Budgeting for Net Zero: Powering Indias reliable clean energy future

The report analyzes the economic viability of firm and dispatchable renewable energy (FDRE)—hybrid systems of solar, wind, and battery storage—as an alternative to coal in India. It finds that FDRE's competitiveness depends heavily on the ability of developers to sell surplus power in the open market, with cost parity with coal projected between 2025 and 2048 depending on the scenario. When accounting for health and climate externalities, FDRE is immediately competitive. The study suggests that scaling FDRE would boost GDP and net job creation, though it recommends a mix of FDRE and stand-alone storage to optimize system flexibility and capital efficiency.

• FDRE's cost competitiveness relative to new pithead coal plants depends on the percentage of surplus power sold in the open market: parity is reached from 2025 if 100% of surplus is sold, by 2030 if 50% is sold, and by 2047 if 30% is sold.
• Accounting for the externalities of coal combustion—specifically mortality, morbidity, and climate change—increases the effective LCOE of coal to INR 13.19/kWh in 2025, making FDRE immediately competitive across all analyzed scenarios.
• Scaling FDRE is projected to have a positive macroeconomic impact, increasing GDP by 1.8% by 2050 and creating a net of 64,000 jobs by 2050 after accounting for losses in coal power plants.
• FDRE deployment faces structural hurdles, including the need to oversize generation and storage by 2.5 to 3.5 times to meet Demand Fulfillment Ratio (DFR) requirements, which increases upfront capital costs.
• FDRE projects offer a significant deployment advantage over coal plants, with commissioning timelines of 2 to 2.5 years compared to 5 to 7 years for new coal-fired plants.
• The report argues that while FDRE is useful for specific demand profiles, the government should also prioritize stand-alone energy storage systems to achieve better capital utilization and system flexibility.
• Current FDRE market uptake has been only partially successful; as of September 2025, 9.7 GW is under construction, while 4.2 GW of tenders were cancelled and approximately 8 GW were not awarded.
• To improve FDRE uptake, the report recommends redesigning tenders to include less onerous DFR requirements and introducing capacity charges for battery storage to remunerate system-wide ancillary services.

APA

Mani, S., Gangopadhyay, A., Bassi, A., Laan, T., Raizada, S., Ranjan, U., & Sekar, G. P. C. (2025). Budgeting for Net Zero: Powering Indias reliable clean energy future. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-12/india-budgeting-for-net-zero-fdre.pdf

Chicago

Mani, Sunil, Anasuya Gangopadhyay, Andrea Bassi, Tara Laan, Swasti Raizada, Upasna Ranjan, and Godwin Paul Chandra Sekar. Budgeting for Net Zero: Powering Indias reliable clean energy future. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-12/india-budgeting-for-net-zero-fdre.pdf.

Wikipedia

{{cite report |last1=Mani |first1=Sunil |last2=Gangopadhyay |first2=Anasuya |last3=Bassi |first3=Andrea |last4=Laan |first4=Tara |last5=Raizada |first5=Swasti |last6=Ranjan |first6=Upasna |last7=Sekar |first7=Godwin Paul Chandra |title=Budgeting for Net Zero: Powering Indias reliable clean energy future |publisher=International Institute for Sustainable Development |date=December 2025 |url=https://www.iisd.org/system/files/2025-12/india-budgeting-for-net-zero-fdre.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mani2025budgeting, author = {Mani, Sunil and Gangopadhyay, Anasuya and Bassi, Andrea and Laan, Tara and Raizada, Swasti and Ranjan, Upasna and Sekar, Godwin Paul Chandra}, title = {{Budgeting for Net Zero: Powering Indias reliable clean energy future}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = dec, url = {https://www.iisd.org/system/files/2025-12/india-budgeting-for-net-zero-fdre.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }