India's Rapid Renewable Energy Growth and Demand Mismatch Elevate Power Costs
India's rapid expansion of renewable energy in early 2025 has outpaced demand growth, straining the power grid and increasing electricity costs. Surplus renewable power and insufficient transmission infrastructure create challenges for grid stability and energy distribution. Officials emphasize the need for better grid integration, forecasting, and investment in diverse energy sources to maintain reliability.
In the first half of 2025, India experienced its fastest growth in renewable energy output since 2022, reaching 50% of its installed electricity capacity from non-fossil sources. However, this rapid rollout has outstripped demand growth, causing grid management challenges and driving up power costs. The mismatch between renewable generation and actual consumption creates surplus energy that is difficult to manage due to limited transmission capacity and inadequate power purchase agreements. Over 50 GW of renewable capacity remains stranded nationwide, further exacerbating project delays and transmission costs. Officials from the Central Electricity Authority highlight the importance of localized weather forecasting for solar and wind power, carefully planned grid integration, and resource adequacy plans at national and state levels to address these issues. They stress that without holistic planning encompassing generation, grid operation, and costs, renewable energy developers may end up with unused capacity. To ensure grid stability and security, India must invest not only in renewables but also in coal, nuclear, hydro, and gas energy sources. Improving transmission infrastructure and adopting adaptive planning approaches are critical to accommodate the variable nature of renewable energy and align supply with demand patterns effectively.
