IEEFA Identifies Four Levers to Accelerate India's Renewable Energy Integration

India must significantly increase the share of variable renewable energy in its power system to meet its 2030 target of reducing the emissions intensity of its economy by 45% from 2005 levels, according to a new report by the Institute for Energy Economics and Financial Analysis. The report recommends demand-side tariff reforms, national grid expansion, broader deployment of energy storage, and flexible operation of coal power plants as the four primary levers for achieving this integration.

Author and IEEFA Energy Analyst Charith Konda notes that India's renewable capacity additions have significantly outpaced the grid's ability to absorb renewable power: the share of renewables in total electricity generation grew by only 6.5 percentage points from 2016 to 2022, while their share of new capacity additions grew by 13.6 percentage points over the same period. One of the most immediately deployable levers is the introduction of dynamic time-of-use electricity tariffs. The Indian government has already issued guidelines for tariff variations of 10% to 20% below normal rates during solar generation periods and 10% to 20% above during peak periods, but Konda argues static variations are insufficient — dynamic tariffs that respond to real-time supply conditions could reduce peak demand by 5% to 25%.

India's Rs2.4 trillion (approximately US$29.6 billion) transmission infrastructure development plan, aimed at integrating over 500 gigawatts of renewable capacity by 2030, is identified as a positive step. A strong inter-regional grid reduces renewable curtailment, improves grid stability, and allows renewable energy from resource-rich remote regions to reach load centres. On energy storage, IEEFA recommends India expand beyond using batteries and pumped hydro primarily to firm renewable supply, instead deploying these technologies across the full spectrum of ancillary services — frequency regulation, voltage support, and reserve capacity — to improve grid flexibility.

The report also evaluates the government's plan to make coal power plants operate more flexibly as a transitional measure to accommodate higher renewable penetration. Flexible coal operation reduces the need to curtail renewable energy and lowers the marginal cost advantage of renewables versus coal in the dispatch merit order, but implementation faces technical, financial, and contractual hurdles. Solutions include rigorous plant-by-plant suitability assessments, redesigned power purchase contracts that accommodate flexible operation, and market development to create financial incentives for flexible performance. A low-emission power system would also enable decarbonisation of hard-to-abate sectors including transport and manufacturing.

Key figure — 45% — India's target to reduce the emissions intensity of its GDP from 2005 levels by 2030