A foundation built for scale: Dismantling carbon dependency in India’s power sector

At the COP26 Summit in Glasgow, India unveiled the Panchamrit vision, establishing an ambitious national trajectory for its renewable energy goals. Central to this strategy is scaling non fossil energy capacity to 500 GW by 2030. Under its updated Nationally Determined Contribution framework, the country is committed to achieving approximately 50% cumulative electric power capacity from non-fossil fuel-based resources by the end of the decade.

This comprehensive roadmap underscores India’s ambition to cement its position as a leading global player in the clean energy transition. By backing these targets with consistent structural policies, such as the Production Linked Incentive scheme for domestic renewable component manufacturing and the Green Energy Corridor initiatives, the State is systematically decoupling economic growth from greenhouse gas emissions. Rather than a mere statement of intent, this collective national vision integrates directly into long-term infrastructure planning, driving India toward its ultimate target of Net Zero by 2070.

According to the National Generation Adequacy Plan, India’s energy transition is characterized by a strategic move away from traditional thermal-based generation toward a more resilient and diversified portfolio of renewable resources. This shift is not merely an environmental imperative but a structural evolution of the national grid, designed to balance reliability, cost-effectiveness, and sustainability. The current renewable energy landscape is dominated by the following sources:

• Solar Photovoltaic (PV): Solar energy has emerged as the primary catalyst for India’s capacity expansion, supported by a sustained and dramatic decline in the cost of photovoltaic technology. As a ubiquitous source of clean energy, it now represents the largest share of the renewable mix, providing substantial generation during daylight hours that often exceeds non-solar peak demand. The current capacity (as of Jan 31, 2026) is 140.60 GW.

• Wind Energy: Wind power serves as a critical, albeit variable, pillar of the energy matrix, offering significant seasonal contributions particularly during the monsoon months (June to September). Its generation profile is essential for meeting nighttime and evening demand, helping to balance the grid when solar output is unavailable. The current capacity (as of Jan 31, 2026) is 54.65 GW.

• Green Hydrogen Mission: India’s policy framework is increasingly positioning green hydrogen as a third strategic pillar alongside solar and wind, although its current deployment remains limited in comparison. Through the National Green Hydrogen Mission, approved by the Union Cabinet in January 2023, with an outlay of ₹19,744 crore and the flagship Strategic Interventions for Green Hydrogen Transition (SIGHT) programme providing financial incentives for domestic electrolyser manufacturing and green hydrogen production ,, the government has signaled a clear intent to extend the renewable transition beyond electricity generation into hard-to-abate sectors such as steel, refining, and heavy transport. In that sense, green hydrogen is less about present capacity and more about future system design. Its inclusion within the broader renewable narrative reflects a forward-looking policy choice that anticipates the limits of direct electrification. At the same time, the regulatory and commercial ecosystem required to support large-scale hydrogen production, storage, and offtake is still evolving, which makes its trajectory less certain than that of solar or wind. Notably, India does not yet have a standalone Green Hydrogen Act and as such, the current deployment must navigate a patchwork of general energy law, Bureau of Indian Standards specifications for industrial gases, Ministry of New and Renewable Energy notifications, and ad hoc project-specific approvals. However this navigation possess an imminent a legislative gap that introduces regulatory risk and underscores the importance of contractual structuring in early-stage hydrogen transactions.

• Large Hydroelectric Power: Large-scale hydro remains a foundational element of India’s clean energy strategy, providing not only bulk power but also vital grid-balancing capabilities. These plants act as dispatchable “firm power” sources that can respond rapidly to the inherent fluctuations and intermittency of wind and solar generation. The current capacity (as of Jan 31, 2026) is 51.16 GW.

• Biomass and Small Hydro: This category encompasses a variety of decentralized and specialized renewable technologies, including biomass-to-energy, waste-to-energy, and small-scale hydroelectric projects. These resources contribute to the geographic and technological diversification of the generation portfolio, enhancing local energy security. The current capacity (as of Jan 31, 2026) is 16.8 GW.

Firm Dispatchable Renewable Energy (FDRE) represents a sophisticated evolution in clean power, specifically designed to eliminate the intermittency associated with solar and wind. By integrating energy storage or hybridization solutions, FDRE systems can deliver reliable, scheduled, and on-demand electricity, mimicking the performance of conventional thermal power plants. This allows renewable energy to serve as a steady resource, ensuring grid stability even during periods of low sunlight or wind.

In India, FDRE typically utilizes a combination of wind and solar power paired with advanced storage technologies like Battery Energy Storage Systems (BESS) or Pumped Storage Plants (PSP). These integrated systems are vital for meeting the national goal of achieving 500 GW of non-fossil fuel capacity by 2030 and providing Round-The-Clock (RTC) firm power. The Solar Energy Corporation of India has been a major institutional driver, issuing performance-based tenders that require developers to meet specific capacity utilization factors and peak-hour commitments.

From a regulatory standpoint, FDRE is supported by the Electricity Act, 2003, in particular, Section 86(1)(e), which obligates State Electricity Regulatory Commissions to promote renewable sources of energy and provide measures for grid connectivity  as well as the evolving Ministry of Power policies, including new energy storage obligations. The operative instruments governing FDRE procurement are the Ministry of Power’s Guidelines for Procurement of Firm and Dispatchable Renewable Power (June 2022) and the Central Electricity Regulatory Commission’s Framework for Procurement of Round-the-Clock Power from Renewable Energy Sources (2021), which together define the capacity utilization factor benchmarks, scheduling obligations, and deviation settlement mechanisms applicable to FDRE projects. However, the sector faces commercial and legal challenges such as complex tariff structuring and the high costs of storage recovery. Notably, while renewable energy sources enjoy “must-run” status under the Central Electricity Regulatory Commission (Ancillary Services) Regulations and the Indian Electricity Grid Code, this statutory protection has not always translated into commercial reality. It is noteworthy that State Load Despatch Centres have in practice curtailed renewable generation for grid management reasons, creating a persistent gap between legal entitlement and operational outcome that developers have increasingly sought to address through express curtailment compensation clauses in Power Purchase Agreements. While coal remains the predominant source of firm 24x7 power in India today, the continued decline in storage costs is positioning FDRE as a critical innovation for a reliable, low-carbon energy future.

As variable renewable energy penetration increases, the National Generation Adequacy Plan underlines the indispensable role of Energy Storage Systems (ESS) in maintaining grid stability. These technologies are essential for “energy shifting” – storing surplus power during high-generation periods to meet demand during peak hours. India currently utilizes two primary storage modalities:

• Hydro Pumped Storage Plants (PSP): PSP is a mature, long-duration storage solution (typically offering six hours or more of energy) that functions as a “safety net” for the grid. By utilizing two reservoirs at different elevations, these plants provide essential frequency regulation and voltage support, making them the most viable large-scale storage option currently deployed. The current commissioned capacity (as of Jan 31, 2026) is 7.2 GW. From a legal and regulatory standpoint, PSP projects with a capacity exceeding 25 MW require Central Government concurrence under the Electricity Act, 2003, and are subject to mandatory environmental clearance under the Environment Impact Assessment Notification, 2006, administered by the Ministry of Environment, Forest and Climate Change. The Ministry of Power’s Guidelines for Development of Pumped Storage Projects (October 2023) have introduced significant commercial facilitations, including a waiver of inter-state transmission charges for a defined period and the provision of budgetary support through the Viability Gap Funding mechanism, intended to improve the financial bankability of PSP projects and accelerate private sector participation in this capital-intensive asset class.

• Battery Energy Storage Systems (BESS): BESS is an emerging, high-flexibility technology primarily used for short-duration storage and sub-hourly economic dispatch. It is increasingly deployed to manage the morning and evening peak demand non-solar hours, charging during periods of solar abundance and discharging with high precision to support the grid’s operational resilience. The current capacity (as of Jan 31, 2026) is 275.85 MW / 791.8 MWh.

India’s renewable energy trajectory is not merely a story of installed capacity but is the story of a nation systematically dismantling the structural dependencies of a carbon-intensive past while constructing the institutional, technological, and commercial scaffolding of a low-carbon future. The NDC framework, coupled with the 500 GW target, has catalysed a diversified energy matrix that is increasingly resilient, dispatchable, and commercially bankable.

The aggregation of solar PV (140.60 GW), wind (54.65 GW), large hydro (51.16 GW), and small hydro and biomass (16.8 GW), supplemented by the strategic introduction of FDRE and energy storage modalities such as PSP (7.2 GW) and BESS (275.85 MW / 791.8 MWh), reflects a deliberate policy engineering of the generation stack. The inclusion of Green Hydrogen within the National Mission framework further signals India’s intent to extend decarbonisation into industrial sectors that electricity alone cannot reach. This itself is a recognition of the structural limits of the grid and the systemic role of hydrogen in a mature energy transition.

Yet the physical and technological landscape described above does not exist in a vacuum. The scale and velocity of India’s renewable deployment has been made possible and will continue to be determined by an evolving legal and regulatory architecture that calibrates risk, allocates obligation, and channels capital. Even though India has encountered unfettered Capacity expansion without regulatory coherence leading to grid fragility, investor uncertainty, and contractual stress it has continued to progressively address the same, through legislative reform and institutional innovation.

It is this regulatory and legal architecture, along with the instruments of obligation, the mechanisms of incentive, the frameworks of dispute resolution, and the emerging jurisprudence around renewable energy contracts that forms the subject of the next Viewpoint in this series.

About the authors: Yashodhara Burmon Roy is a Principal Associate, Rucha Prabhu is a Senior Associate and Prateek Singh is an Associate at Hammurabi & Solomon Partners.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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