The target is closer than you think
When the government first announced its goal of 500 gigawatts of non-fossil fuel-based energy capacity by 2030, skepticism was widespread. The scale seemed overwhelming, the timeline aggressive, and the infrastructure gaps too large to bridge.
Fast forward to today, and the math has shifted dramatically in India’s favor.
As of January end, India’s total installed power capacity stands at 521 gigawatts, of which 272 gigawatts is already non-fossil fuel based. In the current fiscal year alone, the country has added 52 gigawatts of capacity — with roughly 35 gigawatts coming from solar and another 4.6 gigawatts from wind.
“If you go by the run rate we are tracking right now, getting from 272 gigawatts to 500 gigawatts by 2030 means we have to clock somewhere close to 46 gigawatts per annum,” said Sumit Kishore, India Industrials, Infrastructure and Power Analyst at Axis Capital. “Are we on track to do 46 gigawatts per annum this year? I think very much so.”
In other words, India doesn’t need to dramatically accelerate. It simply needs to maintain its current pace — and the 500 GW milestone falls into place by 2030.
The one number that keeps experts up at night
Here is where the optimism gets complicated.Capacity addition without corresponding demand growth is an exercise in futility. Power grids don’t build themselves into profitability — they need consumers, industries, and a growing economy pulling electricity through the system.
India’s power demand growth has averaged a 5% CAGR over the past two decades. Post-COVID, it surged for three consecutive years, giving the sector tremendous momentum. But the last 18 months have been, in Kishore’s own words, “rather disappointing.”
Fiscal year to date, power demand growth in India is running at less than 1%. There was a brief uptick in December and the first three weeks of January, but since January 21st, demand growth has once again slipped below the 1% mark.
This sluggishness has real consequences. In states like Rajasthan and Gujarat — which have been at the forefront of solar capacity addition — a combination of weak demand and slow transmission infrastructure ramp-up has already caused curtailment. Power is being generated but cannot be absorbed or evacuated efficiently, effectively wasting the very capacity being built at enormous cost.
The silver lining? The low base effect gives analysts confidence that power demand growth should recover to at least 6% over the next 12 months. Axis Capital’s economist Neelkanth Mishra has consistently maintained that India will sustain 7% GDP growth — and as Kishore points out, that level of economic expansion simply cannot happen without a meaningful rebound in electricity consumption.
The policy piece: What’s still missing
Two policy developments will be critical in shaping the sector’s trajectory from here.
The first is the electricity amendment bill, which was expected during the budget session but has now been pushed to the monsoon session. The bill’s core objective is to ensure that power distribution companies — discoms — operate with cost-reflective tariffs. This is significant because discom financial health sits at the very foundation of the entire power value chain. When discoms are financially stressed, payment delays cascade upward through generators, developers, and equipment manufacturers. A healthier discom ecosystem creates a positive chain reaction for the entire sector, including renewables.
The second shift is a strategic rebalancing away from pure solar toward battery storage integrated with solar and wind. The heavy solar-only build-out of the past year has exposed the grid’s vulnerability when demand is weak and evacuation infrastructure lags. Battery storage addresses intermittency concerns and makes renewable capacity genuinely reliable rather than theoretically available.
Budget boost: Incremental but real
The Union Budget delivered some targeted relief for the renewable energy sector through basic customs duty exemptions on inputs like sodium antimonate and lithium-ion cells. Kishore’s assessment is measured — the big picture doesn’t change, but the benefits are real for manufacturers already positioned in the space.
The more significant near-term opportunity lies in solar cell manufacturing. India currently faces a shortage of domestic solar cell capacity, and the government’s Approved List of Module Manufacturers framework mandates cell manufacturing within India for companies seeking government-awarded contracts. Until domestic cell supply catches up with demand — which Kishore estimates will take another couple of years — manufacturers with existing cell production capacity are sitting in an enviable position.
“There is a party going on for solar module manufacturers in the country, especially those that have manufacturing capacity for solar cells right now,” Kishore noted. “The party will continue for the next couple of years.”
What this means for investors
India’s clean energy story remains structurally intact and the 2030 target is genuinely achievable. But the near-term investment calculus is nuanced. Renewable capacity stocks will only fully re-rate when power demand growth convincingly recovers — that is the single most important data point to track over the coming quarters.
In the meantime, solar cell manufacturers with domestic production capacity, battery storage players, and transmission infrastructure companies stand out as the most compelling opportunities within the broader green energy ecosystem.
The 500 GW finish line is visible. The question is whether demand growth shows up in time to make the journey worthwhile for everyone running the race.