Over the years, renewable energy sector in India has emerged as a significant player in the power generation capacity. Power is one of the most crucial components for the economic growth and welfare of nations. The existence and the development of adequate power sector is essential for sustainable growth of the Indian economy. India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, and oil  to viable non- conventional sources such as wind, solar, hydro and nuclear. The demand for the electricity in the country has increased rapidly and is expected to grow further in the coming years. In order to meet this increasing demand for electricity in the country, massive addition to the installed generating capacity is required. There has been a visible impact of renewable energy in the Indian economy during the last five years. Renewable energy sector in India has experienced tremendous changes in the policy framework during the last few years. Mainly, the Solar energy and Wind energy sectors are experiencing accelerated and ambitious plans to increase the contribution of these sectors out of the total energy contribution in India. India ranks third among 40 countries in Renewable Energy Country Attractiveness Index 2016, with strong focus by the government on promoting renewable energy in India.

India has an estimated renewable energy potential of about 900 GW from sources like Wind – 102 GW, Bio-energy – 25 GW, Small Hydro – 20 GW and Solar power – 750 GW. Renewable energy enjoys 15.90% shares in total installed capacity in India. As of March 2017, renewable energy installed capacity totalled to 57,260 MW. Renewable energy has been witnessing over 20% growth in the last five years. From the total renewable power installed capacity of 14,400 MW at the beginning of 2009, it has increased to the capacity of 38,822 MW at the end of December, 2015 to 57,260MW by March, 2017. Wind energy continues to dominate India’s renewable energy industry accounting for 29151.29 MW by March, 2017 from 25,088 MW by December, 2015.

Renewable power installed capacity has steadily increased over the time. Wind power in fact holds the dominant position in current installed capacity in total renewable power installed capacities. There has been a constant growth in the capacities in India during the financial year 2007-15 which is shown in figure 1.0. ranging from 9389 MW in 2007 to 34,351MW in 2015. Wind Power and Solar power dominates the total renewable energy potential in India taking the states altogether. Estimates of wind energy potential indicate that its potential is much higher across Gujarat and Tamil Nadu. Whereas, the solar energy potential indicate that its potential is much higher across Jammu and Kashmir and Andhra Pradesh.


  1. The government of India through Ministry of New and Renewable Energy (MNRE) is playing a proactive role in promoting the adoption of renewable energy resources by offering various incentives such as generation-based incentives (GBIs), capital and interest subsidies, viability gap funding (VGF), concessional finance, fiscal incentives etc.
  • The National Solar Mission aims to promote the development and use of solar energy for power generation and other uses, with the ultimate objective of making solar energy compete with fossil-based energy options.
  • The objective of the National Solar Mission is to reduce the cost of solar power generation in the country through long-term policy, large scale deployment goals, aggressive R&D and the domestic production of critical raw materials, components and products.
  • The government has created a liberal environment for foreign investment in renewable energy projects. The establishment of a dedicated financial institution – the Indian Renewable Energy Development Agency (IREDA), makes for renewed impetus on the promotion, development and extension of financial assistance for renewable energy and energy efficiency/conservation projects.
  1. Renewable energy is becoming increasingly cost-competitive as compared to fossil fuel-based generation, like the prices of solar modules have declined by almost 80% since 2008.
  2. Reserve Bank of India (RBI) has revised the guidelines for all scheduled commercial banks including renewable energy in the categories priority sector, in addition to existing categories making significant inroads for renewable energy in the priority sector lending, also bank loans for solar rooftop systems to be treated as a part of home loan/ home improvement loan with subsequent tax benefits.
  3. Focus on skill development of workforce: “SuryaMitra Scheme” launched in May 2015 to create 0.05 million trained personnel within a period of 5 years (2015-16 to 2019-20). Almost 6653 SuryaMitras have been trained under the program as of Februray, 2017 and creating job opportunities for unemployed youth.


The Setting up of the Solar Energy Corporation of India:

  • The mandate of the SECI allows wide-ranging activities to be undertaken with an overall view to facilitate the implementation of the National Solar Mission and the achievement of targets set therein. The SECI has the objective of developing renewable energy (RE) technologies and ensuring inclusive RE power development throughout India.

National Offshore Wind Energy Policy, 2015:

  • Under this Policy, the Ministry of New & Renewable Energy (MNRE) has been authorized to explore and promote deployment of offshore wind farms in the Exclusive Economic Zone (EEZ) of the country and the National Institute of Wind Energy (NIWE) has been authorized as the Nodal Agency for development of offshore wind energy in the country and to carry out allocation of offshore wind energy blocks, coordination and allied functions with related ministries and agencies. It would pave the way for offshore wind energy development including, setting up of offshore wind power projects and research and development activities, in waters, in or adjacent to the country, up to the seaward distance of 200 Nautical Miles (EEZ of the country) from the base line. The policy will provide a level playing field to all investors/beneficiaries, domestic and international. It is planned to set up the first offshore wind power project off the Gujarat coast soon.

The Policy for Grid connected Solar Roof-top Projects:

  • Joint Electricity Regulatory Commission (JERC)/State Electricity Regulatory Commissions (SERC) of 29 States/UTs namely Andhra Pradesh, Assam, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Meghalaya, Odisha, Punjab, Rajasthan, Sikkim, Tamil Nadu, Uttar Pradesh, Uttarakhand, West Bengal, Andaman & Nicobar and Lakshadweep Islands, Chandigarh, Dadra & Nagar Haveli, Daman & Diu, Delhi and Pondicherry have notified regulations/tariff order for grid connected solar rooftop projects.

State Initiatives:

  • State Electricity Regulatory Commissions in Andhra Pradesh, Haryana, Punjab, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, Gujarat, Kerala, Punjab, Orissa and West Bengal have announced preferential tariffs for purchase of power from wind power projects.
  • New Solar Policy in 2016 – Delhi, Himachal Pradesh and Haryana.
  • New Solar Policy in 2015 – Telangana Jharkhand, Gujarat, and Andhra Pradesh.


The UN Environment Program’s (UNEP) ‘Global Trends in Renewable Energy Investment 2016’ report ranks India among the top ten countries in the world investing in renewable energy. The Renewable Energy sector has experienced the highest solar power and wind power capacity addition over the last two years. Key achievements in the sector during the last 2 years are:

  • The world’s largest solar power plant was established in Tamil Nadu on September 21,2016.
  • 34 solar parks of aggregate capacity of 20,000 MW have been sanctioned for 21 states. INR 356.63 crores has been provided to Solar Energy Corporation of India for the projects.
  • 31,472 solar water pumps were installed in 2015-16.
  • 501 MW grid connected solar rooftop projects have been installed in the country.
  • 100% FDI is allowed under automatic route for projects of renewable power generation subject to provisions of The Electricity Act, 2003.


This article has been written by Ms. Uma Manna, M.A. Economics, M.Phil. Economics. She is a researcher with Envecologic.