India's renewable energy boom outpaces power grid capacity

India's rapid expansion of renewable energy is outpacing the country's power grid, leaving a growing amount of clean electricity unused even as non-fossil sources take a larger share of the electricity mix.

On a hot July afternoon this year, electricity generated from renewable sources briefly met more than half of India's peak power demand, only the second time this has happened. The first instance was around the same period a year earlier, reports BBC.

Solar, wind, hydropower and nuclear power together briefly produced more electricity than coal-based generation, marking the rapid growth of non-fossil energy in India's power system.

"It showed that renewable energy is no longer a marginal source sitting at the edge of the power system," Sumant Sinha, CEO of Nasdaq-listed clean energy company ReNew Power, told the BBC.

However, coal-fired plants still generate around 70% of India's electricity on average because they operate for more hours than solar and wind facilities.

A decade ago, India had barely 4GW of installed renewable energy capacity. That figure has now reached around 300GW, accounting for 54% of the country's total installed capacity of 552GW. India has therefore achieved its target of having half of its installed electricity capacity from non-fossil sources five years ahead of schedule.

But the rapid expansion has exposed major weaknesses in the infrastructure needed to transmit and store that electricity.

Transmission capacity falls behind

The growth of renewable generation has significantly outpaced the expansion of transmission infrastructure, creating difficulties in moving electricity from generation sites to consumers.

Transmission constraints accounted for nearly two-thirds of all renewable energy curtailment in the first quarter of 2026, amounting to around 300 gigawatt-hours (GWh), according to global energy think-tank Ember.

In other words, a substantial amount of renewable electricity that was generated could not be used because the grid lacked sufficient capacity to carry it.

One in four inter-state transmission projects is facing delays of more than a year, further widening the gap between the development of power generation and transmission infrastructure.

Sinha said generation projects can be built within 18–24 months, while transmission projects generally take longer because they involve right-of-way issues, land acquisition, regulatory approvals and coordination among multiple agencies.

Vibhuti Garg of the Institute for Energy Economics and Financial Analysis also attributed the problem to "poor planning".

She said the grid was able to absorb new capacity when India was adding around 10–15GW of generation annually. But additions reached a record 51GW last year, putting much greater pressure on the existing network.

The concentration of renewable energy projects in the north-western states of Gujarat and Rajasthan has compounded the problem, as the grid faces difficulties evacuating power from these major generation centres.

Ember analysts now consider the growing mismatch between rapidly expanding generation and slower transmission development the "most critical operational risk" to India's target of reaching 500GW of non-fossil electricity capacity by 2030.

Storage could reduce wastage

Battery storage at renewable power pooling stations could help address the mismatch by storing electricity when renewable generation is high and supplying it during periods of greater demand, particularly in the evening when solar generation declines.

"Had that been the case, India could have stored the energy and used it during evening hours rather than wasting it," Garg said.

However, storage capacity has not expanded sufficiently.

A sharp increase in battery prices, shortages of raw materials linked to the war in the Middle East and a fall in the value of the Indian currency have increased financing costs for Indian companies, Garg said.

As a result, many planned storage projects have fallen through.

Financing remains a wider challenge

Access to finance is a broader challenge for India's clean energy industry.

India is estimated to require $400–500 billion in investment to meet its 500GW renewables target by 2030. Yet around 83% of the country's climate-mitigation finance currently comes from domestic sources, according to the government's Economic Survey.

Under the Paris Agreement, developed countries committed to providing developing countries with $100 billion annually in climate finance through 2025. However, access to that funding has remained difficult.

Sinha said emerging and developing economies outside China receive only around 15% of global clean-energy investment despite accounting for roughly two-thirds of the world's population.

He said India does not necessarily need developed countries to finance its entire energy transition but needs support through cheaper loans, guarantees and protection against currency losses to encourage greater private investment.

Rising demand adds pressure

The need to address the infrastructure and financing gaps is becoming more urgent as India's electricity demand continues to rise.

India is the world's third-largest emitter of greenhouse gases, while its electricity demand has grown at a compounded rate of more than 7% annually. Demand is expected to increase further as industries such as data centres and chip manufacturing expand.

The International Energy Agency expects India's electricity demand to rise by 80% by 2035, the sharpest increase among emerging economies.

The agency has also credited India's rapid renewable energy expansion as a major contributor to slowing emissions growth in the developed world this year, even as energy-related carbon dioxide emissions in advanced economies rose more sharply for the first time since the 1990s.

With India's power demand rising and its renewable capacity expanding rapidly, experts say closing the gaps in transmission, storage and financing will be critical to making use of the electricity the country is generating.

How successfully India addresses these bottlenecks will have implications beyond its own energy sector, given the country's scale of electricity demand and its importance to global efforts to reduce greenhouse gas emissions.