While project announcements continue, a significant chunk of the capacity—some 40 GW — is reportedly stalled due to delays in signing power purchase agreements (PPAs).
“Yes, speed is probably not at the level we expect,” says Mohit Bhargava, Senior Advisor at the IECC, University of California, Berkeley, and former CEO of NTPC Green. “Transmission remains one of the biggest challenges today… If you check the CTU website, you will find a long queue for grid connections, and the earliest availability is now around 2029.”
Despite these hurdles, Sumit Kishore, Executive Director at Axis Capital, points out that FY25 saw the highest-ever annual capacity addition of 33 GW, led by solar. “Over the next two, three years, what is very important is that power demand growth, if it revives itself, you would basically find everything else falling in place,” he said.
In this wide-ranging conversation, Bhargava and Kishore assess India’s current position, discuss the evolving energy landscape, and outline the opportunities and risks for both policymakers and investors in the push toward a greener future.
This is the edited excerpt of the interview.
Q: Our ambitious dream is to reach 500 giga watt of renewable capacity. At last count, some notes I read suggested that by the end of 2024, we were roughly at about 209–210 giga watt. Some argue the pace is slow. What are the major challenges? I read somewhere that around 40 giga watt of capacity has stalled because power purchase agreement (PPAs), are not being signed quickly enough. What is your assessment of our progress toward this 500-giga watt target, and what are the main hurdles?
Bhargava: Yes, speed is probably not at the level we expect to achieve our overall objective of 500 giga watt by 2030. There are multiple challenges, and these have been discussed at various levels. A few of them include land acquisition, transmission evacuation, and execution challenges in getting PPAs off the ground, as you mentioned.
In fact, there has been a lot of focus on the support being provided. One report suggests the government is again pushing the coal-based power agenda. So the question arises — has the government taken its foot off the pedal for renewables? I don’t believe so, but the challenges remain.
Q: Is there a threat that we will miss the 500-gigawatt target by 2030? I don’t sense a strong urgency in your response. Are we moving at an acceptable pace?
Bhargava: I would say we are moving at a reasonable pace, but there is always room for improvement. 500 giga watts is an excellent ambition, and I am quite hopeful we will end up pretty close.
However, transmission remains one of the biggest challenges today. The pace at which the evacuation system is being developed is not aligned with renewable energy producers’ expectations. If you check the CTU website, you will find a long queue for grid connections, and the earliest availability is now around 2029.
Even for operational capacity, there are challenges in pumping the full amount of power. For instance, a 1,000 mega watt renewable project may not be fully scheduled throughout the day due to incomplete transmission infrastructure. We need to move quickly on transmission.
Q: There are questions about whether the government has taken its foot off the pedal, but you don’t think so. Sumit, your thoughts on what Mr Bhargava said?
Kishore: Despite on-ground challenges, India added almost 33 giga watt of capacity in FY25 — an increase of nearly 28% year-on-year. That is the highest capacity addition in a single fiscal. The previous peak was 30 giga watt in FY16 during the thermal boom. Of the 33 giga watt, 24 giga watt were solar and 4.3 giga watt were wind, which is a strong outcome.
Last fiscal, peak demand grew just 2.7%, which was weak. Post-COVID, India saw just 4.2% power demand growth — the weakest in years. This weak demand, along with falling battery and solar module prices, gave discoms time to finalise procurement. As a result, there is now over 40 giga watt of renewable LOAs pending PPA signing.
This fiscal again, so far, April, power demand was just 2.2%, May power demand is down 2% year-on-year so far and peak demand is at 231 giga watt in May, so far. At the end of May last year, it was 250 giga watt. So you are in a summer season where peak demand is down on a year-on-year basis. The execution challenges have been evergreen. They will remain. But over the next two, three years, what is very important is that power demand growth, if it revives itself, you would basically think find everything else falling in place.
In FY26, the biggest risk is the addition of over 8 giga watt of coal capacity, even with a six-month delay versus the CEA target. If this coincides with weak demand and strong RE addition, discoms may delay PPA signings further.
Q: Now, from the listed universe’s perspective—how does this environment affect companies like Waaree Technologies and Premier Energies? There is strong short-term demand, but what about two years down the line, with so much capacity coming up?
Kishore: India’s power demand is a secular growth story. Over the last 15 years, demand grew at a CAGR of 5%, and it could accelerate over the next five years due to new drivers like data centres, EV charging, and green hydrogen.
If India’s peak demand was 250 giga watt last fiscal, and if it grows at 6%, that is 15 giga watt of additional demand annually. To meet this with lower PLF renewables and some thermal, we would need about 37.5 giga watt of new capacity annually. Therefore, there is a long runway. We should not be overly skeptical.
Q: Sumit, if someone wants to play the renewable theme from a portfolio perspective — not just short-term — what is your advice? Should they look at integrated players like Tata Power, or exchanges, or something else?
Kishore: Across the board, power sector capex has risen meaningfully, driven by green growth. Companies with visibility on PPA signings and EBITDA compounding in the next 2–3 years stand out — like JSW Energy, which has seen organic and inorganic growth, and Tata Power, with an integrated model spanning IPP capacity, solar equipment manufacturing, and EPC.
Privatisation of discoms, particularly in Uttar Pradesh, is a major catalyst—for companies like Tata Power, Torrent Power, and CESC.
Even power exchanges are benefiting, with coal availability and flat international prices. While evening prices spike, average exchange rates are down 15–20% year-on-year, attracting discoms and C&I customers.
Exchange volumes rose despite weak demand, and this trend is likely to continue. Short-term power supply penetration in India has grown from 3–4% to over 9%, and could reach 15–20% in the next few years, following trends in Europe.
Q: Sumit, you said not to be too skeptical—but in stock markets, skepticism is the default! I get your broader point. My concern was about Waaree and Premier — solar module makers. Are we heading for overcapacity?
Kishore: That is a separate point. Yes, India already has excess solar module assembly capacity — over 70 giga watt annually. We are likely to achieve self-reliance in solar cells soon, and backward integration into wafers is gaining ground.
Players who diversify their clean energy offerings will maintain better margins and profitability, even as industry-wide RoCE normalises due to oversupply of the module manufacturing value chain.
India must also find new export markets like the Middle East. Given US-China tensions, local manufacturing in the US could help. India stands to gain from this shift.
Q: One quick final word to Mr Bhargava — on labour availability. Is that a constraint for the sector?
Bhargava: It is always a challenge. The renewable sector is labour-intensive, especially during the execution phase. Also, I would like to add to Sumit’s point—he missed NTPC Green, my former company, which is also doing well.
The renewables story is strong. On peak power demand — you mentioned evening spikes — that is where RE + storage tenders become crucial. Storage projects can be set up within 12 months, unlike coal plants which take five to six years.
So yes, the government is acting, but we need faster action, especially state-level clearances and PPAs, to bring these projects online. On labour, with construction activity booming, manpower availability remains a concern.