New Delhi [India], March 19 : The Indian renewable energy (RE) sector may soon face regulatory pressures taking cues from Europe and China to combat emerging challenges such as grid disturbances, subsidy-driven incentives, and negative energy prices, according to a report by JM Financial.
The report refers to the situations arising in Western countries, including China, which is a major player in international renewable energy.
"As the share of RE in the supply mix in India increases, we expect domestic policies to be influenced by global experiences in the next 3-4 years," the report added.
The renewable energy (RE) sector has seen rapid growth, driven by an evolving governance structure and frequent regulatory changes that have allowed for greater flexibility and adaptation.
However, as the sector expands, there is increasing pressure on governments worldwide to enforce stricter regulations and bring more discipline to market players.
This is particularly true as the growth of renewables has begun to cause challenges such as grid disturbances, which are becoming more evident as the share of renewables in the energy mix increases.
Governments across the globe, including China and Europe, are taking steps to address these challenges. In China, policymakers are moving towards reducing subsidy-driven incentives, as the country has experienced issues with oversupply and negative energy prices.
In Europe, some nations are controlling the promotion of renewables, as the sector grapples with similar price-related challenges. These developments suggest that India may soon face similar regulatory pressures.
"While policy makers remain ambitious in their targets and continue to facilitate execution, there is an emerging feeling among them that subsidy-driven incentives need to be restricted (particularly in China) and promotion of renewables needs to be controlled (in Europe) as the sector struggles with negative prices. Regulatory actions by China and Germany suggest likely developments that, we believe, will be seen in India as well," the report added.
The report highlights that China's shift to market-driven pricing of renewable energy and Germany's action to tackle negative power prices, which suspends subsidies for PV grid integration when electricity prices fall below zero, is evidence of the increasing regulatory hand on the sector.
According to the official data, as of 20th Jan 2025, India's total non-fossil fuel-based energy capacity has reached 217.62 gigawatts (GW).
The year 2024 saw a record-breaking 24.5 GW of solar capacity and 3.4 GW of wind capacity added, reflecting a more than twofold increase in solar installations and a 21 per cent rise in wind installations compared to 2023.
This surge was driven by government incentives, policy reforms, and increased investments in domestic solar and wind turbine manufacturing. Solar energy remained the dominant contributor to India's renewable energy growth, accounting for 47 per cent of the total installed renewable energy capacity.
Last year saw the installation of 18.5 GW of utility-scale solar capacity, a nearly 2.8x increase compared to 2023. Rajasthan, Gujarat, and Tamil Nadu emerged as the top-performing states, contributing 71 percent of India's total utility-scale solar installations.
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