Let’s start with some numbers. India is the third-largest emitter of greenhouse gases globally, after the United States and China. Greenhouse gas emissions are measured in a unit called million tonnes of CO2 equivalent per year, or Mt CO2eq/yr. According to the European Commission’s Joint Research Centre (JRC) 2024 report, India’s greenhouse gas emissions rose from 3,270.4 million tonnes of CO₂ equivalent per year in 2014 to 4,133.6 million tonnes in 2023. The increase has been particularly steep in recent years, with emissions growing by 6% in 2023, 5.9% in 2022, and 7.2% in 2021. So yes — India burns a lot of fossil fuels, and a big chunk of that comes from the energy sector, primarily driven by coal-based power plants.
But there is a silver lining: when it comes to fighting climate change, India is making progress. According to the Climate Change Performance Index (CCPI) released during the UN climate conference in November 2024, India ranked 10th among more than 60 countries evaluated for their climate action efforts. (The CCPI is a report publicised by think tanks Germanwatch, the New Climate Institute, and Climate Action Network International, and assesses the performance of the world’s largest greenhouse gas emitters.)
This progress can be attributed to India’s commitment to a sustainable energy future, and policies that focus on expanding renewables, particularly large-scale solar energy projects. So how have these policy changes impacted India’s solar energy sector? What kind of scope exists for their growth? We’ll be examining that in this article — but before we do, we need to understand the climate goals India is working towards.
Climate Resolutions
COP28, the United Nations’ climate change conference that India was part of, called for global agreement to triple renewable energy capacity by 2030. Nearly 200 countries agreed to accelerate climate action as part of the world’s first ‘global stocktake,’ calling for a shift away from fossil fuels to help keep the 1.5°C global temperature goal of the Paris Agreement within reach by the end of the decade.
The Paris Agreement is a legally-binding international treaty on climate change, adopted by 196 countries in 2015. The main objective is to keep global warming well below 2°C, and ideally limit it to 1.5°C, above pre-industrial levels. Countries set their own Nationally Determined Contributions (NDCs), outlining plans to cut greenhouse gas emissions and adapt to the effects of climate change.
At the 2021 UN Climate Summit in Glasgow, India pledged to expand its non-fossil fuel energy capacity to 500 GW and to ensure that renewable sources account for 50% of the country’s energy requirements by 2030. While coal still dominates India’s energy mix, government policies and initiatives like the 14th National Electricity Plan (NEP14) are helping the transition to green energy, especially solar — and this has effects for multiple stakeholders down the line.
NEP14 and solar expansion
India’s 14th National Electricity Plan (NEP14) outlines an ambitious roadmap for the country’s power sector from 2023 to 2032. The plan aims to achieve a total renewable energy capacity of 596 GW by 2032, representing 68.4% of India’s total installed capacity and projected to meet 44% of the nation’s electricity demand.
Solar energy is set to play a pivotal role, with a targeted capacity of 365 GW by 2032. This marks a substantial increase from current levels and underscores the country’s commitment to harnessing solar power. If the NEP14 targets are met, solar power’s contribution to India’s electricity generation is expected to rise significantly, potentially accounting for 25% of the power mix by 2032, up from 5% in 2022.
The good news is, data from the National Electricity Plan report shows that India has seen a remarkable 30-fold increase in solar power adoption, with installed capacity rising from just 2.5 GW in 2014 to around 94.16 GW by November 2024. Domestically, the government has rolled out several programs to boost solar infrastructure, including the development of solar parks. So far, 50 parks with capacities of 500 MW or more have been approved across 12 states. India is also part of the International Solar Alliance, a group of 120 countries that are committed to harnessing the potential of solar energy collaboratively.
While this is a great start, India needs to do more to stay on course with NEP14’s solar goals, scaling up annual solar capacity additions by 36% each year, which in turn requires a boost in solar infrastructure. And solar infra requires money: to achieve this target, India needs a hefty investment of close to $293 billion, according to a report released by global energy think tank Ember.
How has this impacted solar companies in India?
Fundamentals dictate that with the government leaning heavily into solar and renewables, companies engaged in the solar sector – from those engaged in managing solar power facilities to manufacturers of solar glass and panels – stand to gain. And there has been a flurry of activity in the space, especially among small cap companies that specialise in solar solutions.
| Company | What they do | Advancements and growth |
| Websol Energy System | Manufacturers of photovoltaic solar cells and related modules
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Expansion of cell manufacturing plant in Falta, WB. Additional capacity of 600 MW PERC cell line capacity with an investment of approx INR 220 crore Source |
| Acme Solar Holdings | Renewable energy independent power producer (IPP) with a portfolio of solar, wind and hybrid energy projects, develop, build, own, and operate large-scale clean energy solutions. | Won an order for 250MW FDRE (firm and dispatchable renewable energy)order from NHPC, with a blend of solar, wind, and battery technologies. Project includes a green-shoe option that may expand total capacity to 500MW Source Investing INR 17000 crore by 2026, with plans to expand solar capacity to 4430 MW (under construction projects) Source
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| Waree Energies | Manufacturer of solar PV modules | Commenced trial production at its 5.4 GW solar cell manufacturing facility in Gujarat, enhancing manufacturing capabilities to meet growing domestic demand for solar power modules Source Secured a 410 MW order from Aditya Birla Renewable, to supply advanced n-type TOPCon bifacial solar modules (panels that capture light from both sides), for projects in Gujarat, Rajasthan, and Maharashtra. Source |
| KPI Green Energy | Develop, build, own, manage, and maintain renewable power facilities in the solar and solar-wind hybrid space.
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Developing a hybrid project of 50 MW in Bharuch, Gujarat, with 75.2 MWp (megawatt peak or the max theoretical output possible) of solar and 16.95 MW wind capacity. |
| Borosil Renewables | Manufacturers of solar glass | Plans to T invest INR 900 crore to boost its solar glass manufacturing capacity in Gujarat from 6.5 GW to 10 GW by July 2026, to cater to the growing demand for solar components. Source |
| Solex Energy | Manufacturers of solar PV cells and modules
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Commissions state of the art 800MW high-speed solar module manufacturing line Source |
Challenges, opportunities, and the road ahead
While India’s expansion into solar power is a great move toward sustainability, it also brings several technical and operational challenges in integrating this energy smoothly into the existing power grid.
Intermittent supply: One of the biggest issues with solar energy is its intermittent nature, and temporal variability. Solar energy generation fluctuates throughout the day and across seasons. This variation doesn’t always match the times when electricity demand is highest, creating problems for grid operators. (To address the intermittent nature of renewable sources like solar and wind, NEP14 emphasises the development of energy storage systems, including 47 GW/236 GWh of Battery Energy Storage Systems (BESS) and 26.7 GW of pumped storage plants.)
Output uncertainty: There is also uncertainty in terms of output. It’s difficult to accurately predict how much power solar plants will produce at any given moment and this makes it challenging to schedule power supply reliably, especially during real-time operations.
Grid integration issues: India’s current power system is designed to handle only a certain level of fluctuation in supply and demand. Traditional sources like thermal plants help balance this variability, but with more renewables coming online, the system needs flexible energy sources such as hydro, pumped storage, and battery systems. And thermal plants may need to be revamped to run more flexibly, like operating below full capacity and ramping up or down based on grid demand.
Resource location and transmission: India may receive a lot of sunshine due to its geographical location, but solar resources are not evenly distributed across the country. Solar potential is highest in western states, and these resources are often far from the main demand centres, leading to transmission bottlenecks. There is a need for high-capacity inter-state and inter-regional transmission lines to move renewable energy to areas where it’s needed most.
Turning plans into progress requires tackling some of these operational challenges, from better energy storage and transmission upgrades to grid management and rooftop solar adoption. The government also needs to streamline project approvals, improve the land acquisition process, and expand Production-Linked Incentives (PLI) for solar panels and cells, to strengthen domestic manufacturing and create a robust supply chain.
Considering the speed and scale with which this work needs to be carried out, solar solutions providers have a chance to cash in and grow considerably in the race to achieve emissions/renewables targets. The sector looks set to play a key role in India’s future, presenting dynamic opportunities for investors and companies alike, and is definitely a space to watch.
Sources
https://www.arcweb.com/blog/indias-power-sector-balancing-act-between-coal-renewables
https://www.iea.org/countries/india/emissions
https://www.investindia.gov.in/sector/renewable-energy
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1928750