New Delhi [India]: India’s renewable energy (RE) sector could soon face regulatory pressures inspired by global trends, particularly from Europe and China, to address emerging challenges like grid disturbances, subsidy-driven incentives, and negative energy prices, according to a report by JM Financial.
The report highlights that countries like China and several European nations have begun implementing stricter regulations to tackle issues arising from the rapid growth of 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 stated.
The Indian RE sector has seen significant expansion, driven by evolving policies and regulatory flexibility. However, with this growth comes the need for stricter controls to maintain market stability.
In China, policymakers are now reducing subsidy-driven incentives after facing oversupply and negative energy prices. Similarly, some European countries are scaling back renewable energy promotions to mitigate similar pricing challenges.
“While policymakers 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,” the report added.
The report also referenced China’s shift toward market-driven renewable energy pricing and Germany’s approach to handling negative power prices by suspending subsidies for PV grid integration when electricity prices drop below zero.
As of January 20, 2025, India’s total non-fossil fuel-based energy capacity reached 217.62 gigawatts (GW).
In 2024, India experienced record-breaking growth with 24.5 GW of solar capacity and 3.4 GW of wind capacity added. This marked a more than twofold increase in solar installations and a 21% rise in wind installations compared to 2023.
The surge was largely driven by government incentives, policy reforms, and heightened investments in domestic solar and wind turbine manufacturing. Solar energy remained the leading contributor to India’s renewable energy growth, accounting for 47% of the total installed capacity.
In particular, Rajasthan, Gujarat, and Tamil Nadu emerged as top-performing states, contributing 71% of India’s total utility-scale solar installations.