (National Solar Mission, wind policies, rooftop and distributed generation programs).  PM-KUSUM supports decentralized solar, solar pumps, and farmer-level generation (targeting ~34,800 MW by 2026 under the scheme components). Quick Response Code: Website: https://jrdrvb.org/ DOI: Creative Commons (CC BY-NC-SA 4.0) This is an open access journal, and articles are distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International Public License, which allows others to remix, tweak, and build upon the work noncommercially, as long as appropriate credit is given and the new creations ae licensed under the idential terms. Address for correspondence: Dr. Bhavna H. Parmar, M.A., M.phil., Ph.D Assistant Professor People Education Society’s Dr. Ambedkar College of Commerce and Economics, Wadala, Mumbai, Maharashtra. How to cite this article: Bhavna H. Parmar (2025). Policy and Economics of Renewable Energy in India. Journal of Research & Development, 17(11(I)), 135-137. Original Article Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11(I)| November 2025 136  Renewable Purchase Obligations (RPOs) require DISCOMs/obligated entities to procure a minimum share of renewable power; state-level compliance data is available via government portals.  Green Hydrogen Mission (launched 2023) aims to scale green hydrogen production and position India as a manufacturing/export hub for hydrogen derivatives.  Green Energy Corridor and storage initiatives address transmission and balancing needs; PLI and manufacturing incentives promote domestic supply chains. Economics of renewable energy 1. Cost trajectories & bidding outcomes  Solar and wind costs have declined sharply over the past decade due to technology improvements, module price declines, and competitive reverse auctions. International and India-specific analyses document steep PV price falls (global PV module spot prices falling massively in 2022–23; India’s auction/tender process drove domestic bid declines in earlier years).  Recent hybrid solar + storage and solar-plus-battery projects are demonstrating low delivered firm prices for round-the-clock power, showing the economics of coupling storage with renewables is improving. (Example: a recent solar-plus-storage project delivering firm power below Rs 3/unit.) 2. Investment flows & finance needs Public and private investment in the RE sector has increased, with both domestic firms and traditional oil/gas incumbents acquiring RE portfolios (e.g., ONGC expanding renewables). Meeting the 2030 500 GW target will require substantial additional capital across generation, storage, and transmission. 3. Market design & price signals  Competitive auctions (reverse bidding) have reduced tariffs but introduced concerns about bid realism, project delays, and offtaker risk.  RPOs aim to create demand-pull for renewables but enforcement and compliance vary by state; open data shows uneven state/UT compliance in recent years. 4. System costs and externalities Renewables reduce fuel import bills and air pollution externalities; however, integration costs (grid reinforcement, ancillary services, storage) are real and must be accounted for in planning and tariffs. The economics therefore depends not only on levelized generation cost but the full system value and costs (firming, capacity adequacy, curtailment). Key barriers and economic challenges 1. DISCOM financial health: Weak cash flows and high losses delay payments and increase perceived off-taker risk, raising financing costs for developers. (This remains a structural constraint requiring distribution reforms.) 2. Transmission and land bottlenecks: Rapid additions need corresponding transmission reinforcement (Green Energy Corridor) and streamlined land/clearance processes. 3. Intermittency & storage scale: Firm, 24×7 clean power needs scaled storage or flexible generation (or longduration storage, green hydrogen). Storage costs are falling but require deployment at scale. 4. Manufacturing concentration in global supply chains: Module and battery manufacturing is globally concentrated; India’s PLI and PPA strategies aim to boost domestic manufacturing but need sustained investment. 5. Policy and regulatory uncertainty at state level: Differences across states in RPO enforcement, land policy, and grid charges create investment risk. Policy evaluation — what’s working and what needs strengthening 1. What’s working  Auction model and competitive procurement have driven down tariffs and attracted capital.  Decentralized programs (PM-KUSUM) support energy access and farmer incomes while adding distributed capacity.  Green Hydrogen Mission stimulates investment in an emerging supply chain and long-duration energy vectors. 2. What needs strengthening  DISCOM reforms (tariff rationalization, reduction of losses, improved billing/collection) to de-risk payments.  Integrated planning for storage & transmission — co-optimizing generation, storage, and network investment to minimize overall system cost.  RPO enforcement and market instruments (e.g., firm renewable contracts, green power markets) to provide predictable demand.  Finance tools: credit enhancement (guarantees), long-tenor debt, and blended finance to lower cost of capital for storage and hybrid projects. Journal of Research and Development A Multidisciplinary International Level Referred and Double Blind Peer Reviewed, Open Access ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-11(I)| November 2025 137 Policy recommendations (prioritized) 1. Accelerate DISCOM financial restructuring: clear roadmaps (tariff reforms, loss reduction, direct benefit transfer for subsidies) to restore payment credibility. 2. Scale storage through targeted incentives: time-limited capital support or capacity market mechanisms for longduration storage and hybrid contracts. 3. Strengthen transmission investment and streamlined approvals: prioritize Green Energy Corridor expansions and fast-track ROW/clearances for critical corridors. 4. Enhance domestic manufacturing via coordinated PLI + demand guarantees: align module, inverter, and battery PLI with predictable domestic demand (e.g., local content requirements for select auctions). 5. Market reforms for firming and flexibility: create markets for ancillary services, capacity, and storage-as-aservice; encourage corporate/industrial offtake via green tariffs. 6. Targeted support for green hydrogen scale-up: focus on electrolyser manufacturing, low-cost renewable supply corridors, and early offtake incentives. Discussion — macroeconomic & social implications  Energy security & trade balance: Replacing fuel imports with domestically generated RE and green hydrogen improves trade balance and energy sovereignty.  Employment: Manufacturing, O&M, and decentralized RE can create substantial jobs—especially in semi-skilled and rural areas—if supply chain and training programs are prioritized.  Distributional effects: Tariff reforms must protect vulnerable consumers; transitioning subsidy frameworks to targeted support avoids cross-subsidy distortions while preserving equity. Limitations and further research This study is based on secondary sources and public data available up to September 2025. Future quantitative work should use plant-level generation, hourly dispatch, and financials of DISCOMs to model system costs and the value of storage precisely. More micro-level research on social impacts of distributed RE (e.g., farmer incomes under PM-KUSUM) would complement this macro policy review. Conclusion India’s policy landscape for renewables is ambitious and dynamic: far-reaching targets (500 GW by 2030; netzero by 2070), major schemes (PM-KUSUM, Green Hydrogen Mission), and strong cost declines in solar and wind create favorable economics. However, achieving these goals requires reforms in distribution finances, scaled storage and transmission investment, and smart market design that internalizes system integration costs while preserving affordability. With coordinated policy action and targeted finance, India can accelerate a just and economically efficient energy transition. References 1. Ministry of New & Renewable Energy (MNRE), Annual Report 2024–25. Ministry of New and Renewable Energy 2. Press Information Bureau, Year End Review 2024 — MNRE. (Dec 31, 2024). Press Information Bureau 3. Reuters, ―India hits 50% non-fossil power milestone …‖ (Jul 14, 2025). Reuters 4. Modi N., National Statement at COP26 (Glasgow) — Net-zero by 2070 announcement. MEA India+1 5. MNRE, PM-KUSUM scheme details. Ministry of New and Renewable Energy+1 6. MNRE, National Green Hydrogen Mission page. Ministry of New and Renewable Energy 7. IEA, Solar PV and price trends (global module price trends). IEA 8. CEEW, ―Anatomy of solar bid declines in India‖ (analysis of auction-driven tariff declines). CEEW 9. Prayas (Energy Group) / India R.E. portal — RPO analysis and state compliance. indiaredata.org+1 10. Ember / policy analysis on unlocking 500 GW (transmission and risk management). Ember Energy 11. RMI, ―Green Hydrogen Production Pathways for India‖ (Jul 2025). RMI 12. Recent news on solar-plus-storage firm power bids (example reporting). The Times of India+1