The Future of Distributed Renewable Energy in India

The report argues that India must shift its policy focus from large grid-scale projects to distributed renewable energy (DRE) to meet its target of 175 GW of renewable energy by 2022. It identifies a critical investment gap, estimating that annual DRE investment must increase from USD 2 billion in 2019 to USD 18 billion by 2024. Key barriers include the financial instability of state electricity distribution companies (DISCOMs), which has led to hostility toward net-metering and the imposition of grid support charges. The report recommends a rejuvenated policy framework that integrates DISCOMs as demand aggregators and service providers across several DRE applications, including rooftop solar, energy storage, EV charging, and solar-powered agricultural tools.

• India's renewable energy targets for 2022 and 2030 are 175 GW and 450 GW respectively. As of March 31, 2020, rooftop solar (RTS) installations reached 5.25 GW, which is approximately 13% of the 40 GW target earmarked for RTS and off-grid solar.
• To achieve its sustainable energy goals, India requires a ten-fold increase in annual DRE investments, rising from USD 2 billion in 2019 to USD 18 billion by 2024.
• State electricity distribution companies (DISCOMs) are resisting rooftop solar due to revenue losses from high-paying Commercial and Industrial (C&I) customers, leading to policy amendments that replace net-metering with gross-metering in states like Uttar Pradesh, Tamil Nadu, and Karnataka.
• The rooftop solar sector requires an estimated total investment of USD 25-30 billion to reach its 40 GW target, necessitating a compound annual growth rate of over 100%.
• Solar-based irrigation and cold storage present significant market opportunities: the KUSUM scheme targets 1.75 million solar water pumps by 2024 (estimated annual market of USD 1.5 billion), and the solar cold storage market is estimated to reach USD 3.3 billion over seven years.
• The energy storage market for off-grid renewable energy in India is projected to be worth USD 2.36 billion by 2024, with rooftop solar accounting for 80% of that total.
• Electric vehicle (EV) adoption is expected to grow, with EVs potentially accounting for 30% of total automotive sales in India by 2030. The FAME scheme has allocated USD 1.5 billion over three years to support the electrification of public and shared transport.
• DRE developers face significant financing gaps due to information asymmetry and a lack of project preparation, making them unable to navigate lender credit appraisal processes. Private capital from family offices and high-net-worth individuals remains limited as they view DRE as less financially attractive than mainstream models.
• The COVID-19 pandemic caused execution bottlenecks, primarily through delays in government approvals for net-metering and labor shortages, while increasing receivables for developers by 20% or more.

APA

Gautam, K., & Purkayastha, D. (2021). The Future of Distributed Renewable Energy in India. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/05/The-Future-of-Distributed-Renewable-Energy-in-India.pdf

Chicago

Gautam, Kushagra, and Dhruba Purkayastha. The Future of Distributed Renewable Energy in India. Climate Policy Initiative, 2021. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/05/The-Future-of-Distributed-Renewable-Energy-in-India.pdf.

Wikipedia

{{cite report |last1=Gautam |first1=Kushagra |last2=Purkayastha |first2=Dhruba |title=The Future of Distributed Renewable Energy in India |publisher=Climate Policy Initiative |date=May 2021 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2021/05/The-Future-of-Distributed-Renewable-Energy-in-India.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gautam2021future, author = {Gautam, Kushagra and Purkayastha, Dhruba}, title = {{The Future of Distributed Renewable Energy in India}}, institution = {Climate Policy Initiative}, year = {2021}, month = may, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2021/05/The-Future-of-Distributed-Renewable-Energy-in-India.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }