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  • Published: 07 January 2020

Renewable energy for sustainable development in India: current status, future prospects, challenges, employment, and investment opportunities

  • Charles Rajesh Kumar. J   ORCID: orcid.org/0000-0003-2354-6463 1 &
  • M. A. Majid 1  

Energy, Sustainability and Society volume  10 , Article number:  2 ( 2020 ) Cite this article

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The primary objective for deploying renewable energy in India is to advance economic development, improve energy security, improve access to energy, and mitigate climate change. Sustainable development is possible by use of sustainable energy and by ensuring access to affordable, reliable, sustainable, and modern energy for citizens. Strong government support and the increasingly opportune economic situation have pushed India to be one of the top leaders in the world’s most attractive renewable energy markets. The government has designed policies, programs, and a liberal environment to attract foreign investments to ramp up the country in the renewable energy market at a rapid rate. It is anticipated that the renewable energy sector can create a large number of domestic jobs over the following years. This paper aims to present significant achievements, prospects, projections, generation of electricity, as well as challenges and investment and employment opportunities due to the development of renewable energy in India. In this review, we have identified the various obstacles faced by the renewable sector. The recommendations based on the review outcomes will provide useful information for policymakers, innovators, project developers, investors, industries, associated stakeholders and departments, researchers, and scientists.


The sources of electricity production such as coal, oil, and natural gas have contributed to one-third of global greenhouse gas emissions. It is essential to raise the standard of living by providing cleaner and more reliable electricity [ 1 ]. India has an increasing energy demand to fulfill the economic development plans that are being implemented. The provision of increasing quanta of energy is a vital pre-requisite for the economic growth of a country [ 2 ]. The National Electricity Plan [NEP] [ 3 ] framed by the Ministry of Power (MoP) has developed a 10-year detailed action plan with the objective to provide electricity across the country, and has prepared a further plan to ensure that power is supplied to the citizens efficiently and at a reasonable cost. According to the World Resource Institute Report 2017 [ 4 , 5 ], India is responsible for nearly 6.65% of total global carbon emissions, ranked fourth next to China (26.83%), the USA (14.36%), and the EU (9.66%). Climate change might also change the ecological balance in the world. Intended Nationally Determined Contributions (INDCs) have been submitted to the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. The latter has hoped to achieve the goal of limiting the rise in global temperature to well below 2 °C [ 6 , 7 ]. According to a World Energy Council [ 8 ] prediction, global electricity demand will peak in 2030. India is one of the largest coal consumers in the world and imports costly fossil fuel [ 8 ]. Close to 74% of the energy demand is supplied by coal and oil. According to a report from the Center for monitoring Indian economy, the country imported 171 million tons of coal in 2013–2014, 215 million tons in 2014–2015, 207 million tons in 2015–2016, 195 million tons in 2016–2017, and 213 million tons in 2017–2018 [ 9 ]. Therefore, there is an urgent need to find alternate sources for generating electricity.

In this way, the country will have a rapid and global transition to renewable energy technologies to achieve sustainable growth and avoid catastrophic climate change. Renewable energy sources play a vital role in securing sustainable energy with lower emissions [ 10 ]. It is already accepted that renewable energy technologies might significantly cover the electricity demand and reduce emissions. In recent years, the country has developed a sustainable path for its energy supply. Awareness of saving energy has been promoted among citizens to increase the use of solar, wind, biomass, waste, and hydropower energies. It is evident that clean energy is less harmful and often cheaper. India is aiming to attain 175 GW of renewable energy which would consist of 100 GW from solar energy, 10 GW from bio-power, 60 GW from wind power, and 5 GW from small hydropower plants by the year 2022 [ 11 ]. Investors have promised to achieve more than 270 GW, which is significantly above the ambitious targets. The promises are as follows: 58 GW by foreign companies, 191 GW by private companies, 18 GW by private sectors, and 5 GW by the Indian Railways [ 12 ]. Recent estimates show that in 2047, solar potential will be more than 750 GW and wind potential will be 410 GW [ 13 , 14 ]. To reach the ambitious targets of generating 175 GW of renewable energy by 2022, it is essential that the government creates 330,000 new jobs and livelihood opportunities [ 15 , 16 ].

A mixture of push policies and pull mechanisms, accompanied by particular strategies should promote the development of renewable energy technologies. Advancement in technology, proper regulatory policies [ 17 ], tax deduction, and attempts in efficiency enhancement due to research and development (R&D) [ 18 ] are some of the pathways to conservation of energy and environment that should guarantee that renewable resource bases are used in a cost-effective and quick manner. Hence, strategies to promote investment opportunities in the renewable energy sector along with jobs for the unskilled workers, technicians, and contractors are discussed. This article also manifests technological and financial initiatives [ 19 ], policy and regulatory framework, as well as training and educational initiatives [ 20 , 21 ] launched by the government for the growth and development of renewable energy sources. The development of renewable technology has encountered explicit obstacles, and thus, there is a need to discuss these barriers. Additionally, it is also vital to discover possible solutions to overcome these barriers, and hence, proper recommendations have been suggested for the steady growth of renewable power [ 22 , 23 , 24 ]. Given the enormous potential of renewables in the country, coherent policy measures and an investor-friendly administration might be the key drivers for India to become a global leader in clean and green energy.

Projection of global primary energy consumption

An energy source is a necessary element of socio-economic development. The increasing economic growth of developing nations in the last decades has caused an accelerated increase in energy consumption. This trend is anticipated to grow [ 25 ]. A prediction of future power consumption is essential for the investigation of adequate environmental and economic policies [ 26 ]. Likewise, an outlook to future power consumption helps to determine future investments in renewable energy. Energy supply and security have not only increased the essential issues for the development of human society but also for their global political and economic patterns [ 27 ]. Hence, international comparisons are helpful to identify past, present, and future power consumption.

Table 1 shows the primary energy consumption of the world, based on the BP Energy Outlook 2018 reports. In 2016, India’s overall energy consumption was 724 million tons of oil equivalent (Mtoe) and is expected to rise to 1921 Mtoe by 2040 with an average growth rate of 4.2% per annum. Energy consumption of various major countries comprises commercially traded fuels and modern renewables used to produce power. In 2016, India was the fourth largest energy consumer in the world after China, the USA, and the Organization for economic co-operation and development (OECD) in Europe [ 29 ].

The projected estimation of global energy consumption demonstrates that energy consumption in India is continuously increasing and retains its position even in 2035/2040 [ 28 ]. The increase in India’s energy consumption will push the country’s share of global energy demand to 11% by 2040 from 5% in 2016. Emerging economies such as China, India, or Brazil have experienced a process of rapid industrialization, have increased their share in the global economy, and are exporting enormous volumes of manufactured products to developed countries. This shift of economic activities among nations has also had consequences concerning the country’s energy use [ 30 ].

Projected primary energy consumption in India

The size and growth of a country’s population significantly affects the demand for energy. With 1.368 billion citizens, India is ranked second, of the most populous countries as of January 2019 [ 31 ]. The yearly growth rate is 1.18% and represents almost 17.74% of the world’s population. The country is expected to have more than 1.383 billion, 1.512 billion, 1.605 billion, 1.658 billion people by the end of 2020, 2030, 2040, and 2050, respectively. Each year, India adds a higher number of people to the world than any other nation and the specific population of some of the states in India is equal to the population of many countries.

The growth of India’s energy consumption will be the fastest among all significant economies by 2040, with coal meeting most of this demand followed by renewable energy. Renewables became the second most significant source of domestic power production, overtaking gas and then oil, by 2020. The demand for renewables in India will have a tremendous growth of 256 Mtoe in 2040 from 17 Mtoe in 2016, with an annual increase of 12%, as shown in Table 2 .

Table 3 shows the primary energy consumption of renewables for the BRIC countries (Brazil, Russia, India, and China) from 2016 to 2040. India consumed around 17 Mtoe of renewable energy in 2016, and this will be 256 Mtoe in 2040. It is probable that India’s energy consumption will grow fastest among all major economies by 2040, with coal contributing most in meeting this demand followed by renewables. The percentage share of renewable consumption in 2016 was 2% and is predicted to increase by 13% by 2040.

How renewable energy sources contribute to the energy demand in India

Even though India has achieved a fast and remarkable economic growth, energy is still scarce. Strong economic growth in India is escalating the demand for energy, and more energy sources are required to cover this demand. At the same time, due to the increasing population and environmental deterioration, the country faces the challenge of sustainable development. The gap between demand and supply of power is expected to rise in the future [ 32 ]. Table 4 presents the power supply status of the country from 2009–2010 to 2018–2019 (until October 2018). In 2018, the energy demand was 1,212,134 GWh, and the availability was 1,203,567 GWh, i.e., a deficit of − 0.7% [ 33 ].

According to the Load generation and Balance Report (2016–2017) of the Central Electricity Authority of India (CEA), the electrical energy demand for 2021–2022 is anticipated to be at least 1915 terawatt hours (TWh), with a peak electric demand of 298 GW [ 34 ]. Increasing urbanization and rising income levels are responsible for an increased demand for electrical appliances, i.e., an increased demand for electricity in the residential sector. The increased demand in materials for buildings, transportation, capital goods, and infrastructure is driving the industrial demand for electricity. An increased mechanization and the shift to groundwater irrigation across the country is pushing the pumping and tractor demand in the agriculture sector, and hence the large diesel and electricity demand. The penetration of electric vehicles and the fuel switch to electric and induction cook stoves will drive the electricity demand in the other sectors shown in Table 5 .

According to the International Renewable Energy Agency (IRENA), a quarter of India’s energy demand can be met with renewable energy. The country could potentially increase its share of renewable power generation to over one-third by 2030 [ 35 ].

Table 6 presents the estimated contribution of renewable energy sources to the total energy demand. MoP along with CEA in its draft national electricity plan for 2016 anticipated that with 175 GW of installed capacity of renewable power by 2022, the expected electricity generation would be 327 billion units (BUs), which would contribute to 1611 BU energy requirements. This indicates that 20.3% of the energy requirements would be fulfilled by renewable energy by 2022 and 24.2% by 2027 [ 36 ]. Figure 1 shows the ambitious new target for the share of renewable energy in India’s electricity consumption set by MoP. As per the order of revised RPO (Renewable Purchase Obligations, legal act of June 2018), the country has a target of a 21% share of renewable energy in its total electricity consumption by March 2022. In 2014, the same goal was at 15% and increased to 21% by 2018. It is India’s goal to reach 40% renewable sources by 2030.

figure 1

Target share of renewable energy in India’s power consumption

Estimated renewable energy potential in India

The estimated potential of wind power in the country during 1995 [ 37 ] was found to be 20,000 MW (20 GW), solar energy was 5 × 10 15 kWh/pa, bioenergy was 17,000 MW, bagasse cogeneration was 8000 MW, and small hydropower was 10,000 MW. For 2006, the renewable potential was estimated as 85,000 MW with wind 4500 MW, solar 35 MW, biomass/bioenergy 25,000 MW, and small hydropower of 15,000 MW [ 38 ]. According to the annual report of the Ministry of New and Renewable Energy (MNRE) for 2017–2018, the estimated potential of wind power was 302.251 GW (at 100-m mast height), of small hydropower 19.749 GW, biomass power 17.536 GW, bagasse cogeneration 5 GW, waste to energy (WTE) 2.554 GW, and solar 748.990 GW. The estimated total renewable potential amounted to 1096.080 GW [ 39 ] assuming 3% wasteland, which is shown in Table 7 . India is a tropical country and receives significant radiation, and hence the solar potential is very high [ 40 , 41 , 42 ].

Gross installed capacity of renewable energy in India

As of June 2018 reports, the country intends to reach 225 GW of renewable power capacity by 2022 exceeding the target of 175 GW pledged during the Paris Agreement. The sector is the fourth most attractive renewable energy market in the world. As in October 2018, India ranked fifth in installed renewable energy capacity [ 43 ].

Gross installed capacity of renewable energy—according to region

Table 8 lists the cumulative installed capacity of both conventional and renewable energy sources. The cumulative installed capacity of renewable sources as on the 31 st of December 2018 was 74081.66 MW. Renewable energy (small hydropower, wind, biomass, WTE, solar) accounted for an approximate 21% share of the cumulative installed power capacity, and the remaining 78.791% originated from other conventional sources (coal, gas diesel, nuclear, and large hydropower) [ 44 ]. The best regions for renewable energy are the southern states that have the highest solar irradiance and wind in the country. When renewable energy alone is considered for analysis, the Southern region covers 49.121% of the cumulative installed renewable capacity, followed by the Western region (29.742%), the Northern region (18.890%), the Eastern region (1.836%), the North-Easter region 0.394%, and the Islands (0.017%). As far as conventional energy is concerned, the Western region with 33.452% ranks first and is followed by the Northern region with 28.484%, the Southern region (24.967%), the Eastern region (11.716%), the Northern-Eastern (1.366%), and the Islands (0.015%).

Gross installed capacity of renewable energy—according to ownership

State government, central government, and private players drive the Indian energy sector. The private sector leads the way in renewable energy investment. Table 9 shows the installed gross renewable energy and conventional energy capacity (percentage)—ownership wise. It is evident from Fig. 2 that 95% of the installed renewable capacity derives from private companies, 2% from the central government, and 3% from the state government. The top private companies in the field of non-conventional energy generation are Tata Power Solar, Suzlon, and ReNew Power. Tata Power Solar System Limited are the most significant integrated solar power players in the country, Suzlon realizes wind energy projects, and ReNew Power Ventures operate with solar and wind power.

figure 2

Gross renewable energy installed capacity (percentage)—Ownership wise as per the 31.12.2018 [ 43 ]

Gross installed capacity of renewable energy—state wise

Table 10 shows the installed capacity of cumulative renewable energy (state wise), out of the total installed capacity of 74,081.66 MW, where Karnataka ranks first with 12,953.24 MW (17.485%), Tamilnadu second with 11,934.38 MW (16%), Maharashtra third with 9283.78 MW (12.532%), Gujarat fourth with 10.641 MW (10.641%), and Rajasthan fifth with 7573.86 MW (10.224%). These five states cover almost 66.991% of the installed capacity of total renewable. Other prominent states are Andhra Pradesh (9.829%), Madhya Pradesh (5.819%), Telangana (5.137%), and Uttar Pradesh (3.879%). These nine states cover almost 91.655%.

Gross installed capacity of renewable energy—according to source

Under union budget of India 2018–2019, INR 3762 crore (USD 581.09 million), was allotted for grid-interactive renewable power schemes and projects. As per the 31.12.2018, the installed capacity of total renewable power (excluding large hydropower) in the country amounted to 74.08166 GW. Around 9.363 GW of solar energy, 1.766 GW of wind, 0.105 GW of small hydropower (SHP), and biomass power of 8.7 GW capacity were added in 2017–2018. Table 11 shows the installed capacity of renewable energy over the last 10 years until the 31.12.2018. Wind energy continues to dominate the countries renewable energy industry, accounting for over 47% of cumulative installed renewable capacity (35,138.15 MW), followed by solar power of 34% (25,212.26 MW), biomass power/cogeneration of 12% (9075.5 MW), and small hydropower of 6% (4517.45 MW). In the renewable energy country attractiveness index (RECAI) of 2018, India ranked in fourth position. The installed renewable energy production capacity has grown at an accelerated pace over the preceding few years, posting a CAGR of 19.78% between 2014 and 2018 [ 45 ] .

Estimation of the installed capacity of renewable energy

Table 12 gives the share of installed cumulative renewable energy capacity, in comparison with the installed conventional energy capacity. In 2022 and 2032, the installed renewable energy capacity will account for 32% and 35%, respectively [ 46 , 47 ]. The most significant renewable capacity expansion program in the world is being taken up by India. The government is preparing to boost the percentage of clean energy through a tremendous push in renewables, as discussed in the subsequent sections.

Gross electricity generation from renewable energy in India

The overall generation (including the generation from grid-connected renewable sources) in the country has grown exponentially. Between 2014–2015 and 2015–2016, it achieved 1110.458 BU and 1173.603 BU, respectively. The same was recorded with 1241.689 BU and 1306.614 BU during 2015–2016 and 1306.614 BU from 2016–2017 and 2017–2018, respectively. Figure 3 indicates that the annual renewable power production increased faster than the conventional power production. The rise accounted for 6.47% in 2015–2016 and 24.88% in 2017–2018, respectively. Table 13 compares the energy generation from traditional sources with that from renewable sources. Remarkably, the energy generation from conventional sources reached 811.143 BU and from renewable sources 9.860 BU in 2010 compared to 1.206.306 BU and 88.945 BU in 2017, respectively [ 48 ]. It is observed that the price of electricity production using renewable technologies is higher than that for conventional generation technologies, but is likely to fall with increasing experience in the techniques involved [ 49 ].

figure 3

The annual growth in power generation as per the 30th of November 2018

Gross electricity generation from renewable energy—according to regions

Table 14 shows the gross electricity generation from renewable energy-region wise. It is noted that the highest renewable energy generation derives from the southern region, followed by the western part. As of November 2018, 50.33% of energy generation was obtained from the southern area and 29.37%, 18.05%, 2%, and 0.24% from Western, Northern, North-Eastern Areas, and the Island, respectively.

Gross electricity generation from renewable energy—according to states

Table 15 shows the gross electricity generation from renewable energy—region-wise. It is observed that the highest renewable energy generation was achieved from Karnataka (16.57%), Tamilnadu (15.82%), Andhra Pradesh (11.92%), and Gujarat (10.87%) as per November 2018. While adding four years from 2015–2016 to 2018–2019 Tamilnadu [ 50 ] remains in the first position followed by Karnataka, Maharashtra, Gujarat and Andhra Pradesh.

Gross electricity generation from renewable energy—according to sources

Table 16 shows the gross electricity generation from renewable energy—source-wise. It can be concluded from the table that the wind-based energy generation as per 2017–2018 is most prominent with 51.71%, followed by solar energy (25.40%), Bagasse (11.63%), small hydropower (7.55%), biomass (3.34%), and WTE (0.35%). There has been a constant increase in the generation of all renewable sources from 2014–2015 to date. Wind energy, as always, was the highest contributor to the total renewable power production. The percentage of solar energy produced in the overall renewable power production comes next to wind and is typically reduced during the monsoon months. The definite improvement in wind energy production can be associated with a “good” monsoon. Cyclonic action during these months also facilitates high-speed winds. Monsoon winds play a significant part in the uptick in wind power production, especially in the southern states of the country.

Estimation of gross electricity generation from renewable energy

Table 17 shows an estimation of gross electricity generation from renewable energy based on the 2015 report of the National Institution for Transforming India (NITI Aayog) [ 51 ]. It is predicted that the share of renewable power will be 10.2% by 2022, but renewable power technologies contributed a record of 13.4% to the cumulative power production in India as of the 31st of August 2018. The power ministry report shows that India generated 122.10 TWh and out of the total electricity produced, renewables generated 16.30 TWh as on the 31st of August 2018. According to the India Brand Equity Foundation report, it is anticipated that by the year 2040, around 49% of total electricity will be produced using renewable energy.

Current achievements in renewable energy 2017–2018

India cares for the planet and has taken a groundbreaking journey in renewable energy through the last 4 years [ 52 , 53 ]. A dedicated ministry along with financial and technical institutions have helped India in the promotion of renewable energy and diversification of its energy mix. The country is engaged in expanding the use of clean energy sources and has already undertaken several large-scale sustainable energy projects to ensure a massive growth of green energy.

1. India doubled its renewable power capacity in the last 4 years. The cumulative renewable power capacity in 2013–2014 reached 35,500 MW and rose to 70,000 MW in 2017–2018.

2. India stands in the fourth and sixth position regarding the cumulative installed capacity in the wind and solar sector, respectively. Furthermore, its cumulative installed renewable capacity stands in fifth position globally as of the 31st of December 2018.

3. As said above, the cumulative renewable energy capacity target for 2022 is given as 175 GW. For 2017–2018, the cumulative installed capacity amounted to 70 GW, the capacity under implementation is 15 GW and the tendered capacity was 25 GW. The target, the installed capacity, the capacity under implementation, and the tendered capacity are shown in Fig. 4 .

4. There is tremendous growth in solar power. The cumulative installed solar capacity increased by more than eight times in the last 4 years from 2.630 GW (2013–2014) to 22 GW (2017–2018). As of the 31st of December 2018, the installed capacity amounted to 25.2122 GW.

5. The renewable electricity generated in 2017–2018 was 101839 BUs.

6. The country published competitive bidding guidelines for the production of renewable power. It also discovered the lowest tariff and transparent bidding method and resulted in a notable decrease in per unit cost of renewable energy.

7. In 21 states, there are 41 solar parks with a cumulative capacity of more than 26,144 MW that have already been approved by the MNRE. The Kurnool solar park was set up with 1000 MW; and with 2000 MW the largest solar park of Pavagada (Karnataka) is currently under installation.

8. The target for solar power (ground mounted) for 2018–2019 is given as 10 GW, and solar power (Rooftop) as 1 GW.

9. MNRE doubled the target for solar parks (projects of 500 MW or more) from 20 to 40 GW.

10. The cumulative installed capacity of wind power increased by 1.6 times in the last 4 years. In 2013–2014, it amounted to 21 GW, from 2017 to 2018 it amounted to 34 GW, and as of 31st of December 2018, it reached 35.138 GW. This shows that achievements were completed in wind power use.

11. An offshore wind policy was announced. Thirty-four companies (most significant global and domestic wind power players) competed in the “expression of interest” (EoI) floated on the plan to set up India’s first mega offshore wind farm with a capacity of 1 GW.

12. 682 MW small hydropower projects were installed during the last 4 years along with 600 watermills (mechanical applications) and 132 projects still under development.

13. MNRE is implementing green energy corridors to expand the transmission system. 9400 km of green energy corridors are completed or under implementation. The cost spent on it was INR 10141 crore (101,410 Million INR = 1425.01 USD). Furthermore, the total capacity of 19,000 MVA substations is now planned to be complete by March 2020.

14. MNRE is setting up solar pumps (off-grid application), where 90% of pumps have been set up as of today and between 2014–2015 and 2017–2018. Solar street lights were more than doubled. Solar home lighting systems have been improved by around 1.5 times. More than 2,575,000 solar lamps have been distributed to students. The details are illustrated in Fig. 5 .

15. From 2014–2015 to 2017–2018, more than 2.5 lakh (0.25 million) biogas plants were set up for cooking in rural homes to enable families by providing them access to clean fuel.

16. New policy initiatives revised the tariff policy mandating purchase and generation obligations (RPO and RGO). Four wind and solar inter-state transmission were waived; charges were planned, the RPO trajectory for 2022 and renewable energy policy was finalized.

17. Expressions of interest (EoI) were invited for installing solar photovoltaic manufacturing capacities associated with the guaranteed off-take of 20 GW. EoI indicated 10 GW floating solar energy plants.

18. Policy for the solar-wind hybrid was announced. Tender for setting up 2 GW solar-wind hybrid systems in existing projects was invited.

19. To facilitate R&D in renewable power technology, a National lab policy on testing, standardization, and certification was announced by the MNRE.

20. The Surya Mitra program was conducted to train college graduates in the installation, commissioning, operations, and management of solar panels. The International Solar Alliance (ISA) headquarters in India (Gurgaon) will be a new commencement for solar energy improvement in India.

21. The renewable sector has become considerably more attractive for foreign and domestic investors, and the country expects to attract up to USD 80 billion in the next 4 years from 2018–2019 to 2021–2022.

22. The solar power capacity expanded by more than eight times from 2.63 GW in 2013–2014 to 22 GW in 2017–2018.

23. A bidding for 115 GW renewable energy projects up to March 2020 was announced.

24. The Bureau of Indian Standards (BIS) acting for system/components of solar PV was established.

25. To recognize and encourage innovative ideas in renewable energy sectors, the Government provides prizes and awards. Creative ideas/concepts should lead to prototype development. The Name of the award is “Abhinav Soch-Nayi Sambhawanaye,” which means Innovative ideas—New possibilities.

figure 4

Renewable energy target, installed capacity, under implementation and tendered [ 52 ]

figure 5

Off-grid solar applications [ 52 ]

Solar energy

Under the National Solar Mission, the MNRE has updated the objective of grid-connected solar power projects from 20 GW by the year 2021–2022 to 100 GW by the year 2021–2022. In 2008–2009, it reached just 6 MW. The “Made in India” initiative to promote domestic manufacturing supported this great height in solar installation capacity. Currently, India has the fifth highest solar installed capacity worldwide. By the 31st of December 2018, solar energy had achieved 25,212.26 MW against the target of 2022, and a further 22.8 GW of capacity has been tendered out or is under current implementation. MNRE is preparing to bid out the remaining solar energy capacity every year for the periods 2018–2019 and 2019–2020 so that bidding may contribute with 100 GW capacity additions by March 2020. In this way, 2 years for the completion of projects would remain. Tariffs will be determined through the competitive bidding process (reverse e-auction) to bring down tariffs significantly. The lowest solar tariff was identified to be INR 2.44 per kWh in July 2018. In 2010, solar tariffs amounted to INR 18 per kWh. Over 100,000 lakh (10,000 million) acres of land had been classified for several planned solar parks, out of which over 75,000 acres had been obtained. As of November 2018, 47 solar parks of a total capacity of 26,694 MW were established. The aggregate capacity of 4195 MW of solar projects has been commissioned inside various solar parks (floating solar power). Table 18 shows the capacity addition compared to the target. It indicates that capacity addition increased exponentially.

Wind energy

As of the 31st of December 2018, the total installed capacity of India amounted to 35,138.15 MW compared to a target of 60 GW by 2022. India is currently in fourth position in the world for installed capacity of wind power. Moreover, around 9.4 GW capacity has been tendered out or is under current implementation. The MNRE is preparing to bid out for A 10 GW wind energy capacity every year for 2018–2019 and 2019–2020, so that bidding will allow for 60 GW capacity additions by March 2020, giving the remaining two years for the accomplishment of the projects. The gross wind energy potential of the country now reaches 302 GW at a 100 m above-ground level. The tariff administration has been changed from feed-in-tariff (FiT) to the bidding method for capacity addition. On the 8th of December 2017, the ministry published guidelines for a tariff-based competitive bidding rule for the acquisition of energy from grid-connected wind energy projects. The developed transparent process of bidding lowered the tariff for wind power to its lowest level ever. The development of the wind industry has risen in a robust ecosystem ensuring project execution abilities and a manufacturing base. State-of-the-art technologies are now available for the production of wind turbines. All the major global players in wind power have their presence in India. More than 12 different companies manufacture more than 24 various models of wind turbines in India. India exports wind turbines and components to the USA, Europe, Australia, Brazil, and other Asian countries. Around 70–80% of the domestic production has been accomplished with strong domestic manufacturing companies. Table 19 lists the capacity addition compared to the target for the capacity addition. Furthermore, electricity generation from the wind-based capacity has improved, even though there was a slowdown of new capacity in the first half of 2018–2019 and 2017–2018.

The national energy storage mission—2018

The country is working toward a National Energy Storage Mission. A draft of the National Energy Storage Mission was proposed in February 2018 and initiated to develop a comprehensive policy and regulatory framework. During the last 4 years, projects included in R&D worth INR 115.8 million (USD 1.66 million) in the domain of energy storage have been launched, and a corpus of INR 48.2 million (USD 0.7 million) has been issued. India’s energy storage mission will provide an opportunity for globally competitive battery manufacturing. By increasing the battery manufacturing expertise and scaling up its national production capacity, the country can make a substantial economic contribution in this crucial sector. The mission aims to identify the cumulative battery requirements, total market size, imports, and domestic manufacturing. Table 20 presents the economic opportunity from battery manufacturing given by the National Institution for Transforming India, also called NITI Aayog, which provides relevant technical advice to central and state governments while designing strategic and long-term policies and programs for the Indian government.

Small hydropower—3-year action agenda—2017

Hydro projects are classified as large hydro, small hydro (2 to 25 MW), micro-hydro (up to 100 kW), and mini-hydropower (100 kW to 2 MW) projects. Whereas the estimated potential of SHP is 20 GW, the 2022 target for India in SHP is 5 GW. As of the 31st of December 2018, the country has achieved 4.5 GW and this production is constantly increasing. The objective, which was planned to be accomplished through infrastructure project grants and tariff support, was included in the NITI Aayog’s 3-year action agenda (2017–2018 to 2019–2020), which was published on the 1st of August 2017. MNRE is providing central financial assistance (CFA) to set up small/micro hydro projects both in the public and private sector. For the identification of new potential locations, surveys and comprehensive project reports are elaborated, and financial support for the renovation and modernization of old projects is provided. The Ministry has established a dedicated completely automatic supervisory control and data acquisition (SCADA)—based on a hydraulic turbine R&D laboratory at the Alternate Hydro Energy Center (AHEC) at IIT Roorkee. The establishment cost for the lab was INR 40 crore (400 million INR, 95.62 Million USD), and the laboratory will serve as a design and validation facility. It investigates hydro turbines and other hydro-mechanical devices adhering to national and international standards [ 54 , 55 ]. Table 21 shows the target and achievements from 2007–2008 to 2018–2019.

National policy regarding biofuels—2018

Modernization has generated an opportunity for a stable change in the use of bioenergy in India. MNRE amended the current policy for biomass in May 2018. The policy presents CFA for projects using biomass such as agriculture-based industrial residues, wood produced through energy plantations, bagasse, crop residues, wood waste generated from industrial operations, and weeds. Under the policy, CFA will be provided to the projects at the rate of INR 2.5 million (USD 35,477.7) per MW for bagasse cogeneration and INR 5 million (USD 70,955.5) per MW for non-bagasse cogeneration. The MNRE also announced a memorandum in November 2018 considering the continuation of the concessional customs duty certificate (CCDC) to set up projects for the production of energy using non-conventional materials such as bio-waste, agricultural, forestry, poultry litter, agro-industrial, industrial, municipal, and urban wastes. The government recently established the National policy on biofuels in August 2018. The MNRE invited an expression of interest (EOI) to estimate the potential of biomass energy and bagasse cogeneration in the country. A program to encourage the promotion of biomass-based cogeneration in sugar mills and other industries was also launched in May 2018. Table 22 shows how the biomass power target and achievements are expected to reach 10 GW of the target of 2022 before the end of 2019.

The new national biogas and organic manure program (NNBOMP)—2018

The National biogas and manure management programme (NBMMP) was launched in 2012–2013. The primary objective was to provide clean gaseous fuel for cooking, where the remaining slurry was organic bio-manure which is rich in nitrogen, phosphorus, and potassium. Further, 47.5 lakh (4.75 million) cumulative biogas plants were completed in 2014, and increased to 49.8 lakh (4.98 million). During 2017–2018, the target was to establish 1.10 lakh biogas plants (1.10 million), but resulted in 0.15 lakh (0.015 million). In this way, the cost of refilling the gas cylinders with liquefied petroleum gas (LPG) was greatly reduced. Likewise, tons of wood/trees were protected from being axed, as wood is traditionally used as a fuel in rural and semi-urban households. Biogas is a viable alternative to traditional cooking fuels. The scheme generated employment for almost 300 skilled laborers for setting up the biogas plants. By 30th of May 2018, the Ministry had issued guidelines for the implementation of the NNBOMP during the period 2017–2018 to 2019–2020 [ 56 ].

The off-grid and decentralized solar photovoltaic application program—2018

The program deals with the energy demand through the deployment of solar lanterns, solar streetlights, solar home lights, and solar pumps. The plan intended to reach 118 MWp of off-grid PV capacity by 2020. The sanctioning target proposed outlay was 50 MWp by 2017–2018 and 68 MWp by 2019–2020. The total estimated cost amounted to INR 1895 crore (18950 Million INR, 265.547 million USD), and the ministry wanted to support 637 crores (6370 million INR, 89.263 million USD) by its central finance assistance. Solar power plants with a 25 KWp size were promoted in those areas where grid power does not reach households or is not reliable. Public service institutions, schools, panchayats, hostels, as well as police stations will benefit from this scheme. Solar study lamps were also included as a component in the program. Thirty percent of financial assistance was provided to solar power plants. Every student should bear 15% of the lamp cost, and the ministry wanted to support the remaining 85%. As of October 2018, lantern and lamps of more than 40 Lakhs (4 million), home lights of 16.72 lakhs (1.672 million) number, street lights of 6.40 lakhs (0.64 million), solar pumps of 1.96 lakhs (0.196 million), and 187.99 MWp stand-alone devices had been installed [ 57 , 58 ].

Major government initiatives for renewable energy

Technological initiatives.

The Technology Development and Innovation Policy (TDIP) released on the 6th of October 2017 was endeavored to promote research, development, and demonstration (RD&D) in the renewable energy sector [ 59 ]. RD&D intended to evaluate resources, progress in technology, commercialization, and the presentation of renewable energy technologies across the country. It aimed to produce renewable power devices and systems domestically. The evaluation of standards and resources, processes, materials, components, products, services, and sub-systems was carried out through RD&D. A development of the market, efficiency improvements, cost reductions, and a promotion of commercialization (scalability and bankability) were achieved through RD&D. Likewise, the percentage of renewable energy in the total electricity mix made it self-sustainable, industrially competitive, and profitable through RD&D. RD&D also supported technology development and demonstration in wind, solar, wind-solar hybrid, biofuel, biogas, hydrogen fuel cells, and geothermal energies. RD&D supported the R&D units of educational institutions, industries, and non-government organizations (NGOs). Sharing expertise, information, as well as institutional mechanisms for collaboration was realized by use of the technology development program (TDP). The various people involved in this program were policymakers, industrial innovators, associated stakeholders and departments, researchers, and scientists. Renowned R&D centers in India are the National Institute of Solar Energy (NISE), Gurgaon, the National Institute of Bio-Energy (NIBE), Kapurthala, and the National Institute of Wind Energy (NIWE), Chennai. The TDP strategy encouraged the exploration of innovative approaches and possibilities to obtain long-term targets. Likewise, it efficiently supported the transformation of knowledge into technology through a well-established monitoring system for the development of renewable technology that meets the electricity needs of India. The research center of excellence approved the TDI projects, which were funded to strengthen R&D. Funds were provided for conducting training and workshops. The MNRE is now preparing a database of R&D accomplishments in the renewable energy sector.

The Impacting Research Innovation and Technology (IMPRINT) program seeks to develop engineering and technology (prototype/process development) on a national scale. IMPRINT is steered by the Indian Institute of Technologies (IITs) and Indian Institute of science (IISCs). The expansion covers all areas of engineering and technology including renewable technology. The ministry of human resource development (MHRD) finances up to 50% of the total cost of the project. The remaining costs of the project are financed by the ministry (MNRE) via the RD&D program for renewable projects. Currently (2018–2019), five projects are under implementation in the area of solar thermal systems, storage for SPV, biofuel, and hydrogen and fuel cells which are funded by the MNRE (36.9 million INR, 0.518426 Million USD) and IMPRINT. Development of domestic technology and quality control are promoted through lab policies that were published on the 7th of December 2017. Lab policies were implemented to test, standardize, and certify renewable energy products and projects. They supported the improvement of the reliability and quality of the projects. Furthermore, Indian test labs are strengthened in line with international standards and practices through well-established lab policies. From 2015, the MNRE has provided “The New and Renewable Energy Young Scientist’s Award” to researchers/scientists who demonstrate exceptional accomplishments in renewable R&D.

Financial initiatives

One hundred percent financial assistance is granted by the MNRE to the government and NGOs and 50% financial support to the industry. The policy framework was developed to guide the identification of the project, the formulation, monitoring appraisal, approval, and financing. Between 2012 and 2017, a 4467.8 million INR, 62.52 Million USD) support was granted by the MNRE. The MNRE wanted to double the budget for technology development efforts in renewable energy for the current three-year plan period. Table 23 shows that the government is spending more and more for the development of the renewable energy sector. Financial support was provided to R&D projects. Exceptional consideration was given to projects that worked under extreme and hazardous conditions. Furthermore, financial support was applied to organizing awareness programs, demonstrations, training, workshops, surveys, assessment studies, etc. Innovative approaches will be rewarded with cash prizes. The winners will be presented with a support mechanism for transforming their ideas and prototypes into marketable commodities such as start-ups for entrepreneur development. Innovative projects will be financed via start-up support mechanisms, which will include an investment contract with investors. The MNRE provides funds to proposals for investigating policies and performance analyses related to renewable energy.

Technology validation and demonstration projects and other innovative projects with regard to renewables received a financial assistance of 50% of the project cost. The CFA applied to partnerships with industry and private institutions including engineering colleges. Private academic institutions, accredited by a government accreditation body, were also eligible to receive a 50% support. The concerned industries and institutions should meet the remaining 50% expenditure. The MNRE allocated an INR 3762.50 crore (INR 37625 million, 528.634 million USD) for the grid interactive renewable sources and an INR 1036.50 crore (INR 10365 million, 145.629 million USD) for off-grid/distributed and decentralized renewable power for the year 2018–2019 [ 60 ]. The MNRE asked the Reserve Bank of India (RBI), attempting to build renewable power projects under “priority sector lending” (priority lending should be done for renewable energy projects and without any limit) and to eliminate the obstacles in the financing of renewable energy projects. In July 2018, the Ministry of Finance announced that it would impose a 25% safeguard duty on solar panels and modules imported from China and Malaysia for 1 year. The quantum of tax might be reduced to 20% for the next 6 months, and 15% for the following 6 months.

Policy and regulatory framework initiatives

The regulatory interventions for the development of renewable energy sources are (a) tariff determination, (b) defining RPO, (c) promoting grid connectivity, and (d) promoting the expansion of the market.

Tariff policy amendments—2018

On the 30th of May 2018, the MoP released draft amendments to the tariff policy. The objective of these policies was to promote electricity generation from renewables. MoP in consultation with MNRE announced the long-term trajectory for RPO, which is represented in Table 24 . The State Electricity Regulatory Commission (SERC) achieved a favorable and neutral/off-putting effect in the growth of the renewable power sector through their RPO regulations in consultation with the MNRE. On the 25th of May 2018, the MNRE created an RPO compliance cell to reach India’s solar and wind power goals. Due to the absence of implementation of RPO regulations, several states in India did not meet their specified RPO objectives. The cell will operate along with the Central Electricity Regulatory Commission (CERC) and SERCs to obtain monthly statements on RPO compliance. It will also take up non-compliance associated concerns with the relevant officials.

Repowering policy—2016

On the 09th of August 2016, India announced a “repowering policy” for wind energy projects. An about 27 GW turnaround was possible according to the policy. This policy supports the replacing of aging wind turbines with more modern and powerful units (fewer, larger, taller) to raise the level of electricity generation. This policy seeks to create a simplified framework and to promote an optimized use of wind power resources. It is mandatory because the up to the year 2000 installed wind turbines were below 500 kW in sites where high wind potential might be achieved. It will be possible to obtain 3000 MW from the same location once replacements are in place. The policy was initially applied for the one MW installed capacity of wind turbines, and the MNRE will extend the repowering policy to other projects in the future based on experience. Repowering projects were implemented by the respective state nodal agencies/organizations that were involved in wind energy promotion in their states. The policy provided an exception from the Power Purchase Agreement (PPA) for wind farms/turbines undergoing repowering because they could not fulfill the requirements according to the PPA during repowering. The repowering projects may avail accelerated depreciation (AD) benefit or generation-based incentive (GBI) due to the conditions appropriate to new wind energy projects [ 61 ].

The wind-solar hybrid policy—2018

On the 14th of May 2018, the MNRE announced a national wind-solar hybrid policy. This policy supported new projects (large grid-connected wind-solar photovoltaic hybrid systems) and the hybridization of the already available projects. These projects tried to achieve an optimal and efficient use of transmission infrastructure and land. Better grid stability was achieved and the variability in renewable power generation was reduced. The best part of the policy intervention was that which supported the hybridization of existing plants. The tariff-based transparent bidding process was included in the policy. Regulatory authorities should formulate the necessary standards and regulations for hybrid systems. The policy also highlighted a battery storage in hybrid projects for output optimization and variability reduction [ 62 ].

The national offshore wind energy policy—2015

The National Offshore Wind Policy was released in October 2015. On the 19th of June 2018, the MNRE announced a medium-term target of 5 GW by 2022 and a long-term target of 30 GW by 2030. The MNRE called expressions of Interest (EoI) for the first 1 GW of offshore wind (the last date was 08.06.2018). The EoI site is located in Pipavav port at the Gulf of Khambhat at a distance of 23 km facilitating offshore wind (FOWIND) where the consortium deployed light detection and ranging (LiDAR) in November 2017). Pipavav port is situated off the coast of Gujarat. The MNRE had planned to install more such equipment in the states of Tamil Nadu and Gujarat. On the 14 th of December 2018, the MNRE, through the National Institute of Wind Energy (NIWE), called tender for offshore environmental impact assessment studies at intended LIDAR points at the Gulf of Mannar, off the coast of Tamil Nadu for offshore wind measurement. The timeline for initiatives was to firstly add 500 MW by 2022, 2 to 2.5 GW by 2027, and eventually reaching 5 GW between 2028 and 2032. Even though the installation of large wind power turbines in open seas is a challenging task, the government has endeavored to promote this offshore sector. Offshore wind energy would add its contribution to the already existing renewable energy mix for India [ 63 ] .

The feed-in tariff policy—2018

On the 28th of January 2016, the revised tariff policy was notified following the Electricity Act. On the 30th May 2018, the amendment in tariff policy was released. The intentions of this tariff policy are (a) an inexpensive and competitive electricity rate for the consumers; (b) to attract investment and financial viability; (c) to ensure that the perceptions of regulatory risks decrease through predictability, consistency, and transparency of policy measures; (d) development in quality of supply, increased operational efficiency, and improved competition; (e) increase the production of electricity from wind, solar, biomass, and small hydro; (f) peaking reserves that are acceptable in quantity or consistently good in quality or performance of grid operation where variable renewable energy source integration is provided through the promotion of hydroelectric power generation, including pumped storage projects (PSP); (g) to achieve better consumer services through efficient and reliable electricity infrastructure; (h) to supply sufficient and uninterrupted electricity to every level of consumers; and (i) to create adequate capacity, reserves in the production, transmission, and distribution that is sufficient for the reliability of supply of power to customers [ 64 ].

Training and educational initiatives

The MHRD has developed strong renewable energy education and training systems. The National Council for Vocational Training (NCVT) develops course modules, and a Modular Employable Skilling program (MES) in its regular 2-year syllabus to include SPV lighting systems, solar thermal systems, SHP, and provides the certificate for seven trades after the completion of a 2-year course. The seven trades are plumber, fitter, carpenter, welder, machinist, and electrician. The Ministry of Skill Development and Entrepreneurship (MSDE) worked out a national skill development policy in 2015. They provide regular training programs to create various job roles in renewable energy along with the MNRE support through a skill council for green jobs (SCGJ), the National Occupational Standards (NOS), and the Qualification Pack (QP). The SCGJ is promoted by the Confederation of Indian Industry (CII) and the MNRE. The industry partner for the SCGJ is ReNew Power [ 65 , 66 ].

The global status of India in renewable energy

Table 25 shows the RECAI (Renewable Energy Country Attractiveness Index) report of 40 countries. This report is based on the attractiveness of renewable energy investment and deployment opportunities. RECAI is based on macro vitals such as economic stability, investment climate, energy imperatives such as security and supply, clean energy gap, and affordability. It also includes policy enablement such as political stability and support for renewables. Its emphasis lies on project delivery parameters such as energy market access, infrastructure, and distributed generation, finance, cost and availability, and transaction liquidity. Technology potentials such as natural resources, power take-off attractiveness, potential support, technology maturity, and forecast growth are taken into consideration for ranking. India has moved to the fourth position of the RECAI-2018. Indian solar installations (new large-scale and rooftop solar capacities) in the calendar year 2017 increased exponentially with the addition of 9629 MW, whereas in 2016 it was 4313 MW. The warning of solar import tariffs and conflicts between developers and distribution firms are growing investor concerns [ 67 ]. Figure 6 shows the details of the installed capacity of global renewable energy in 2016 and 2017. Globally, 2017 GW renewable energy was installed in 2016, and in 2017, it increased to 2195 GW. Table 26 shows the total capacity addition of top countries until 2017. The country ranked fifth in renewable power capacity (including hydro energy), renewable power capacity (not including hydro energy) in fourth position, concentrating solar thermal power (CSP) and wind power were also in fourth position [ 68 ].

figure 6

Globally installed capacity of renewable energy in 2017—Global 2018 status report with regard to renewables [ 68 ]

The investment opportunities in renewable energy in India

The investments into renewable energy in India increased by 22% in the first half of 2018 compared to 2017, while the investments in China dropped by 15% during the same period, according to a statement by the Bloomberg New Energy Finance (BNEF), which is shown in Table 27 [ 69 , 70 ]. At this rate, India is expected to overtake China and become the most significant growth market for renewable energy by the end of 2020. The country is eyeing pole position for transformation in renewable energy by reaching 175 GW by 2020. To achieve this target, it is quickly ramping up investments in this sector. The country added more renewable capacity than conventional capacity in 2018 when compared to 2017. India hosted the ISA first official summit on the 11.03.2018 for 121 countries. This will provide a standard platform to work toward the ambitious targets for renewable energy. The summit will emphasize India’s dedication to meet global engagements in a time-bound method. The country is also constructing many sizeable solar power parks comparable to, but larger than, those in China. Half of the earth’s ten biggest solar parks under development are in India.

In 2014, the world largest solar park was the Topaz solar farm in California with a 550 MW facility. In 2015, another operator in California, Solar Star, edged its capacity up to 579 MW. By 2016, India’s Kamuthi Solar Power Project in Tamil Nadu was on top with 648 MW of capacity (set up by the Adani Green Energy, part of the Adani Group, in Tamil Nadu). As of February 2017, the Longyangxia Dam Solar Park in China was the new leader, with 850 MW of capacity [ 71 ]. Currently, there are 600 MW operating units and 1400 MW units under construction. The Shakti Sthala solar park was inaugurated on 01.03.2018 in Pavagada (Karnataka, India) which is expected to become the globe’s most significant solar park when it accomplishes its full potential of 2 GW. Another large solar park with 1.5 GW is scheduled to be built in the Kadappa region [ 72 ]. The progress in solar power is remarkable and demonstrates real clean energy development on the ground.

The Kurnool ultra-mega solar park generated 800 million units (MU) of energy in October 2018 and saved over 700,000 tons of CO 2 . Rainwater was harvested using a reservoir that helps in cleaning solar panels and supplying water. The country is making remarkable progress in solar energy. The Kamuthi solar farm is cleaned each day by a robotic system. As the Indian economy expands, electricity consumption is forecasted to reach 15,280 TWh in 2040. With the government’s intent, green energy objectives, i.e., the renewable sector, grow considerably in an attractive manner with both foreign and domestic investors. It is anticipated to attract investments of up to USD 80 billion in the subsequent 4 years. The government of India has raised its 175 GW target to 225 GW of renewable energy capacity by 2022. The competitive benefit is that the country has sun exposure possible throughout the year and has an enormous hydropower potential. India was also listed fourth in the EY renewable energy country attractive index 2018. Sixty solar cities will be built in India as a section of MNRE’s “Solar cities” program.

In a regular auction, reduction in tariffs cost of the projects are the competitive benefits in the country. India accounts for about 4% of the total global electricity generation capacity and has the fourth highest installed capacity of wind energy and the third highest installed capacity of CSP. The solar installation in India erected during 2015–2016, 2016–2017, 2017–2018, and 2018–2019 was 3.01 GW, 5.52 GW, 9.36 GW, and 6.53 GW, respectively. The country aims to add 8.5 GW during 2019–2020. Due to its advantageous location in the solar belt (400 South to 400 North), the country is one of the largest beneficiaries of solar energy with relatively ample availability. An increase in the installed capacity of solar power is anticipated to exceed the installed capacity of wind energy, approaching 100 GW by 2022 from its current levels of 25.21226 GW as of December 2018. Fast falling prices have made Solar PV the biggest market for new investments. Under the Union Budget 2018–2019, a zero import tax on parts used in manufacturing solar panels was launched to provide an advantage to domestic solar panel companies [ 73 ].

Foreign direct investment (FDI) inflows in the renewable energy sector of India between April 2000 and June 2018 amounted to USD 6.84 billion according to the report of the department of industrial policy and promotion (DIPP). The DIPP was renamed (gazette notification 27.01.2019) the Department for the Promotion of Industry and Internal Trade (DPIIT). It is responsible for the development of domestic trade, retail trade, trader’s welfare including their employees as well as concerns associated with activities in facilitating and supporting business and startups. Since 2014, more than 42 billion USD have been invested in India’s renewable power sector. India reached US$ 7.4 billion in investments in the first half of 2018. Between April 2015 and June 2018, the country received USD 3.2 billion FDI in the renewable sector. The year-wise inflows expanded from USD 776 million in 2015–2016 to USD 783 million in 2016–2017 and USD 1204 million in 2017–2018. Between January to March of 2018, the INR 452 crore (4520 Million INR, 63.3389 million USD) of the FDI had already come in. The country is contributing with financial and promotional incentives that include a capital subsidy, accelerated depreciation (AD), waiver of inter-state transmission charges and losses, viability gap funding (VGF), and FDI up to 100% under the automated track.

The DIPP/DPIIT compiles and manages the data of the FDI equity inflow received in India [ 74 ]. The FDI equity inflow between April 2015 and June 2018 in the renewable sector is illustrated in Fig. 7 . It shows that the 2018–2019 3 months’ FDI equity inflow is half of that of the entire one of 2017–2018. It is evident from the figure that India has well-established FDI equity inflows. The significant FDI investments in the renewable energy sectors are shown in Table 28 . The collaboration between the Asian development bank and Renew Power Ventures private limited with 44.69 million USD ranked first followed by AIRRO Singapore with Diligent power with FDI equity inflow of 44.69 USD million.

figure 7

The FDI equity inflow received between April 2015 and June 2018 in the renewable energy sector [ 73 ]

Strategies to promote investments

Strategies to promote investments (including FDI) by investors in the renewable sector:

Decrease constraints on FDI; provide open, transparent, and dependable conditions for foreign and domestic firms; and include ease of doing business, access to imports, comparatively flexible labor markets, and safeguard of intellectual property rights.

Establish an investment promotion agency (IPA) that targets suitable foreign investors and connects them as a catalyst with the domestic economy. Assist the IPA to present top-notch infrastructure and immediate access to skilled workers, technicians, engineers, and managers that might be needed to attract such investors. Furthermore, it should involve an after-investment care, recognizing the demonstration effects from satisfied investors, the potential for reinvestments, and the potential for cluster-development due to follow-up investments.

It is essential to consider the targeted sector (wind, solar, SPH or biomass, respectively) for which investments are required.

Establish the infrastructure needed for a quality investor, including adequate close-by transport facilities (airport, ports), a sufficient and steady supply of energy, a provision of a sufficiently skilled workforce, the facilities for the vocational training of specialized operators, ideally designed in collaboration with the investor.

Policy and other support mechanisms such as Power Purchase Agreements (PPA) play an influential role in underpinning returns and restricting uncertainties for project developers, indirectly supporting the availability of investment. Investors in renewable energy projects have historically relied on government policies to give them confidence about the costs necessary for electricity produced—and therefore for project revenues. Reassurance of future power costs for project developers is secured by signing a PPA with either a utility or an essential corporate buyer of electricity.

FiT have been the most conventional approach around the globe over the last decade to stimulate investments in renewable power projects. Set by the government concerned, they lay down an electricity tariff that developers of qualifying new projects might anticipate to receive for the resulting electricity over a long interval (15–20 years). These present investors in the tax equity of renewable power projects with a credit that they can manage to offset the tax burden outside in their businesses.

Table 29 presents the 2018 renewable energy investment report, source-wise, by the significant players in renewables according to the report of the Bloomberg New Energy Finance Report 2018. As per this report, global investment in renewable energy was USD of 279.8 billion in 2017. The top ten in the total global investments are China (126.1 $BN), the USA (40.5 $BN), Japan (13.4 $BN), India (10.9 $BN), Germany (10.4 $BN), Australia (8.5 $BN), UK (7.6 $BN), Brazil (6.0 $BN), Mexico (6.0 $BN), and Sweden (3.7 $BN) [ 75 ]. This achievement was possible since those countries have well-established strategies for promoting investments [ 76 , 77 ].

The appropriate objectives for renewable power expansion and investments are closely related to the Nationally Determined Contributions (NDCs) objectives, the implementation of the NDC, on the road to achieving Paris promises, policy competence, policy reliability, market absorption capacity, and nationwide investment circumstances that are the real purposes for renewable power expansion, which is a significant factor for the investment strategies, as is shown in Table 30 .

The demand for investments for building a Paris-compatible and climate-resilient energy support remains high, particularly in emerging nations. Future investments in energy grids and energy flexibility are of particular significance. The strategies and the comparison chart between China, India, and the USA are presented in Table 31 .

Table 32 shows France in the first place due to overall favorable conditions for renewables, heading the G20 in investment attractiveness of renewables. Germany drops back one spot due to a decline in the quality of the global policy environment for renewables and some insufficiencies in the policy design, as does the UK. Overall, with four European countries on top of the list, Europe, however, directs the way in providing attractive conditions for investing in renewables. Despite high scores for various nations, no single government is yet close to growing a role model. All countries still have significant room for increasing investment demands to deploy renewables at the scale required to reach the Paris objectives. The table shown is based on the Paris compatible long-term vision, the policy environment for renewable energy, the conditions for system integration, the market absorption capacity, and general investment conditions. India moved from the 11th position to the 9th position in overall investments between 2017 and 2018.

A Paris compatible long-term vision includes a de-carbonization plan for the power system, the renewable power ambition, the coal and oil decrease, and the reliability of renewables policies. Direct support policies include medium-term certainty of policy signals, streamlined administrative procedures, ensuring project realization, facilitating the use of produced electricity. Conditions for system integration include system integration-grid codes, system integration-storage promotion, and demand-side management policies. A market absorption capacity includes a prior experience with renewable technologies, a current activity with renewable installations, and a presence of major renewable energy companies. General investment conditions include non-financial determinants, depth of the financial sector as well, as an inflation forecast.

Employment opportunities for citizens in renewable energy in India

Global employment scenario.

According to the 2018 Annual review of the IRENA [ 78 ], global renewable energy employment touched 10.3 million jobs in 2017, an improvement of 5.3% compared with the quantity published in 2016. Many socio-economic advantages derive from renewable power, but employment continues to be exceptionally centralized in a handful of countries, with China, Brazil, the USA, India, Germany, and Japan in the lead. In solar PV employment (3.4 million jobs), China is the leader (65% of PV Jobs) which is followed by Japan, USA, India, Bangladesh, Malaysia, Germany, Philippines, and Turkey. In biofuels employment (1.9 million jobs), Brazil is the leader (41% of PV Jobs) followed by the USA, Colombia, Indonesia, Thailand, Malaysia, China, and India. In wind employment (1.1 million jobs), China is the leader (44% of PV Jobs) followed by Germany, USA, India, UK, Brazil, Denmark, Netherlands, France, and Spain.

Table 33 shows global renewable energy employment in the corresponding technology branches. As in past years, China maintained the most notable number of people employed (3880 million jobs) estimating for 43% of the globe’s total which is shown in Fig. 8 . In India, new solar installations touched a record of 9.6 GW in 2017, efficiently increasing the total installed capacity. The employment in solar PV improved by 36% and reached 164,400 jobs, of which 92,400 represented on-grid use. IRENA determines that the building and installation covered 46% of these jobs, with operations and maintenance (O&M) representing 35% and 19%, individually. India does not produce solar PV because it could be imported from China, which is inexpensive. The market share of domestic companies (Indian supplier to renewable projects) declined from 13% in 2014–2015 to 7% in 2017–2018. If India starts the manufacturing base, more citizens will get jobs in the manufacturing field. India had the world’s fifth most significant additions of 4.1 GW to wind capacity in 2017 and the fourth largest cumulative capacity in 2018. IRENA predicts that jobs in the wind sector stood at 60,500.

figure 8

Renewable energy employment in selected countries [ 79 ]

The jobs in renewables are categorized into technological development, installation/de-installation, operation, and maintenance. Tables 34 , 35 , 36 , and 37 show the wind industry, solar energy, biomass, and small hydro-related jobs in project development, component manufacturing, construction, operations, and education, training, and research. As technology quickly evolves, workers in all areas need to update their skills through continuing training/education or job training, and in several cases could benefit from professional certification. The advantages of moving to renewable energy are evident, and for this reason, the governments are responding positively toward the transformation to clean energy. Renewable energy can be described as the country’s next employment boom. Renewable energy job opportunities can transform rural economy [ 79 , 80 ]. The renewable energy sector might help to reduce poverty by creating better employment. For example, wind power is looking for specialists in manufacturing, project development, and construction and turbine installation as well as financial services, transportation and logistics, and maintenance and operations.

The government is building more renewable energy power plants that will require a workforce. The increasing investments in the renewable energy sector have the potential to provide more jobs than any other fossil fuel industry. Local businesses and renewable sectors will benefit from this change, as income will increase significantly. Many jobs in this sector will contribute to fixed salaries, healthcare benefits, and skill-building opportunities for unskilled and semi-skilled workers. A range of skilled and unskilled jobs are included in all renewable energy technologies, even though most of the positions in the renewable energy industry demand a skilled workforce. The renewable sector employs semi-skilled and unskilled labor in the construction, operations, and maintenance after proper training. Unskilled labor is employed as truck drivers, guards, cleaning, and maintenance. Semi-skilled labor is used to take regular readings from displays. A lack of consistent data on the potential employment impact of renewables expansion makes it particularly hard to assess the quantity of skilled, semi-skilled, and unskilled personnel that might be needed.

Key findings in renewable energy employment

The findings comprise (a) that the majority of employment in the renewable sector is contract based, and that employees do not benefit from permanent jobs or security. (b) Continuous work in the industry has the potential to decrease poverty. (c) Most poor citizens encounter obstacles to entry-level training and the employment market due to lack of awareness about the jobs and the requirements. (d) Few renewable programs incorporate developing ownership opportunities for the citizens and the incorporation of women in the sector. (e) The inadequacy of data makes it challenging to build relationships between employment in renewable energy and poverty mitigation.

Recommendations for renewable energy employment

When building the capacity, focus on poor people and individuals to empower them with training in operation and maintenance.

Develop and offer training programs for citizens with minimal education and training, who do not fit current programs, which restrict them from working in renewable areas.

Include women in the renewable workforce by providing localized training.

Establish connections between training institutes and renewable power companies to guarantee that (a) trained workers are placed in appropriate positions during and after the completion of the training program and (b) training programs match the requirements of the renewable sector.

Poverty impact assessments might be embedded in program design to know how programs motivate poverty reduction, whether and how they influence the community.

Allow people to have a sense of ownership in renewable projects because this could contribute to the growth of the sector.

The details of the job being offered (part time, full time, contract-based), the levels of required skills for the job (skilled, semi-skilled and unskilled), the socio-economic status of the employee data need to be collected for further analysis.

Conduct investigations, assisted by field surveys, to learn about the influence of renewable energy jobs on poverty mitigation and differences in the standard of living.

Challenges faced by renewable energy in India

The MNRE has been taking dedicated measures for improving the renewable sector, and its efforts have been satisfactory in recognizing various obstacles.

Policy and regulatory obstacles

A comprehensive policy statement (regulatory framework) is not available in the renewable sector. When there is a requirement to promote the growth of particular renewable energy technologies, policies might be declared that do not match with the plans for the development of renewable energy.

The regulatory framework and procedures are different for every state because they define the respective RPOs (Renewable Purchase Obligations) and this creates a higher risk of investments in this sector. Additionally, the policies are applicable for just 5 years, and the generated risk for investments in this sector is apparent. The biomass sector does not have an established framework.

Incentive accelerated depreciation (AD) is provided to wind developers and is evident in developing India’s wind-producing capacity. Wind projects installed more than 10 years ago show that they are not optimally maintained. Many owners of the asset have built with little motivation for tax benefits only. The policy framework does not require the maintenance of the wind projects after the tax advantages have been claimed. There is no control over the equipment suppliers because they undertake all wind power plant development activities such as commissioning, operation, and maintenance. Suppliers make the buyers pay a premium and increase the equipment cost, which brings burden to the buyer.

Furthermore, ready-made projects are sold to buyers. The buyers are susceptible to this trap to save income tax. Foreign investors hesitate to invest because they are exempted from the income tax.

Every state has different regulatory policy and framework definitions of an RPO. The RPO percentage specified in the regulatory framework for various renewable sources is not precise.

RPO allows the SERCs and certain private firms to procure only a part of their power demands from renewable sources.

RPO is not imposed on open access (OA) and captive consumers in all states except three.

RPO targets and obligations are not clear, and the RPO compliance cell has just started on 22.05.2018 to collect the monthly reports on compliance and deal with non-compliance issues with appropriate authorities.

Penalty mechanisms are not specified and only two states in India (Maharashtra and Rajasthan) have some form of penalty mechanisms.

The parameter to determine the tariff is not transparent in the regulatory framework and many SRECs have established a tariff for limited periods. The FiT is valid for only 5 years, and this affects the bankability of the project.

Many SERCs have not decided on adopting the CERC tariff that is mentioned in CERCs regulations that deal with terms and conditions for tariff determinations. The SERCs have considered the plant load factor (PLF) because it varies across regions and locations as well as particular technology. The current framework does not fit to these issues.

Third party sale (TPS) is not allowed because renewable generators are not allowed to sell power to commercial consumers. They have to sell only to industrial consumers. The industrial consumers have a low tariff and commercial consumers have a high tariff, and SRCS do not allow OA. This stops the profit for the developers and investors.

Institutional obstacles

Institutes, agencies stakeholders who work under the conditions of the MNRE show poor inter-institutional coordination. The progress in renewable energy development is limited by this lack of cooperation, coordination, and delays. The delay in implementing policies due to poor coordination, decrease the interest of investors to invest in this sector.

The single window project approval and clearance system is not very useful and not stable because it delays the receiving of clearances for the projects ends in the levy of a penalty on the project developer.

Pre-feasibility reports prepared by concerned states have some deficiency, and this may affect the small developers, i.e., the local developers, who are willing to execute renewable projects.

The workforce in institutes, agencies, and ministries is not sufficient in numbers.

Proper or well-established research centers are not available for the development of renewable infrastructure.

Customer care centers to guide developers regarding renewable projects are not available.

Standards and quality control orders have been issued recently in 2018 and 2019 only, and there are insufficient institutions and laboratories to give standards/certification and validate the quality and suitability of using renewable technology.

Financial and fiscal obstacles

There are a few budgetary constraints such as fund allocation, and budgets that are not released on time to fulfill the requirement of developing the renewable sector.

The initial unit capital costs of renewable projects are very high compared to fossil fuels, and this leads to financing challenges and initial burden.

There are uncertainties related to the assessment of resources, lack of technology awareness, and high-risk perceptions which lead to financial barriers for the developers.

The subsidies and incentives are not transparent, and the ministry might reconsider subsidies for renewable energy because there was a sharp fall in tariffs in 2018.

Power purchase agreements (PPA) signed between the power purchaser and power generators on pre-determined fixed tariffs are higher than the current bids (Economic survey 2017–2018 and union budget on the 01.02.2019). For example, solar power tariff dropped to 2.44 INR (0. 04 USD) per unit in May 2017, wind power INR 3.46 per unit in February 2017, and 2.64 INR per unit in October 2017.

Investors feel that there is a risk in the renewable sector as this sector has lower gross returns even though these returns are relatively high within the market standards.

There are not many developers who are interested in renewable projects. While newly established developers (small and local developers) do not have much of an institutional track record or financial input, which are needed to develop the project (high capital cost). Even moneylenders consider it risky and are not ready to provide funding. Moneylenders look exclusively for contractors who have much experience in construction, well-established suppliers with proven equipment and operators who have more experience.

If the performance of renewable projects, which show low-performance, faces financial obstacles, they risks the lack of funding of renewable projects.

Financial institutions such as government banks or private banks do not have much understanding or expertise in renewable energy projects, and this imposes financial barriers to the projects.

Delay in payment by the SERCs to the developers imposes debt burden on the small and local developers because moneylenders always work with credit enhancement mechanisms or guarantee bonds signed between moneylenders and the developers.

Market obstacles

Subsidies are adequately provided to conventional fossil fuels, sending the wrong impression that power from conventional fuels is of a higher priority than that from renewables (unfair structure of subsidies)

There are four renewable markets in India, the government market (providing budgetary support to projects and purchase the output of the project), the government-driven market (provide budgetary support or fiscal incentives to promote renewable energy), the loan market (taking loan to finance renewable based applications), and the cash market (buying renewable-based applications to meet personal energy needs by individuals). There is an inadequacy in promoting the loan market and cash market in India.

The biomass market is facing a demand-supply gap which results in a continuous and dramatic increase in biomass prices because the biomass supply is unreliable (and, as there is no organized market for fuel), and the price fluctuations are very high. The type of biomass is not the same in all the states of India, and therefore demand and price elasticity is high for biomass.

Renewable power was calculated based on cost-plus methods (adding direct material cost, direct labor cost, and product overhead cost). This does not include environmental cost and shields the ecological benefits of clean and green energy.

There is an inadequate evacuation infrastructure and insufficient integration of the grid, which affects the renewable projects. SERCs are not able to use all generated power to meet the needs because of the non-availability of a proper evacuation infrastructure. This has an impact on the project, and the SERCs are forced to buy expensive power from neighbor states to fulfill needs.

Extending transmission lines is not possible/not economical for small size projects, and the seasonality of generation from such projects affect the market.

There are few limitations in overall transmission plans, distribution CapEx plans, and distribution licenses for renewable power. Power evacuation infrastructure for renewable energy is not included in the plans.

Even though there is an increase in capacity for the commercially deployed renewable energy technology, there is no decline in capital cost. This cost of power also remains high. The capital cost quoted by the developers and providers of equipment is too high due to exports of machinery, inadequate built up capacity, and cartelization of equipment suppliers (suppliers join together to control prices and limit competition).

There is no adequate supply of land, for wind, solar, and solar thermal power plants, which lead to poor capacity addition in many states.

Technological obstacles

Every installation of a renewable project contributes to complex risk challenges from environmental uncertainties, natural disasters, planning, equipment failure, and profit loss.

MNRE issued the standardization of renewable energy projects policy on the 11th of December 2017 (testing, standardization, and certification). They are still at an elementary level as compared to international practices. Quality assurance processes are still under starting conditions. Each success in renewable energy is based on concrete action plans for standards, testing and certification of performance.

The quality and reliability of manufactured components, imported equipment, and subsystems is essential, and hence quality infrastructure should be established. There is no clear document related to testing laboratories, referral institutes, review mechanism, inspection, and monitoring.

There are not many R&D centers for renewables. Methods to reduce the subsidies and invest in R&D lagging; manufacturing facilities are just replicating the already available technologies. The country is dependent on international suppliers for equipment and technology. Spare parts are not manufactured locally and hence they are scarce.

Awareness, education, and training obstacles

There is an unavailability of appropriately skilled human resources in the renewable energy sector. Furthermore, it faces an acute workforce shortage.

After installation of renewable project/applications by the suppliers, there is no proper follow-up or assistance for the workers in the project to perform maintenance. Likewise, there are not enough trained and skilled persons for demonstrating, training, operation, and maintenance of the plant.

There is inadequate knowledge in renewables, and no awareness programs are available to the general public. The lack of awareness about the technologies is a significant obstacle in acquiring vast land for constructing the renewable plant. Moreover, people using agriculture lands are not prepared to give their land to construct power plants because most Indians cultivate plants.

The renewable sector depends on the climate, and this varying climate also imposes less popularity of renewables among the people.

The per capita income is low, and the people consider that the cost of renewables might be high and they might not be able to use renewables.

The storage system increases the cost of renewables, and people believe it too costly and are not ready to use them.

The environmental benefits of renewable technologies are not clearly understood by the people and negative perceptions are making renewable technologies less prevalent among them.

Environmental obstacles

A single wind turbine does not occupy much space, but many turbines are placed five to ten rotor diameters from each other, and this occupies more area, which include roads and transmission lines.

In the field of offshore wind, the turbines and blades are bigger than onshore wind turbines, and they require a substantial amount of space. Offshore installations affect ocean activities (fishing, sand extraction, gravel extraction, oil extraction, gas extraction, aquaculture, and navigation). Furthermore, they affect fish and other marine wildlife.

Wind turbines influence wildlife (birds and bats) because of the collisions with them and due to air pressure changes caused by wind turbines and habitat disruption. Making wind turbines motionless during times of low wind can protect birds and bats but is not practiced.

Sound (aerodynamic, mechanical) and visual impacts are associated with wind turbines. There is poor practice by the wind turbine developers regarding public concerns. Furthermore, there are imperfections in surfaces and sound—absorbent material which decrease the noise from turbines. The shadow flicker effect is not taken as severe environmental impact by the developers.

Sometimes wind turbine material production, transportation of materials, on-site construction, assembling, operation, maintenance, dismantlement, and decommissioning may be associated with global warming, and there is a lag in this consideration.

Large utility-scale solar plants require vast lands that increase the risk of land degradation and loss of habitat.

The PV cell manufacturing process includes hazardous chemicals such as 1-1-1 Trichloroethene, HCL, H 2 SO 4 , N 2 , NF, and acetone. Workers face risks resulting from inhaling silicon dust. The manufacturing wastes are not disposed of properly. Proper precautions during usage of thin-film PV cells, which contain cadmium—telluride, gallium arsenide, and copper-indium-gallium-diselenide are missing. These materials create severe public health threats and environmental threats.

Hydroelectric power turbine blades kill aquatic ecosystems (fish and other organisms). Moreover, algae and other aquatic weeds are not controlled through manual harvesting or by introducing fish that can eat these plants.

Discussion and recommendations based on the research

Policy and regulation advancements.

The MNRE should provide a comprehensive action plan or policy for the promotion of the renewable sector in its regulatory framework for renewables energy. The action plan can be prepared in consultation with SERCs of the country within a fixed timeframe and execution of the policy/action plan.

The central and state government should include a “Must run status” in their policy and follow it strictly to make use of renewable power.

A national merit order list for renewable electricity generation will reduce power cost for the consumers. Such a merit order list will help in ranking sources of renewable energy in an ascending order of price and will provide power at a lower cost to each distribution company (DISCOM). The MNRE should include that principle in its framework and ensure that SERCs includes it in their regulatory framework as well.

SERCs might be allowed to remove policies and regulatory uncertainty surrounding renewable energy. SERCs might be allowed to identify the thrust areas of their renewable energy development.

There should be strong initiatives from municipality (local level) approvals for renewable energy-based projects.

Higher market penetration is conceivable only if their suitable codes and standards are adopted and implemented. MNRE should guide minimum performance standards, which incorporate reliability, durability, and performance.

A well-established renewable energy certificates (REC) policy might contribute to an efficient funding mechanism for renewable energy projects. It is necessary for the government to look at developing the REC ecosystem.

The regulatory administration around the RPO needs to be upgraded with a more efficient “carrot and stick” mechanism for obligated entities. A regulatory mechanism that both remunerations compliance and penalizes for non-compliance may likely produce better results.

RECs in India should only be traded on exchange. Over-the-counter (OTC) or off-exchange trading will potentially allow greater participation in the market. A REC forward curve will provide further price determination to the market participants.

The policymakers should look at developing and building the REC market.

Most states have defined RPO targets. Still, due to the absence of implemented RPO regulations and the inadequacy of penalties when obligations are not satisfied, several of the state DISCOMs are not complying completely with their RPO targets. It is necessary that all states adhere to the RPO targets set by respective SERCs.

The government should address the issues such as DISCOM financials, must-run status, problems of transmission and evacuation, on-time payments and payment guarantees, and deemed generation benefits.

Proper incentives should be devised to support utilities to obtain power over and above the RPO mandated by the SERC.

The tariff orders/FiTs must be consistent and not restricted for a few years.

Transmission requirements

The developers are worried that transmission facilities are not keeping pace with the power generation. Bays at the nearest substations are occupied, and transmission lines are already carrying their full capacity. This is due to the lack of coordination between MNRE and the Power Grid Corporation of India (PGCIL) and CEA. Solar Corporation of India (SECI) is holding auctions for both wind and solar projects without making sure that enough evacuation facilities are available. There is an urgent need to make evacuation plans.

The solution is to develop numerous substations and transmission lines, but the process will take considerably longer time than the currently under-construction projects take to get finished.

In 2017–2018, transmission lines were installed under the green energy corridor project by the PGCIL, with 1900 circuit km targeted in 2018–2019. The implementation of the green energy corridor project explicitly meant to connect renewable energy plants to the national grid. The budget allocation of INR 6 billion for 2018–2019 should be increased to higher values.

The mismatch between MNRE and PGCIL, which are responsible for inter-state transmission, should be rectified.

State transmission units (STUs) are responsible for the transmission inside the states, and their fund requirements to cover the evacuation and transmission infrastructure for renewable energy should be fulfilled. Moreover, STUs should be penalized if they fail to fulfill their responsibilities.

The coordination and consultation between the developers (the nodal agency responsible for the development of renewable energy) and STUs should be healthy.

Financing the renewable sector

The government should provide enough budget for the clean energy sector. China’s annual budget for renewables is 128 times higher than India’s. In 2017, China spent USD 126.6 billion (INR 9 lakh crore) compared to India’s USD 10.9 billion (INR 75500 crore). In 2018, budget allocations for grid interactive wind and solar have increased but it is not sufficient to meet the renewable target.

The government should concentrate on R&D and provide a surplus fund for R&D. In 2017, the budget allotted was an INR 445 crore, which was reduced to an INR 272.85 crore in 2016. In 2017–2018, the initial allocation was an INR 144 crore that was reduced to an INR 81 crore during the revised estimates. Even the reduced amounts could not be fully used, there is an urgent demand for regular monitoring of R&D and the budget allocation.

The Goods and Service Tax (GST) that was introduced in 2017 worsened the industry performance and has led to an increase in costs and poses a threat to the viability of the ongoing projects, ultimately hampering the target achievement. These GST issues need to be addressed.

Including the renewable sector as a priority sector would increase the availability of credit and lead to a more substantial participation by commercial banks.

Mandating the provident funds and insurance companies to invest the fixed percentage of their portfolio into the renewable energy sector.

Banks should allow an interest rebate on housing loans if the owner is installing renewable applications such as solar lights, solar water heaters, and PV panels in his house. This will encourage people to use renewable energy. Furthermore, income tax rebates also can be given to individuals if they are implementing renewable energy applications.

Improvement in manufacturing/technology

The country should move to domestic manufacturing. It imports 90% of its solar cell and module requirements from Malaysia, China, and Taiwan, so it is essential to build a robust domestic manufacturing basis.

India will provide “safeguard duty” for merely 2 years, and this is not adequate to build a strong manufacturing basis that can compete with the global market. Moreover, safeguard duty would work only if India had a larger existing domestic manufacturing base.

The government should reconsider the safeguard duty. Many foreign companies desiring to set up joint ventures in India provide only a lukewarm response because the given order in its current form presents inadequate safeguards.

There are incremental developments in technology at regular periods, which need capital, and the country should discover a way to handle these factors.

To make use of the vast estimated renewable potential in India, the R&D capability should be upgraded to solve critical problems in the clean energy sector.

A comprehensive policy for manufacturing should be established. This would support capital cost reduction and be marketed on a global scale.

The country should initiate an industry-academia partnership, which might promote innovative R&D and support leading-edge clean power solutions to protect the globe for future generations.

Encourage the transfer of ideas between industry, academia, and policymakers from around the world to develop accelerated adoption of renewable power.

Awareness about renewables

Social recognition of renewable energy is still not very promising in urban India. Awareness is the crucial factor for the uniform and broad use of renewable energy. Information about renewable technology and their environmental benefits should reach society.

The government should regularly organize awareness programs throughout the country, especially in villages and remote locations such as the islands.

The government should open more educational/research organizations, which will help in spreading knowledge of renewable technology in society.

People should regularly be trained with regard to new techniques that would be beneficial for the community.

Sufficient agencies should be available to sell renewable products and serve for technical support during installation and maintenance.

Development of the capabilities of unskilled and semiskilled workers and policy interventions are required related to employment opportunities.

An increase in the number of qualified/trained personnel might immediately support the process of installations of renewables.

Renewable energy employers prefer to train employees they recruit because they understand that education institutes fail to give the needed and appropriate skills. The training institutes should rectify this issue. Severe trained human resources shortages should be eliminated.

Upgrading the ability of the existing workforce and training of new professionals is essential to achieve the renewable goal.

Hybrid utilization of renewables

The country should focus on hybrid power projects for an effective use of transmission infrastructure and land.

India should consider battery storage in hybrid projects, which support optimizing the production and the power at competitive prices as well as a decrease of variability.

Formulate mandatory standards and regulations for hybrid systems, which are lagging in the newly announced policies (wind-solar hybrid policy on 14.05.2018).

The hybridization of two or more renewable systems along with the conventional power source battery storage can increase the performance of renewable technologies.

Issues related to sizing and storage capacity should be considered because they are key to the economic viability of the system.

Fiscal and financial incentives available for hybrid projects should be increased.

The renewable sector suffers notable obstacles. Some of them are inherent in every renewable technology; others are the outcome of a skewed regulative structure and marketplace. The absence of comprehensive policies and regulation frameworks prevent the adoption of renewable technologies. The renewable energy market requires explicit policies and legal procedures to enhance the attention of investors. There is a delay in the authorization of private sector projects because of a lack of clear policies. The country should take measures to attract private investors. Inadequate technology and the absence of infrastructure required to establish renewable technologies should be overcome by R&D. The government should allow more funds to support research and innovation activities in this sector. There are insufficiently competent personnel to train, demonstrate, maintain, and operate renewable energy structures and therefore, the institutions should be proactive in preparing the workforce. Imported equipment is costly compared to that of locally manufactured; therefore, generation of renewable energy becomes expensive and even unaffordable. Hence, to decrease the cost of renewable products, the country should become involve in the manufacturing of renewable products. Another significant infrastructural obstacle to the development of renewable energy technologies is unreliable connectivity to the grid. As a consequence, many investors lose their faith in renewable energy technologies and are not ready to invest in them for fear of failing. India should work on transmission and evacuation plans.

Inadequate servicing and maintenance of facilities and low reliability in technology decreases customer trust in some renewable energy technologies and hence prevent their selection. Adequate skills to repair/service the spare parts/equipment are required to avoid equipment failures that halt the supply of energy. Awareness of renewable energy among communities should be fostered, and a significant focus on their socio-cultural practices should be considered. Governments should support investments in the expansion of renewable energy to speed up the commercialization of such technologies. The Indian government should declare a well-established fiscal assistance plan, such as the provision of credit, deduction on loans, and tariffs. The government should improve regulations making obligations under power purchase agreements (PPAs) statutorily binding to guarantee that all power DISCOMs have PPAs to cover a hundred percent of their RPO obligation. To accomplish a reliable system, it is strongly suggested that renewables must be used in a hybrid configuration of two or more resources along with conventional source and storage devices. Regulatory authorities should formulate the necessary standards and regulations for hybrid systems. Making investments economically possible with effective policies and tax incentives will result in social benefits above and beyond the economic advantages.

Availability of data and materials

Not applicable.


Accelerated depreciation

Billion units

Central Electricity Authority of India

Central electricity regulatory commission

Central financial assistance

Expression of interest

Foreign direct investment


Ministry of new and renewable energy

Research and development

Renewable purchase obligations

State electricity regulatory

Small hydropower

Terawatt hours

Waste to energy

Chr.Von Zabeltitz (1994) Effective use of renewable energies for greenhouse heating. Renewable Energy 5:479-485.

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The authors gratefully acknowledge the support provided by the Research Consultancy Institute (RCI) and the department of Electrical and Computer Engineering of Effat University, Saudi Arabia.

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Kumar. J, C.R., Majid, M.A. Renewable energy for sustainable development in India: current status, future prospects, challenges, employment, and investment opportunities. Energ Sustain Soc 10 , 2 (2020). https://doi.org/10.1186/s13705-019-0232-1

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Renewables Integration in India

About this report, executive summary, india’s demand for energy is growing rapidly.

India is the third largest energy-consuming country in the world. It has become one of the largest sources of energy demand growth globally and has made significant progress towards its universal electrification target for residential users, with 100 million people gaining access in 2018 alone. Per capita electricity consumption across the 28 Indian states and eight union territories is still around a third of the world average, and is expected to continue increasing despite the government’s intention to pursue strong energy efficiency standards, including LED lighting, efficient cooling and building standards. Total Indian electricity demand has begun to expand again following a significant decline in 2020 due to Covid-19. The pandemic has affected the financial viability of the electricity distribution companies (DISCOMs), which were already struggling with mounting debts and a liquidity crunch.

India faces three principal challenges: (1) how to expand reliable energy access and use while maintaining affordability for consumers and financial stability for the DISCOMs; (2) how, at the same time, to integrate increasing shares of renewable energy in a secure and reliable manner; and (3) how to reduce emissions to achieve ambitious social and climate objectives while meeting economic goals.

Growing renewables increasingly challenge the power system

Renewable energy penetration is highly variable by state in India. The share of solar and wind in India’s ten renewables-rich states (Tamil Nadu, Karnataka, Gujarat, Rajasthan, Andhra Pradesh, Maharashtra, Madhya Pradesh, Telangana, Punjab and Kerala) is significantly higher than the national average of 8.2%. Solar and wind account for around 29% of annual electricity generation in Karnataka, 20% in Rajasthan, 18% in Tamil Nadu and 14% in Gujarat (financial year [FY] 2020/21). India’s renewables-rich states already have a higher share of variable renewable energy (VRE) than most countries internationally. As a result, many states are already facing system integration challenges.

Countries and regions in phases of renewables integration, 2019

Furthermore, in the coming decade the Indian power system is due to undergo an even more profound transformation. The government plans to increase renewable generating capacity from 175 GW in 2022 to 450 GW in 2030. Some state leaders have expressed concern that they will face excess VRE generation and the need to: (1) export significantly more power to other states; (2) allow renewables to displace some coal power plants locally; or (3) curtail more solar and wind to ensure system security. Recent trends underlying the main renewables integration challenges include the increasing variability of hourly demand, increasing ramping requirements due to the impact of solar on net demand, short-term frequency variations and local voltage issues.

While the Power System Operation Corporation (POSOCO), a wholly owned public sector undertaking under the Ministry of Power, highlighted that national-level inertia has declined slightly from the 2014 level at certain times, India does not yet face system inertia challenges. However, with future increases in solar and wind power, the renewables-rich states will experience periods when wind and solar make up the majority of generation, and it will then become imperative to monitor local system strength and inertia requirements. The report covers important international experience in managing systems with declining inertia levels.

Indian states should leverage all potential sources of power system flexibility to maximise the value of solar and wind

This report highlights potential sources of power system flexibility in renewables-rich Indian states, including demand-side flexibility, power plant flexibility, storage (pumped-storage hydro and batteries) and grid flexibility, as well as policy, market and regulatory solutions that can be implemented in the short to medium term until 2030. The optimal mix of flexibility resources needs to be determined for each state, taking into account the regional and national context. For example, there are trade-offs between investing in batteries, pumped-storage hydro, demand response and coal power plants that depend upon the existing generation and demand profiles of each system. This report fills a gap in the international literature by focusing on renewables integration in individual states, rather than at the national level in India. It builds on the ongoing power sector stakeholder engagement that the IEA and NITI Aayog have been leading since 2018, including the outcomes of a series of workshops in recent years – one national, four regional and three state level – and the related in-depth analysis. The report also draws on two detailed production cost models developed by the IEA to illustrate flexibility challenges and solutions: a five‑region India Regional Power System Model and a Gujarat State Power System Model. Power system flexibility challenges, solutions and priorities are very different in each state. This report highlights the findings applicable to multiple states in India, and potentially across the globe.

Policy and tariff reforms can tap into demand response potential

Power system transformation in India will be supported by the transformation of electricity demand from passive consumption to more proactive participation by demand sectors. Agricultural users already play an important role in balancing power supply and demand through involuntary irrigation load shifting, and the IEA analysis foresees more active participation from the agricultural sector, buildings (including cooling) and industry by 2030.

The existing agricultural demand shift from high to low demand hours already provides a significant source of low-cost power system flexibility in India, and has assisted some states in reaching high levels of solar and wind penetration without major system events. This shift has been largely enabled by the availability and use of existing distribution networks dedicated to agricultural users in certain states, which allow the system operator to control irrigation loads without impacting other grid users. Looking ahead, transitioning from involuntary agricultural demand shift to proactive agricultural demand response (e.g. active response to a price signal) can be one of the most cost-effective solutions to improve power system flexibility, although its use must be balanced against the potential impact on the water stress of each region. 

Solar generation absorption with limited flexibility, projections for 2030

Solar generation absorption with agricultural demand shift, projections for 2030.

Time-of-day (or time-of-use) tariffs for industry are offered in most states as the basis of the existing industrial demand response incentive. In the medium to longer term, a shift towards time-of-use tariffs as the default option is recommended, following the rollout of advanced metering infrastructure, for the activation of demand response potential from buildings and transport (such as cooling and electric vehicle [EV] smart charging). On the residential side, shifting towards advanced digital metering, automation and smart home appliances is a prerequisite, whilst ensuring cybersecurity and avoiding proprietary standards that could limit interoperability and consumer choice.

Rooftop solar systems need to be monitored and managed

State system operators and DISCOMs are concerned about the rise of rooftop solar systems, due to their impact on DISCOM financial stability (from revenue loss), distribution system issues (from reactive power, voltage impacts and reverse power flows) and demand forecast uncertainty. This report highlights international experiences, illustrating how these can become system-friendly assets and support the low-voltage network with voltage stability and reactive power. To improve the visibility of rooftop solar assets in India, connection codes need to stipulate the registration of individual systems, with state- and national-level registers of these assets. The rooftop solar database should first be built in states. Later, a national-level standardised interface and data model can bring more efficiency and transparency. Requiring all rooftop solar customers to be on time-of-use tariffs can help mitigate the revenue loss suffered by DISCOMs while also balancing the shift in costs between consumers with rooftop solar and consumers without it. Regularly revisiting time-of-use timeslots will be required as rooftop solar additions and demand response reshape the state demand curves. 

New regulatory and policy frameworks can activate more flexibility from storage and power plants

Most states are concerned about the future role of existing coal-fired power plants. Coal plants are expected to operate less as renewable technologies supply more generation, which leads to reduced revenues. At the same time, to operate flexibly and meet stricter emissions standards, some coal plants may also require further investment. Such investment needs to be weighed against investment in flexibility sources in other parts of the system (storage, demand and grids) and emission reduction targets. Government officials are also concerned that historical dependence on long-term power procurement contracts as the tool for ensuring capacity adequacy creates an economic burden by locking in long-term fixed capacity payments to coal power plants.

In the Stated Policies Scenario (STEPS) of the IEA World Energy Outlook (WEO), coal capacity in the Indian power system will increase to 269 GW by 2030 compared to 235 GW in 2019. The analytical results of the IEA India Regional Power System Model show that the use of coal power plants in India will change dramatically by 2030. Use will shift from typically steady baseload operation to frequent operation near minimum and maximum output levels. Coal plants in some states have the potential to better support the integration of high shares of VRE with increased flexibility, such as faster ramp rates, lower technical minimum levels and shorter start-up times. Additional flexibility, however, requires new investment and new compensation designs for these power plants. In contrast to the current tariff structures focused on capacity and energy payments, emphasis should be placed on tariff and market-based compensation for flexibility.

Retrofitting hydropower plants to allow operation in pumped-storage mode seems to be the preferred storage solution in many states in India. However, batteries are also likely to play an important role in India. Analysis by the Lawrence Berkeley National Laboratory suggests that battery storage coupled with solar farms can be a more cost-effective solution than pumped-storage hydro retrofits for morning peaks or evening ramps requiring a storage duration of less than six hours. The optimal sizing and location of battery storage will differ by region and requires detailed studies in each state. 

Changes to wholesale markets and power purchase agreements can remove barriers to interstate trade

The current regulatory and market frameworks present significant gaps and barriers for power system flexibility resources, including demand response, batteries, pumped-storage hydro and power plant flexibility. Comprehensively reviewing and removing the wholesale and retail market barriers to new technologies and creating an equal playing field for all resources is an important ongoing task not only in India, but worldwide.

India’s wholesale power trade achieved important milestones in 2020, with improved trading across Indian states and the introduction of real-time markets and green markets. Since 2020 the real-time market has filled an important gap by providing corrections on an hour ahead timeframe for variable and uncertain generation such as solar and wind. The newly established green market enables clients such as the DISCOMs to fulfil the states’ renewable purchase obligations through market purchases.

Analysis based on the IEA India Regional Power System Model suggests that additional power trading across states is an effective renewables integration solution that could reduce curtailment by around 2.5% in the STEPS in 2030. However, significant barriers remain to reach this potential. These include: (1) the lack of transmission capacity available for interstate trade; (2) the low level of liquidity in wholesale markets; and (3) the inflexible existing contractual structures, namely long-term physical purchase power agreements (PPAs) between the DISCOMs and generators (also contributing to the low liquidity).

States will need to weigh the costs and benefits of potential new transmission investment against the costs and benefits of other flexibility options. In India existing long-term physical PPAs represent about 90‑95% of total generation. The current practice of using these PPAs to meet resource adequacy requirements may not be the most cost-effective tool for achieving resource adequacy. Existing PPAs also pose a barrier to improved power system flexibility from both interstate trade and power plant flexibility. Thus, states could consider creating alternative resource adequacy mechanisms and using financial PPAs. In the longer term, a sophisticated financial market for power sector products could be introduced in India.

Flexibility reduces curtailment, and lower curtailment means reduced system operating costs and lower CO2 emissions

Reduction in curtailment, co2 emissions and operating costs due to combined flexibility options in india and gujarat.

Some level of curtailment is present in most systems with high solar and wind penetration – typically up to 3% of annual solar and wind output.

While renewables have must-run status in India, renewable generators can be curtailed due to system security considerations. For example, states such as Tamil Nadu and Karnataka have seen solar and wind curtailment in recent years.

Increasing solar and wind generation curtailment and lack of related mitigation policies are a major concern, particularly for investors. Power sector investment in India fell by USD 10 billion to USD 39 billion in 2020, including a decline in solar and wind investment, mainly due to the impacts of Covid-19. Improving investor confidence will be important in the coming years as India aspires to attract greater power system investment. To better address curtailment risk, discussions on the future of the must-run status of solar and wind must continue. Formulating practical contractual structures and policies related to compensation for curtailment will be critical.

Increasing power system flexibility enables the integration of higher shares of solar and wind generation. As a result, for a given amount of solar and wind capacity, a larger share of renewables can be utilised. This is illustrated in the two models presented in this report. Lower curtailment also brings about the benefits of reduced system operating costs and lower CO 2 emissions.

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How India’s renewable energy sector survived and thrived in a turbulent 2020

Workers clean photovoltaic panels inside a solar power plant in Gujarat, India, in this July 2, 2015 file photo. The likely collapse of SunEdison Inc's solar project in India, the first of 32 planned "ultra mega" complexes, could delay Prime Minister Narendra Modi's goal to increase renewable energy fivefold by several years and probably cost consumers more. REUTERS/Amit Dave/Files - GF10000372053

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Stay up to date:, decarbonizing energy.

  • 2020 proved to be a decisive year for clean energy in India.
  • Record-low solar tariffs and flexible clean power auctions have pushed India’s renewable energy growth, despite disruption from the pandemic.
  • Power demand is expected to triple by 2040, leading many to ask if renewables can be developed fast enough to keep up?

Last March, the Indian government implemented one of the most stringent coronavirus lockdowns in the world. With just a few hours’ notice, all 1.3 billion people in the country were ordered to stay at home for several weeks. Ongoing restrictions to limit the spread of the virus crippled economic activity. Businesses closed. Workers fled from cities. And India’s clean energy transition was put on pause .

Looking back, however, 2020 proved to be a decisive year for clean energy in India.

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Bids for new solar projects hit record lows last year, affirming that coal is no longer the cheapest source of electricity. The country awarded landmark supply contracts for flexible renewable power, an important step in addressing the limitations of intermittent wind and solar. Cheap renewables were favored on the grid last year, which caused coal use to fall as energy demand plummeted amid the economic slowdown. Stimulus measures for utilities, an extension to project commissioning deadlines, and domestic solar manufacturing initiatives also helped to bolster the outlook for renewables.

But while the renewable energy industry endured a turbulent 2020, coal remains the dominant player in India’s electricity mix. With power demand expected to triple by 2040 as India’s population continues to achieve upward mobility, fossil fuels are poised to see continued growth even as the clean energy market thrives.

Two burning questions for India — and the world — are how fast the use of renewables and related clean energy technologies can scale, and to what extent can they mitigate the increase in fossil fuel use. As the second-largest coal-producing and -consuming country on earth and the third-largest emitter of greenhouse gases, India’s transition from carbon-intensive resources is a critical front in the global climate change fight.

Challenges lie ahead, but there may be cause for optimism. As the country grapples with the intertwined issues of air pollution, water scarcity and energy security, along with energy access and affordability, experts say they’re starting to see a future for India where coal will no longer be king.

"Despite the pandemic, there has been a slew of challenges for coal mining and generation, and the government is becoming clearer that energy transition is on track even as the economic recovery continues to take shape,” said Aarti Khosla, founder and director of Climate Trends, a Delhi-based strategic communications initiative, and former communication lead for WWF India.

“The energy transition is gathering speed,” she said. “It's no more a question of if the transition will happen or not. It's only a question of what the pace of the transition will be.”

Modi: India on track to "exceed" its renewable targets

Speaking at the United Nations Climate Ambition Summit in mid-December, Prime Minister Narendra Modi declared that India is on track to reach, and ultimately exceed, its ambitious renewable energy targets.

“India has reduced its emission intensity by 21 percent over 2005 levels,” he said at the virtual event, which marked five years since the adoption of the Paris Agreement on Climate Change. “Our renewable energy capacity is the fourth largest in the world. It will reach 175 gigawatts before 2022.”

India’s total installed capacity of renewable energy, not including hydropower, currently stands at 90 gigawatts. According to a year-end review by the Ministry of New and Renewable Energy, another 49.59 gigawatts of renewable energy capacity is under installation, and an additional 27.41 gigawatts of capacity has been tendered. This puts the total capacity of renewable energy projects already commissioned or in the pipeline at nearly 167 gigawatts.

Modi recently announced that he expects the country’s clean energy capacity to reach 220 megawatts by 2022 — besting the country’s 175-gigawatt target. India has an even more ambitious target of 450 gigawatts of renewable energy capacity by 2030. By that year, the government wants to meet half of the country's power demand with renewable energy resources.

“India is not only on track to achieve Paris targets but to exceed them beyond your expectations,” Modi said at the climate summit last month.

While leadership reaffirmed the country’s lofty goals, the pace of renewable energy deployment in India slowed significantly in 2020. Solar installations in the first nine months of the year totaled 1.73 gigawatts, marking a 68 percent decline from the same period in 2019, according to Mercom India Research . Wind installations also fell dramatically .

a chart showing solar installations by quarter from 2017 to 2020 in India

Still, India’s renewables industry weathered the market turbulence. Central and state governments took steps to support the domestic clean energy sector last year, which have put low-carbon energy resources in a position to see continued growth and claim a greater share of India’s coal-heavy power system.

Record-low solar bids and "must-run" status

One key action the Modi government took to bolster clean energy in 2020 was to grant wind and solar projects “must-run” status, which means that their power cannot be curtailed except in conditions that would compromise grid stability. Renewables were insulated from the decline in electricity demand as a result, while coal plants took a major hit.

During the 2019/2020 fiscal year, the average coal-fired power plant ran just 55.5 percent of the time, according to the Institute for Energy Economics and Financial Analysis (IEEFA) . In April 2020, the average Indian coal-fired power plant operated at just 40 percent capacity utilization, creating inefficiencies and ultimately increasing the cost of production.

a chart showing how much power different types of energy generated in india

In addition to granting renewables must-run status through the pandemic, the government launched multiple tenders for new renewable energy projects to meet India’s future energy demand. Not only did the auctions continue but the country also saw a series of record-low solar bids.

Last month, a 500-megawatt solar auction held by utility Gujarat Urja Vikas Nigam Limited set a new record for the lowest price in India of INR 1.99 ($0.0269) per kilowatt-hour.

The latest auction results narrowly beat a record set just a few weeks prior. In late November, state-owned Solar Energy Corporation of India announced the outcome of a 1.07-gigawatt solar auction in Rajasthan that attracted bids of INR 2 ($0.0270) per kilowatt-hour from Saudi Arabia-based Aljomaih Energy and Water Co. and Sembcorp Energy’s India arm Green Infra Wind Energy Ltd.

These recent historic bids are 15 percent lower than the previous Indian record of INR 2.36 ($0.032) per kilowatt-hour, submitted by Spanish developer Solarpack in an auction held earlier in the year. In addition, developers set a new record for solar-wind hybrid projects, quoting a price of INR 2.41 ($0.0326) per kilowatt-hour.

“Solar is now by far the lowest-cost source of new energy in India,” said Tim Buckley, director of energy finance studies for Australia and South Asia for IEEFA. Solar is helping to meet the country’s objective of making power affordable to low-income residents, he said. But that is far from the only benefit.

“India's economy is going to see its energy consumption double over the next decade or two, and they want to enhance energy security, which means they want to ideally use domestic energy supplies,” said Buckley. “They also have a massive air pollution problem, so they want to reduce the air pollution issues. They have a massive water security issue, too…so they want to use energy sources that are least taxing on their water supply. Solar ticks every one of those boxes.”

“And...it doesn't emit carbon dioxide or methane,” he added. “So there's an ancillary benefit that it helps solve the world's climate crisis.”

The combination of low-cost financing and expected solar module cost declines are among the key factors driving down solar prices in India today. Delivering on this year’s record-low solar bids will be a challenge; it will require developers to deploy the latest technology and accurately estimate costs for every project component.

But while the recent bid prices set a tough standard for the Indian solar industry, IEEFA analysts say that it demonstrates investor confidence in the sector and opportunities for continued cost reductions as the country strives to create a more sustainable and domestic-based energy system.

A boost for domestic solar manufacturing

In a testament to India's growing demand for low-cost and locally manufactured power, Indian power minister R.K. Singh announced last fall that the country would boost its domestic solar manufacturing base to reduce reliance on solar cells and modules imported from China. He also announced that renewables would replace the generating capacity from 29 coal plants slated to retire in the coming years.

State-owned enterprise Coal India — the largest coal-producing company in the world — announced that it will enter the solar value-chain business and launch a new renewable energy vertical. The company received board approval to establish an integrated solar wafer manufacturing facility in December. There are also reports that other state-owned companies could be required to establish a domestic polysilicon supply chain.

In November, Prime Minister Modi announced that the government will offer new incentives for Indian-made solar modules, which follows an announcement that solar modules have been included in a production-linked incentive scheme to help make domestic players more competitive abroad.

A lifeline for renewable projects and utilities

In addition to the measures above, the Indian government extended commissioning deadlines for wind and solar projects already under development, taking into account that developers couldn’t get their workers and equipment to their construction sites amid the lockdowns.

“They gave a blanket five-month extension to all projects, which was really essential,” said Sumant Sinha, chairman and managing director of ReNew Power, India's largest clean energy company.

Another significant step the government took to benefit the clean energy sector was to give power distribution companies (discoms) a roughly $13 billion liquidity injection as part of a stimulus package to shore up the Indian economy. The country’s discoms, which have long suffered from financial woes , fell deeper into debt due to weak power demand caused by the COVID-19 pandemic.

Because discoms purchase the power from renewable energy projects, the financial health of the utility sector is critical to keeping India’s clean energy transition moving forward. Analysts note that utility bailouts also benefit thermal power plants . But according to Sinha, the stimulus funding was critical to ensuring that renewable energy generators continued to get paid on time.

“All of these steps have really been very positive,” said Sinha, who recently published the book Fossil Free focusing on the drivers of India’s clean energy transition and path ahead. “I think they indicate that the Indian government is very serious about supporting the growth of renewable energy and they are willing to do whatever is required to push the agenda forward on that front.”

Landmark auctions for flexible renewable energy

As the share of renewables on India’s power grid continues to grow, so too does the demand for new technologies to balance better integrate these intermittent resources.

In January 2020, the Solar Energy Corporation of India (SECI) announced the results of its first peak power tender , requiring developers to couple wind and solar with energy storage to meet grid needs at times of peak demand. At 1.2 gigawatts, the auction represented one of the largest renewables-plus-storage tenders in the world. Greenko Group and ReNew Power ultimately won 900 megawatts and 300 megawatts of capacity, respectively.

SECI also held the country’s first tender for " around-the-clock " clean power last year, which requires developers to bundle solar with wind, hydropower or energy storage to provide an 80 percent plant load factor over the course of the year. ReNew Power was the sole winner in the around-the-clock auction, which was criticized for having terms that were both too tough and too lenient in turn.

These auctions mark a new era in India's energy transition. The government is seeking these new kinds of bids with a view to "making renewable energy more acceptable into the grid and enabling India’s discoms to buy more renewable energy," said Sinha. But he acknowledged that it’s still early days for the next wave of cleantech products and services in India.

There is only one utility-scale energy storage project deployed in India today: a 10-megawatt-hour pilot project owned by Tata Power Delhi Distributed Limited. ReNew’s peak power and around-the-clock projects will be the next battery installations to come online, and they’re still a year and a half out.

Tata Power, The AES Corporation and Mitsubishi Corporation inaugurate India’s first grid-scale battery-based energy storage system in Rohini, Delhi.

“The government is introducing all of these storage-based tenders [because] they are experimenting to ensure that...the storage ecosystem develops in India,” Sinha said.

The International Energy Agency forecasts that India will eventually become the largest market for utility-scale battery storage worldwide. But right now, the government is grappling with what the ecosystem for energy storage in India should look like, including the mix of standalone battery projects versus renewable energy hybrid systems and requirements for ancillary services.

"Over the last decade, India’s government had the luxury of focusing mostly on adding solar and wind energy capacity as fast as possible. Now it must walk, chew gum and much more," Varun Sivaram, senior research scholar at the Columbia University Center on Global Energy Policy, wrote in a recent analysis for the Aspen Institute .

"The next phase will require deep structural reforms to create a cleaner, more flexible and more efficient power system," he continued. "But given the impressive progress to date on deploying renewable energy and the willingness of the government to constantly experiment with new policy approaches, there is reason for optimism about India’s energy future."

Travel to India for portions of this story was supported by SED Fund , which supports a range of activities related to sustainability. All content is editorially independent, with no influence or input from the philanthropy. The views expressed in this article do not necessarily reflect the views of SED Fund or any of its affiliates.

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India Renewable Integration Study

An NREL grid integration study has confirmed the technical and economic viability of integrating 175 gigawatts (GW) of renewable energy into India's electricity grid by 2022.

A screenshot of the Greening the Grid India visualization showing a map of India divided into states with various colored circles in each state. The colored circles represent fuel types and amount of generation in megawatts. The full visualization shows the generation by fuel type over time in India.

The visualization of results shows a full year of generation and transmission flows.

The two-volume report Greening the Grid: Pathways To Integrate 175 Gigawatts of Renewable Energy into India's Electric Grid Vol. I—National Study and Vol. II—Regional Study resolves many questions about how India's electricity grid can manage the variability and uncertainty of India's 2022 renewable energy (RE) target of 175 GW of installed capacity, including 100 GW of solar and 60 GW of wind, up from 9 GW of solar and 29 GW of wind installed in early 2017.

Using advanced weather and power system modeling, the study explored operational impacts of meeting India's 2022 targets and identified actions that are favorable for integration.

The National Study used a state-of-the-art production cost model, which simulates optimal scheduling and dispatch of available generation by minimizing total production costs subject to physical, operational, and market constraints. The objective was to simulate the scheduling and dispatch decisions that are based on variable or production costs. We developed this model to identify how the Indian power system is balanced every 15 minutes in a future year (2022). The model quantifies RE generation, including variability and curtailment, changes in least-cost scheduling and dispatch, flexibility of thermal generation, and periods of stress. To investigate system operations in each of the states with the potential for significant growth in RE capacity, the study team also used a higher-resolution regional model that includes intrastate transmission details. This model—the focus of Vol. II—builds upon the same inputs in the national model but with increased transmission detail within each of the states in the Southern and Western regions plus Rajasthan. Therefore, the regional model provides more robust views of localized operations and can offer more relevant insights to support state-level planning.

The results demonstrate that power system balancing with 100 GW solar and 60 GW wind is achievable at 15-minute operational timescales with minimal RE curtailment. India's current coal-dominated power system has the inherent flexibility to accommodate the variability associated with the targeted RE capacities, and coal flexibility in low-RE, coal-dominant states can play an important role in facilitating RE integration nationwide.

The study results reveal operational impacts, such as:

  • The 160 GW of solar and wind capacity can serve 22% of India's power demand, providing benefits of fuel savings and reduced emissions.
  • The power system as planned for 2022 is able to manage the added variability of wind and solar; new, fast-ramping infrastructure (such as natural gas turbines) is not necessary to maintain balance.
  • In a system with 160 GW of wind and solar, coal plants, on average, operate at only half their capacity, suggesting the potential role for a new tariff structure that moves away from focusing on energy delivery and instead compensates plants for performance that achieves flexibility goals.

The study also evaluates the value of strategies to better integrate RE and demonstrates the importance of policy and market planning. The results of the study indicate that:

  • National and regional coordination of scheduling and dispatch eases renewable energy integration and results in cost savings by smoothing variability and broadening the supply of system flexibility.
  • Flexibility of India's coal fleet is critical to minimizing curtailment of renewable energy.

Table displaying the impacts of integration strategies for 100 GW of solar and 60 GW of wind under different scenarios. Normal operations, detailed in the first column, consist of state-level dispatch with 55% minimum generation; 230,000 INR crore annual production cost, and 1.4% renewable energy curtailment. Regional coordinated scheduling and dispatch, detailed in the second column, results in 2.8% savings annually and 1.3% renewable energy curtailment. National coordinated scheduling and dispatch, detailed in the third column, results in 3.5% savings annually and 0.89% renewable energy curtailment. Lower minimum coal plant generation—at 40% of capacity—detailed in the fourth column results in negligible savings annually and 0.76% renewable energy curtailment. Higher minimum coal plant generation—at 70% of capacity—detailed in the fifth column results in 0.90% increased cost annually and 3.5% renewable energy curtailment. Finally, lower minimum coal plant generation (40% of capacity) with regional balancing area coordination results in 3.3% savings annually and 0.73% renewable energy curtailment.

This work is conducted under a broader program, Greening the Grid, which is an initiative co-led by India's Ministry of Power and the U.S. Agency for International Development, and includes co-sponsorship from the 21st Century Power Partnership and the World Bank's Energy Sector Management Assistance Program. The modeling team comprised a core group from the Power System Operation Corporation Limited, which is the national grid operator (with representation from the National, Southern, and Western Regional Load Dispatch Centers), National Renewable Energy Laboratory, and Lawrence Berkeley National Laboratory, and a broader modeling team drawn from Central Electricity Authority, POWERGRID (the central transmission utility), and state load dispatch centers in Maharashtra, Gujarat, Rajasthan, Tamil Nadu, Karnataka, and Andhra Pradesh. Technical stakeholder review was provided by three teams of Grid Integration Review Committees consisting of more than 150 power system stakeholders from across India.


Study overview fact sheet

Advances in production cost modeling fact sheet

Vol. I—National Study full report

Vol. I—National Study Executive summary

Vol. II—Regional Study full report

State Chapters:

Andhra Pradesh


Summary Fact Sheets

Southern region

Western region

Video of report launch, led by Minister Piyush Goyal

Jaquelin Cochran

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Environment, the present perspective of the indian energy sector.

Manuel Freire-Garabal y Núnez

Manuel Freire-Garabal y Núnez

H.E. Prof. Sir Manuel Freire-Garabal y Núñez is a lawyer and journalist. He is a professor, contributor and advisor at different universities, particularly at the IVY League . He serves in diplomacy as advisor to United Nations higher officials and as a member of the diplomatic staff of several governments. He has received high honours from Russian Federation, United States or Peru. LESS ... MORE

India is seeing substantial expansion in its energy industry, fueled by a combination of traditional and renewable energy initiatives aimed at satisfying the country’s increasing demand and sustainable development objectives.

The Indian government has been aggressively advocating energy projects to guarantee energy security, mitigate carbon emissions, and cultivate economic growth.

India’s renewable energy sector, namely in solar and wind, has had significant and rapid expansion in the last ten years. The nation has established lofty objectives, which include attaining a renewable energy capacity of 175 GW by 2022 and 450 GW by 2030.

The development of solar electricity has been a significant area of attention, with the successful establishment of large-scale solar parks such as the Pavagada solar park in Karnataka and the Bhadla solar park in Rajasthan.

These initiatives not only generate renewable energy but also facilitate the creation of employment opportunities and promote local economic growth. Wind energy is a key part of India’s renewable energy portfolio.

The government has provided support for wind projects through many schemes and incentives, leading to the development of major wind farms in states such as Tamil Nadu, Gujarat, and Maharashtra.

In addition, India is currently investigating the possibility of offshore wind energy in order to further expand its portfolio of renewable energy sources. Although there is a strong emphasis on renewable energy, traditional energy sources still make up a substantial amount of India’s energy combination.

Coal is a prominent and influential source of energy, with a multitude of coal-fired power stations in operation around the nation. Nevertheless, the government is also prioritising the development of cleaner coal technologies, specifically supercritical and ultra-supercritical technology, to enhance efficiency and minimise emissions. There are multiple projects underway to enhance the gas infrastructure in the country, indicating an important subject on natural gas.

The Pradhan Mantri Urja Ganga project is a commendable endeavour aimed at establishing a comprehensive gas pipeline network throughout Eastern India, thereby improving energy availability and encouraging the adoption of cleaner fuel sources. India’s energy diversification and carbon emissions reduction strategy heavily relies on nuclear energy as an essential aspect.

The nation now possesses multiple functioning nuclear power facilities and intends to considerably expand its nuclear capabilities in the near future.

The spread of nuclear power in India relies heavily on projects such as the Kudankulam Nuclear power plant in Tamil Nadu and the forthcoming Kovvada plant in Andhra Pradesh.

Hydropower continues to be a conventional yet essential piece of India’s energy infrastructure. The government has been actively engaged in augmenting hydroelectric capacity through initiatives such as the Subansiri lower dam and the Teesta low dam projects, which are making important contributions to the country’s energy portfolio.

In addition, there is a renewed emphasis on the development of small hydropower projects to exploit the potential of India’s river systems. India’s energy initiatives are facilitated by robust policy support and investor incentives.

The national solar mission, wind mission, and green energy corridors project aim to facilitate the integration of renewable energy sources and provide stability in the power system. In addition, the government has been actively promoting foreign direct investment (FDI) in the energy sector, which has resulted in the attraction of major international companies and the promotion of technological progress.

India’s energy project development is distinguished by a judicious strategy, incorporating both renewable and conventional energy sources to guarantee a dependable, environmentally-friendly, and cost-effective energy provision.

India is poised to become a prominent worldwide player in energy production and sustainability, thanks to ongoing legislative support, technology advancements, and increased investment.

Academia states that the India energy sector is now complex and has a strong emphasis on generating renewable energy, reducing emissions, and achieving sustainable development goals. India has established ambitious objectives to enhance the generation of renewable energy, with a target of reaching 175 gigawatts by 2022, as outlined in the research conducted by Kiesecker et al. in their publication “Renewable energy and land use in India: a vision to facilitate sustainable development” in 2019.

The transition to renewable energy sources is necessary for the process of decarbonising the energy sector and mitigating CO2 emissions, as shown in the study conducted by Sinha & Shahbaz (“Estimation of environmental kuznets curve for co2 emission: role of renewable energy generation in India” published in Renewable Energy, 2018).

In order to accomplish these objectives, a significant amount of funding is expected to be allocated towards the electricity system. This investment is necessary to accommodate the projected growth in renewable energy capacity, as outlined by Giannelos et al. in their publication “Long-term expansion planning of the transmission network in India under multi-dimensional uncertainty” in Energies (2021).

Policy is of utmost importance in determining the trajectory of India’s energy future. The government has implemented a range of policies aimed at restructuring and reducing regulations in the energy sector. These policies include measures to encourage foreign investment and privatisation, as stated in the research article “Energy scenario in South Asia: analytical assessment and policy implications” by Ul-Haq et al., published in IEEE Access in 2020.

In addition, the government plays an active role in power sector planning through bodies such as the Central Electricity Authority, as described by Das & Srikanth in their publication “Viability of power distribution in India – challenges and way forward” in Energy Policy (2020).

The national electricity policy and pricing policy are formulated in collaboration with state governments to maximise the efficient use of resources and encourage the adoption of renewable energy sources, as discussed by Das & Srikanth.

India’s shift towards a low-carbon economy necessitates tackling obstacles and optimising policy-making processes. The country must assess the consequences of sector-specific policies and take a comprehensive approach to meet its obligations under the Paris Climate Agreement.

This approach, as described by authors Rehman & Hussain in their article “Renewable energy governance in India: challenges and prospects for achieving the 2022 energy goals” published in the Journal of Resources Energy and Development in 2018, and Singh et al. in their article “Evaluating India’s climate targets: the implications of economy-wide and sector-specific policies” published in Climate Change Economics in 2019.

Moreover, IMRAN et al. (2021) argue that entrepreneurship plays a crucial role in the solar energy sector of India, leading with significant advancements in both on-grid and off-grid segments.

The energy composition in India is changing, with a specific emphasis on augmenting the proportion of renewable energy sources such as wind and solar power.

This viewpoint is supported by various authors, including Elavarasan et al. in their publication “A holistic review of the present and future drivers of the renewable energy mix in Maharashtra, State of India” (2020) and Rej & Nag in their publication “Land and clean energy trade-off: estimating India’s future land requirement to fulfil indc commitment” (2021) in the International Journal of Energy Sector Management.

According to Ali et al.’s study “Projected increase in hydropower production in India under climate change” published in Scientific Reports (2018), hydropower is expected to have significant effects on satisfying energy needs and reducing the effects of climate change.

Nevertheless, coal continues to play an essential role in India’s power industry, emphasising the necessity of shifting towards more environmentally friendly technologies, as outlined by Sahu et al. in their publication “The role of coal technology in redefining India’s climate change agents and other pollutants” in Environmental Research Letters, 2017.

India’s energy sector is currently transitioning towards sustainability, with a particular focus on renewable energy, regulatory reforms, and fulfilling international climate obligations. The nation’s energy trajectory relies on efficient strategizing, financial commitment, and the implementation of more environmentally friendly technologies in order to attain a carbon-neutral economy.

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The relationship between CO 2 emissions, renewable energy and economic growth in the US: evidence from symmetric and asymmetric spectral granger causality analysis

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case study about renewable energy conducted in india

  • Mustafa Zuhal   ORCID: orcid.org/0000-0002-4645-4628 1 &
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This study analyzes the relationship between renewable energy consumption, CO 2 emissions, and economic growth for 1973:M01-2022:M06 in the USA. The study employs Spectral Granger Causality analysis symmetrically and asymmetrically. The symmetric causality test presents a bidirectional causality relationship between CO 2 emissions, renewable energy consumption, and economic growth. Regarding asymmetric causality results, there is bidirectional causality between positive and negative shocks of CO 2 emissions, renewable energy consumption, and economic growth. The results suggest that renewable energy consumption is essential in increasing sustainable economic growth and environmental quality for the USA.

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1 Introduction

Climate change, combating global warming, and sustainable economic growth have gained importance over the years. In this context, concerns about global warming, one of the most significant environmental problems, have led to the literature examining comprehensively global warming. The greenhouse gases resulting from human activities are the main source of global warming, and CO 2 emissions account for 76% of greenhouse gases (including fossil fuel and industrial use, forestry, and land use) (EPA, 2022 ).

Using renewable energy instead of fossil fuels may negatively affect the economic performance of countries and cause lower growth rates. Nevertheless, renewable energy sources are crucial for ensuring sustainable economic growth and reducing the effects of climate change by playing an essential role in minimizing greenhouse gases, especially CO 2 emissions. Moreover, expected from renewable energy consumption to reduce CO 2 emissions (Bento & Moutinho, 2016 ; Ito, 2017 ; Dogan & Ozturk, 2017 ; Toumi & Toumi, 2019 ; Dimitriadis et al., 2021 ; Lei et al., 2022 ) and fight against global warming and climate change (Balsalobre-Lorente et al., 2023a ). At the same time, using renewable energy to diminish carbon dioxide emissions is recognized as a crucial element for achieving sustainable economic growth. A common solution is transitioning from fossil fuels to renewable energy sources to ensure environmental quality and economic growth. (Balsalobre-Lorente et al., 2018 ). Energy security is important in ensuring sustainable economic growth. Promoting renewable energy sources helps to improve environmental quality, combat global warming and climate change, and ensure energy supply security (Abban et al., 2023 ).

Countries are actively working on significant projects and investments, with an increasing emphasis on the importance of renewable energy on a global level (Zhang et al., 2022 ). Although countries possess different structural, institutional, and cultural characteristics, these researches produce a common coefficient for all of them. Therefore, it is important to conduct studies on individual country studies (Dogan & Ozturk, 2017 ), and we aim to contribute to the literature by focusing on the USA. The USA has the highest rate after China, with 4.71 billion tons of CO 2 emissions as of 2020 (Ritchie & Roser, 2020 ). Therefore, for authorities, the USA is an important factor in solving both economic and global problems on a global scale. Although, there is no American signature on the Kyoto Protocol, which is important in combating global warming and reducing greenhouse gas emissions. (Dogan & Ozturk, 2017 ). Moreover, renewable energy became the fastest-growing energy source in the USA between 2010 and 2020 (C2ES, 2022 ). Figure  1 shows the monthly CO 2 emissions, industrial production index, and the development of renewable energy consumption in the USA for the 1973:M01-2022:M06 period.

figure 1

Source Established by the authors with data from the Energy Information Administration (EIA) ( 2022 ) and FRED ( 2022 )

CO 2 emissions, industrial production index, and renewable energy consumption in the USA (1973-:M01-2022:M06). Note ECG is the total industrial production index, CDX is the total CO2 emissions, and RWE is the total renewable energy consumption.

Figure  1 presents that the CO 2 emissions of the USA increased between 1973 and 2019, and the emissions reduced after the 2000s. Renewable energy consumption in the US grew rapidly after the 2000s due to its increasing use and importance. Figure  1 also shows a serious break in CO 2 emissions and economic growth (industrial production index) due to the COVID-19 pandemic in 2020:04. The measures implemented under pandemic conditions led to a serious reduction in CO 2 emissions. Analyzing the types of consumption of renewable energy in the USA is important. Figure  2 shows sources of renewable energy consumption in the USA.

figure 2

Source (EIA, 2022 )

Types of renewable energy in the USA.

In the USA, wind energy ranks first in renewable energy consumption, followed by Hydroelectric power and Biofuels. Geothermal energy brings up the rear. However, wind and solar are the main sources of increase in renewable energy uses. Figure  3 compares renewable energy consumption with other energy sources in the USA.

figure 3

Other energy sources in the USA.

Fossil fuels are placed at the top among energy production sources in the USA. Renewable energy and Nuclear Electric power rank second and third, respectively. Although the share of renewable energy has increased recently and surpassed Nuclear electric power, it is still way below the share of fossil fuels. It is understood that the share of both safe and environmentally friendly energy sources has increased in the USA.

This study analyzes the relationship between renewable energy consumption, CO 2 emissions, and economic growth for 1973:M01-2022:M06 in the USA. The USA ranks first in the world in CO 2 emissions and renewable energy consumption. In this respect, it is essential to analyze the USA. Moreover, the findings of this paper will provide crucial information for policymakers and other researchers. There are various studies related to the USA, in literature; however, it is vital to retest similar relationships with new methods, analysis techniques, and data sets. Because new empirical methods that provide realistic results between variables are now developed, this study contributes by employing the Spectral Granger causality analysis, which is quite limited in the literature, by including the asymmetric structure.

This study contributes to the literature in various ways. The literature generally focuses on cross-country comparisons. Papers analyzing countries with different structural, institutional, and cultural characteristics suffer from estimating a common coefficient. Therefore, it is crucial to conduct studies on individual countries (Dogan & Ozturk, 2017 ). We, first, aim to contribute by employing time series data on the USA.

Second, the relationship between CO 2 emissions, renewable energy consumption, and economic growth is generally analyzed with annual data in the literature. Ignoring detailed fluctuations, such as monthly changes, can create a serious problem in obtaining accurate results. At the same time, variables consist of positive and negative components, which may not always move in the same direction. Therefore, it is important to analyze the movement patterns of the positive and negative components of the variables (Hatemi-J, 2012 ). This study employs symmetric and asymmetric Spectral Granger causality analyses using monthly data from the USA. Thus, examining the relationship between the variables in depth and controlling whether the relationship is temporary or permanent becomes possible. Another important contribution is revealing the relationship between positive and negative shocks belonging to the neglected variables in the symmetric analysis. In addition, the results and findings of the paper provide the basis for studies of other developed and developing countries. The importance of renewable energy consumption in the struggle against global warming and climate change is emphasized again, specifically in the United States.

The next section reviews the empirical literature. Then, the next chapter introduces the data and methodology and discusses the empirical findings. The final section discusses the findings and makes policy recommendations.

2 Empirical literature review

Many studies in the literature examine the relationship between economic growth, renewable energy, and CO 2 emissions. However, in our study, we generally discussed studies examining CO 2 emissions, renewable energy consumption, and economic growth variables. Much as the studies in this field extend back a long time, they intensified after the 2000s. This is because studies conducted in the 2000s are mostly included. It is observed that these studies obtained different results between these variables. Literature has studies which found bidirectional relationship (Apergis & Payne, 2010 ; Chang, 2010 ; Narayan & Narayan, 2010 ; Menyah & Wolde-Rufael, 2010 ; Arı & Zeren, 2011 ; Akpan & Akpan, 2012 ; Burnett et al., 2013 ; Alkhathlan & Javid, 2013 ; Sebri & Ben-Salha, 2014 ; Akay et al., 2015 ; Dogan, 2016 ; Lu, 2017 ; Rafindadi & Ozturk, 2017 ; Kahia et al., 2019 ; Shahbaz et al., 2020 ); relationship with unidirectional causality (Vidyarthi, 2014 ; Dogan & Seker, 2016 ; Alper & Oguz, 2016 ; Ito, 2017 ; Dogan & Ozturk, 2017 ; Demir & Gozgor, 2018 ; Toumi & Toumi, 2019 ; Dimitriadis et al., 2021 ; Çıtak et al., 2021 ; Lei et al., 2022 ) and relationship no causality (Soytaş & Sarı, 2009 ; Payne, 2009 ; Bowden & Payne, 2010 ; Bhattacharya et al., 2016 ; Acheampong et al., 2021 ; Zuhal ( 2022 ). Ewing et al. ( 2007 ) examined the effect of energy consumption on industrial output in the USA. For findings, the explanatory power of consumption of various energy sources on industrial production in the USA remains low in the short, medium, and long term. It is stated that coal, one of the energy sources, is higher than other energy sources in the long run and that the sources in the renewable energy class have quite low explanatory pow. Soytaş and Sarı ( 2009 ) performed a causality review between carbon emissions, economic growth, and energy consumption in Turkey. There is no causality between economic growth and carbon emissions in Turkey, while a one-way causality from carbon emissions to energy consumption can be identified.

Payne ( 2009 ) researched the effect of renewable and non-renewable energy consumption on real GDP in the USA for the period 1949–2006. No causality could be found between GDP and both renewable and non-renewable energy consumption in the USA for the relevant period. The effects of sectoral renewable and non-renewable energy use on economic growth in the USA were analyzed by Bowden and Payne ( 2010 ). Again, for the results, there is no causal relationship between renewable energy consumption and economic growth in the commercial and industrial sectors, while a positive one-way causality towards economic growth in the use of households was determined. Moreover, using non-renewable energy in the commercial sector and residences has a positive and bidirectional relationship with economic growth, while there is a negative and one-way causality from industrial use to economic growth.

Apergis and Payne ( 2010 ) analyzed the relationship between renewable energy consumption and economic growth for countries in the Eurasian region. Regarding these countries, there is a bidirectional relationship between economic growth and renewable energy consumption for the short and long term.

The relationship between CO 2 emissions, energy consumption, and GDP in China was examined by Chang ( 2010 ). It is emphasized in the relevant study that GDP growth increases crude oil, coal consumption, and CO 2 emissions.

Narayan and Narayan ( 2010 ) tested the existence of the Environmental Kuznets curve (EKC) in developing countries. Countries were analyzed by classifying regionally; for findings, the Middle East and South Asian countries are compatible with the EKC hypothesis, while the results are incompatible with the EKC hypothesis in Latin America, East Asia, and Africa.

Menyah and Wolde-Rufael ( 2010 ) analyzed the relationship between nuclear energy, renewable energy, and economic growth in the USA for the period 1960–2007 with causality analysis. According to the results, there is one-way causality from nuclear energy to CO 2 emissions and from CO 2 emissions to renewable energy. They also found bidirectional causality between GDP and CO 2 emissions in the USA. Moreover, for the authors, renewable energy is not at a level that can reduce emissions in the USA and, therefore, cannot reduce emissions (Menyah & Wolde-Rufael, 2010 :2913).

Arı and Zeren ( 2011 ) analyzed the relationship between economic growth and CO 2 emissions; their findings suggest deviations from the Kuznets curve and that CO 2 emissions may tend to increase even at high-income levels.

The relationship between CO 2 , electricity consumption, and economic growth in Nigeria was reviewed by Akpan and Akpan ( 2012 ). The authors expressed that these variables are cointegrated; they move together in the long run. Therefore, based on the causality analysis, it can be said that income and electricity consumption cause CO 2 emissions.

Burnett et al. ( 2013 ) worked on the USA; according to the results, an increase in population and welfare puts pressure on CO 2 emissions to increase. However, a decreasing trend was observed in emissions due to the pressure of population, welfare increase, and technological developments. Again, the authors confirm that CO 2 emissions positively affect energy production while there is a U-shaped relationship with income.

Alkhathlan and Javid ( 2013 ) researched the relationship between energy consumption, carbon emissions, and economic growth in Saudi Arabia. For their results, there is a positive relationship between economic growth and carbon emissions in the long run in Saudi Arabia, while economic growth increases emissions, and there is no U-shaped relationship between the variables.

Vidyarthi ( 2013 ) examined the relationship between India’s carbon dioxide emissions, economic growth, and electricity consumption. It was seen as a result of the analysis that all three variables are related to each other in the long run, and there is one-way causality from energy consumption and carbon dioxide emissions to GDP. However, economic growth must be sacrificed to reduce emissions in India in the short term.

Vidyarthi ( 2014 ) surveyed South Asian countries and found that energy consumption, CO 2 emissions, and economic growth are cointegrated. There is one-way causality from CO 2 emissions to economic growth in the long run, while there is one-way causality from CO 2 emissions to economic growth.

The relationship between renewable energy consumption and economic growth in BRICS countries was examined by Sebri and Ben-Salha ( 2014 ). The study observed bidirectional causality between renewable energy and economic growth in the relevant countries, except for India.

Yang et al. ( 2015 ) endeavored to find the direction and shape of the relationship between CO 2 emissions and economic growth in sixty-seven countries. For results, the EKC model is not suitable in all countries, while there may be a U, inverted U, M, and N-shaped or linear relationship between the variables in countries.

Akay et al. ( 2015 ) examined the causal relationship between renewable energy, CO 2 emissions, and economic growth in selected Middle East and North African countries. For results, there is a bidirectional causality relationship between economic growth and renewable energy, one-way causality from CO 2 emissions to renewable energy, and one-way causality from growth to CO 2 in the countries.

The relationship between renewable and non-renewable energy production, GDP, and international trade in Italy was analyzed between by Bento and Moutinho ( 2016 ). It is stated that Italy’s CO2 emissions and economic growth are positively related in the short term, but this relationship turns negative in the long term. Renewable energy generation negatively affects CO 2 emissions in the short and long term. However, non-renewable energy production has a positive effect in both periods, and the degree of impact increases in the long term.

The relationship between economic growth, CO 2 emissions, trade openness, and financial development in OECD countries was reviewed by Dogan and Seker ( 2016 ) within the framework of the EKC hypothesis. It was determined that the variables are cointegrated in the long run, while a positive effect was observed on income emissions in low-income countries but negative in high-income countries. Energy consumption increases emissions at the same time.

The effect of renewable and non-renewable energy consumption on economic growth in Turkey was reviewed by Dogan ( 2016 ). Analysis results show us a long-term cointegration between the variables. Again, there is a bidirectional causality relationship between economic growth and non-renewable energy consumption in the short run; there is a unidirectional causality relationship from economic growth to renewable energy, while both renewable and the non-renewable energy consumption is the cause of economic growth in the long run.

Bhattacharya et al. ( 2016 ) researched the relationship between renewable energy consumption and economic growth in countries where renewable energy is heavily used. It is expressed that renewable and non-renewable energy consumption affects growth positively. However, besides all these, the causality between renewable energy consumption and economic growth could not be seen at the end of the causality analysis.

Alper and Oguz ( 2016 ) researched the relationship between renewable energy consumption, capital, labor, and economic growth in new EU member states. No causality could be found in five countries at the end of the analysis, while there is one-way causality from economic growth to renewable energy consumption in Czechia; from renewable energy to economic growth in Bulgaria.

Ito ( 2017 ) reviewed the relationship between renewable and non-renewable energy consumption and economic growth in developed countries. In these countries, non-renewable energy consumption and economic growth increase CO 2 emissions, while renewable energy consumption reduces emissions. It is explained that there is a negative relationship between renewable energy consumption and economic growth.

The relationship between CO 2 emissions, renewable energy, and economic growth in twenty-four Asian countries was researched by Lu ( 2017 ). All three variables are cointegrated in the long run in Asian countries. Again, for analysis results, considering country-specific coefficients, CO 2 emissions affected renewable energy consumption in six countries negatively and in six countries positively; there also was an insignificant effect in the remaining countries. At the same time, economic growth and renewable energy consumption are positively related in seven countries, negatively in two countries, and insignificantly in other countries. According to the causality result, bidirectional causality is seen between renewable energy and CO 2 emissions and economic growth, while there is one-way causality from economic growth to CO 2 emissions.

Another study was performed by Dogan and Ozturk ( 2017 ); the study is about the relationship between real GDP and renewable and non-renewable energy consumption in the USA. They determined a long-run relationship between carbon dioxide emissions, GDP, and the USA’s renewable and non-renewable energy consumption. It was emphasized in the study that increases in the use of renewable energy negatively affect emission levels; it also increases non-renewable energy consumption and increases air pollution. Therefore, CO 2 emissions affect GDP positively, and the EKC hypothesis is not valid in the USA.

The relationship between renewable energy consumption and economic growth in Germany was analyzed by Rafindadi and Ozturk ( 2017 ); for results, there is a bidirectional causality relationship between the series in the long run.

Demir and Gozgor ( 2018 ) used unit root tests to review the effect of renewable energy consumption on CO 2 emissions in fifty-four developing countries. According to the findings, renewable energy sources permanently affect CO 2 emissions in only nine countries.

Kahia et al. ( 2019 ) examined the relationship between renewable energy, FDI economic growth, and CO 2 emissions in the Middle East and African countries. Besides other study results, it is highlighted that there is bidirectional causality between CO 2 emissions, renewable energy consumption, and GDP.

Toumi and Toumi ( 2019 ) asymmetrically analyzed the relationship between renewable energy, CO 2 emissions, and GDP in Saudi Arabia. They found no causality from economic growth to CO 2 emissions and positive and negative components of renewable energy in the short and long term; however, there is one-way causality from the negative and positive components of CO 2 emissions and renewable energy to economic growth in the long run.

Shahbaz et al. ( 2020 ) examined the effect of renewable energy consumption on economic growth. They determined that GDP, renewable energy, non-renewable energy, labor, and capital are related in the long run. Furthermore, renewable and non-renewable energy consumption positively and significantly affect economic growth. They also observed a bidirectional causality between renewable energy consumption and economic growth.

Acheampong et al. ( 2021 ) conducted research in Sub-Saharan African countries. They determined that the institutional structure does not affect carbon emissions, renewable energy, and economic growth, while there is bidirectional causality between economic growth and renewable energy. Moreover, there is no causality between carbon emissions and renewable energy, while there is one-way causality from economic growth to carbon emissions.

Dimitriadis et al. ( 2021 ) analyzed the relationship between renewable and non-renewable energy, CO 2 emissions, and economic growth in developing countries. They found a positive relationship from economic growth to CO 2 emissions and fossil fuels and a negative relationship from renewable energy to CO 2 emissions in the long term.

Çelik ( 2021 ) surveyed to review the relationship between renewable energy production and employment in the USA. There was found no causality relationship between renewable energy production and employment. According to the author, the reason for the lack of a causal relationship between renewable energy production and employment is insufficient renewable energy consumption in the USA (Çelik, 2021 :13053).

Çıtak et al. ( 2021 ) asymmetrically reviewed the effects of renewable energy and natural gas use on CO 2 emissions in states in the USA. The results varied by country. Nevertheless, long-term positive causality was seen between renewable energy, natural gas consumption, and carbon dioxide emissions.

Lei et al. ( 2022 ) examined the relationship between energy efficiency, renewable energy, and CO 2 emissions in China. As a result, energy efficiency and GDP are positive on CO 2 emissions in the short and long term in China; renewable energy consumption and internet use have an insignificant effect on the same issue. However, internet use and renewable energy consumption negatively affect emissions in the short term. The positive component of renewable energy consumption negatively affects CO 2 emissions, while the positive shock of renewable energy consumption positively affects emissions. It is expressed that the negative trend in renewable energy consumption in China increases CO 2 emissions.

Zuhal ( 2022 ) analyzed the long-run relationship between CO 2 emissions and economic growth in G-20 countries. According to the country-specific results, the long-term coefficients between the variables were positive but insignificant in the USA.

Balsalobre-Lorente et al. ( 2023a ) examined the effects of economic complexity, globalization, and renewable energy consumption on CO 2 emissions in European countries. The study stated a long-term relationship exists between economic complexity, globalization, renewable energy consumption, and CO 2 emissions. The study emphasized a negative relationship between renewable energy consumption and CO 2 emissions and that renewable energy is a major factor in reducing emissions.

Abban et al. ( 2023 ) conducted a spatial analysis of the impact of renewable energy consumption and patents on environmental quality in twenty-nine European countries. The study reports that environmental regulations across European countries are mutually influential. It also reveals a negative correlation between renewable energy consumption and CO 2 emissions. The authors highlight the potential of renewable energy sources in mitigating global warming and climate change.

Balsalobre-Lorente et al. ( 2023b ) examined the impact of economic complexity, foreign direct investment, and renewable energy consumption on CO 2 emissions in BRICS countries. It is stated that economic growth has a CO 2 effect in the short run, but this effect is neutralized in the long run. It is emphasized that foreign direct investments positively affect CO 2 emissions, while renewable energy consumption is negatively related. It is recommended to reduce the use of environmental pollutants and increase the use of renewable energy sources.

Chu et al. ( 2023 ) examined the impact of the informal economy, environmental regulations, CO 2 emissions, and oil prices on renewable energy consumption in high and middle-income countries. The study revealed a positive relationship between CO 2 emissions and renewable energy in high-income countries and a negative relationship in middle-income countries. At the same time, no relationship was found between GDP and renewable energy consumption in middle-income countries. Renewable energy consumption is the main argument for reducing carbon emissions and achieving energy efficiency.

In literature, CO 2 emissions, renewable energy, and economic growth have been studied among different country groups. The results indicate varying relationships between the three variables: some studies found no causal relationship (Payne, 2009 ; Bhattacharya et al., 2016 ), others found a unidirectional relationship (Vidyarthi, 2014 ; Dogan & Ozturk, 2017 ; Demir & Gozgor, 2018 ), and some found a bidirectional relationship (Apergis & Payne, 2010 ; Kahia et al., ( 2019 ). Possible reasons for variations in findings may include analyzing countries with differing structural, institutional, and cultural characteristics, using different estimation methods, and covering different years. This study aims to reveal the shortcomings of previous research by using time series analysis. By doing so, it eliminates the differences between countries. Additionally, it uses monthly data instead of annual data to capture both monthly fluctuations and breakdowns of changes in periodic components. The study employs the Spectral Causality Analysis method, which tests the causality relationship between periodic components in the short and long term.

Therefore, this study reviewed the relationship between renewable energy consumption, CO 2 emissions, and economic growth with monthly data for the 1973:M01-2022:M06 in the USA. The relationship between CO 2 emissions, economic growth, and income in the literature was also discussed within the framework of the EKC hypothesis. This study did not test the EKC hypothesis, but the relationship between CO 2 emissions, renewable energy consumption, and economic growth was scrutinized. Again, we, thanks to this study, aim to contribute to the literature in different ways. First, since Spectral causality analysis works with monthly data, it provides an opportunity to examine the relationship between the series in detail. It also helps to determine whether the relationship between the series is permanent or temporary. This paper symmetrically and asymmetrically tested this method. The causality relationship between the variables’ positive and negative components in detail allows us to examine the relation in detail. Since renewable energy consumption is of special importance in terms of CO 2 emissions and economic growth, in addition to all these, the purpose was to form the basis for studies on other developed and developing countries.

3 Data and methodology

We employ monthly data for the period 1973:M01-2022:M06, the most recent for detailed analysis in the USA. Table  1 shows the data and sources.

In the study, the total industrial production index of the USA was employed to represent economic growth. Following the literature, we used the industrial production index to represent economic growth because GDP data are not measured monthly. CO 2 emissions, among the greenhouse gases that affect global warming, are at the fore and preferred because of their extensive use in literature. The total renewable energy consumption was preferred as another variable. Most studies in the literature test the validity of the EKC hypothesis. Since the EKC hypothesis was not tested in the USA, we only examined the causal relationship between the relevant variables and did not use the square of the industrial production index.

3.1 Empirical methodology

The paper examines the relationship between renewable energy, CO 2 emissions, and economic growth by Spectral Causality Analysis developed by Breitung and Candelon ( 2006 ). The variability in a time series into its periodic components is separated by spectral causality analysis, and it also identifies the relatively more important frequencies that affect the fluctuations in these variables. In addition, it helps to give meaning to the causal relationship between the variables as short-term or long-term (Tastan, 2015 ). The strength/power and direction of causality between variables may be different for the short-term and long-term. Thanks to this method, besides the direction of causality, we can determine whether the existence of causality is frequency dependent and the exact lag length regardless of the causality direction (Fromentin & Tadjeddine, 2020 ). This test can be easily generalized to analyze cointegration relationships and higher dimensional data (Breitung & Candelon, 2006 ). If we assume that Breitung and Candelon ( 2006 ) d max > 0, test regression is expressed as follows (Tastan, 2015 ):

H 0 : \({M}_{y\to x}\left(\omega \right)=0\) formula is written as “ Y is not the reason for X”.

The asymmetric spectral causality test is another method used in the study. Bahmani-Oskooee et al. ( 2016 ) conducted a study and expressed that the basic assumption in the traditional Granger causality test is that the causal effects of positive and negative shocks are symmetrical. However, this assumption is restrictive to their findings because economic agents such as investors or consumers respond differently to negative shocks than positive ones. For example, according to Hatemi-J ( 2012 ), people react differently to a positive shock than a negative shock in financial markets. So, analyzing the positive and negative shocks separately within the causal relationship between the variables is important.

Positive and negative shocks are defined as follows (Hatemi-J, 2012 ) \({\epsilon}_{1i}^{+}=\text{max} ({\epsilon}_{1i},0)\) \({\epsilon}_{2i}^{+}=\text{max} ({\epsilon}_{2i},0)\) and \({\epsilon}_{1i}^{-}=\text{max}({\epsilon}_{1i},0) {\epsilon}_{2i}^{-}=\text{max} ({\epsilon}_{2i},0)\) .

\({M}_{{x}_{t}^{+}\to {y}_{t}^{+}}\left(\omega \right)=0\) H 0 hypothesis in the Asymmetric Spectral Causality test is established as ‘’Y + is not the reason for X +’’ (Bahmani-Oskooee et al., 2016 ). The null hypothesis is also established for negative components.

4 Empirical findings and discussions

First, unit root tests were performed as the control mechanism for the stationarity of the series. In addition to the first-generation ADF and PP unit root tests, ZA structural breaks were applied. Table  2 presents the unit root test results.

According to the ADF test, the constant and trend of ECG and the constant of RWE contain a unit root. However, it is understood as the result of these series’s PP and ZA unit root tests that they do not contain a unit root. So, the series was accepted as stationary. There is no unit root in CDX, ADF, PP, and ZA tests. At the end of the analyses, it is understood that the level states of the series are suitable for causality analysis. The series was divided into positive and negative components to perform asymmetric causality in the study. Unit root control was carried out for positive and negative components. The components were not stationary in level in the ADF and PP tests but constant in the ZA test and stationary in the trend. It is decided that the components are stationary at the level because the ZA test considers structural breaks. Therefore, the analysis used the level values of the components.

4.1 Symmetric spectral granger causality test

In the first stage of the study, Spectral causality analysis was applied using the variables’ level state. Then, as is emphasized in the study belongs to Tastan ( 2015 ), the appropriate lag length for analysis was determined based on AIC (Akaike information criterion), HQIC (Hannan–Quinn information criterion), and SBIC (Schwarz–Bayesian information criterion). Figures  4 , 5 and 6 show the Symmetric Spectral Granger causality analysis results.

figure 4

ECG and CDX symmetric spectral granger causality analysis results a from CDX to ECG b from ECG to CDX. Note Lag length is determined as 15 based on AIC, HQIC, and SBIC

figure 5

RWE and ECG symmetric spectral granger test results. a from RWE to ECG b from ECG to RWE. Note Lag length is determined as 13 based on HQIC and SBIC

figure 6

RWE and CDX symmetric spectral granger test results a from RWE to CDX b from CDX to RWE. Note Lag length is determined as 18 based on AIC and HQIC

The opportunity of examining the causality relationship between the variables in the short and long term is provided by spectral causality analysis. The analysis specifies frequency lengths as 0.5 for the long term and 2.5 for the short term. In other words, 0.5 is a permanent causality, while 2.5 is temporary causality. While the long-term refers to periods longer than one year, the short-term refers to periods of approximately three months (Aydin et al., 2022 :123). Between CDX and ECG demonstrated in Fig.  4 , there is causality at a 10% significance level in the frequency ranges [1.59, 1.94], [2.27, 2.48], and [2.64, 3.14] from CDX to ECG. It is seen when looking at causality from ECG to CDX in Fig.  5 that there is causality at a 10% significance level in the frequency ranges [0.01, 0.97], [1.17, 1.53], and [1.94, 2.19]. We can mention a persistent bidirectional causality between economic growth and CO 2 emissions in the USA. These results are consistent with Menyah and Wolde-Rufael ( 2010 ), Akpan and Akpan ( 2012 ), Kahia et al. ( 2019 ), and Çıtak et al. ( 2021 ).

In Fig.  5 , there is causality from RWE to ECG at frequency ranges [0.52, 0.84] and [1.85, 2.53], and from ECG to RWE at the frequency ranges [1.02, 1.77] and [2.53, 3.14]. This presents a permanent bidirectional causality between renewable energy consumption and economic growth in the USA. These results are consistent with Apergis and Payne ( 2010 ), Sebri and Ben-Salha ( 2014 ), Akay et al. ( 2015 ), Lu ( 2017 ), Rafindadi and Ozturk ( 2017 ), Kahia et al. ( 2019 ), Shahbaz et al. ( 2020 ) and inconsistent with the findings of Chu et al. ( 2023 ).

In Fig.  6 , there is causality from RWE to CDX in the frequency ranges [0.39, 0.68], [0.88, 1.04], [1.70, 2.09] and [2.49, 3.14], and from CDX to RWE in the frequency ranges [0.10, 0.40], [0.52, 0.73], [0.93, 1.12], [1.26, 2.27] and [2.51, 3.06]. While there is bidirectional causality between CO 2 emissions and renewable energy in the USA, both in the short and long run, permanent causality is observed between the variables in the long run. These results are consistent with Bento and Moutinho ( 2016 ), Lu ( 2017 ), Kahia et al. ( 2019 ), and Balsalobre-Lorente et al. ( 2023 ).

4.2 Asymmetric spectral granger causality test

In addition to examining the relationship between the variables symmetrically in the study, Hatemi-J ( 2012 ) also examined this relationship asymmetrically. Variables are divided into positive and negative components; classified as follows; CDX (PCDX: Positive CDX, NCDX: Negative CDX), ECG (PECG: Positive ECG, NECG: Negative ECG), and RWE (PRWE: Positive RWE, NRWE: Negative RWE). The unit root test was applied after the series was separated into its components; according to the findings, the series are suitable for causality analysis according to the ZA test. Figures  7 , 8 and 9 present Asymmetric Spectral Granger Causality results.

figure 7

CDX and ECG asymmetric spectral granger causality results a from PCDX to PECG b from PECG to PCDX. Note Lag length is determined as 14 based on AIC and HQIC ( a , b ); c from NCDX to NECG d from NECG to NCDX. Note Lag length is determined as 13 based on HQIC and SBIC ( c , d )

figure 8

RWE and ECG asymmetric spectral granger causality results a from PRWE to PECG b from PECG to PRWE. Note Lag length is determined as 13 based on HQIC and SBIC ( a , b ); c from NRWE to NECG d from NECG to NRWE. Note Lag length is determined as 13 based on HQIC and SBIC ( c , d )

figure 9

RWE and CDX asymmetric spectral causality results a from PRWE to PCDX b from PCDX to PRWE. Note Lag length is determined as 15 based on AIC and HQIC ( a , b ); c from NRWE to NCDX d from NCDX to NRWE. Note Lag length is determined as 13 based on HQIC and SBIC ( c , d )

Considering Asymmetric Spectral Granger Causality results, there is causality from PCDX to PECG in [0.01, 0.42] and [1.60, 1.91] frequency ranges; from PECG to PCDX in [1.28, 1.66] and [2.35, 2.76] frequency ranges. Permanent causality is found from PCDX to PECG, whereas transient causality is observed in the opposite case. The positive shock in economic growth in the USA temporarily increased CO 2 emissions. The causality is found from NCDX to NECG [0.03, 0.51] in the frequency ranges and from NECG to NCDX in the frequency ranges [0.07, 0.56], [1.33, 1.43] and [2.43, 2.57]. There is permanent bidirectional causality between CO 2 emissions and negative shocks to economic growth. These results agree with Vidyarthi, 2013 ), 2014 ); Dimitriadis et al. ( 2021 ); Menyah and Wolde-Rufael ( 2010 ); Akpan and Akpan ( 2012 ); Kahia et al. ( 2019 ); Çıtak et al. ( 2021 ); Balsalobre-Lorente et al. ( 2023b ).

A permanent causality exists from PRWE to PECG in the frequency ranges [0.01, 0.09] and [1.85, 2.48] and [1.96, 2.08], while there is also a permanent causality from PECG to PRWE in [0.01, 1.87] and [2.07, 2.42]. There is a permanent causality from NRWE to NECG in the frequency ranges [0.01, 0.08], [0.46, 0.95], and [1.74, 2.57], while there is a permanent causality from NECG to NRWE in the frequency ranges [0.71, 1.49] and [2.44, 3.14]. The results demonstrate a permanent bidirectional causality between positive and negative shocks of renewable energy consumption and economic growth in the United States. These results agree with Apergis & Payne, 2010 , Sebri & Ben-Salha, 2014 , Akay et al., 2015 , Lu, 2017 , Rafindadi & Ozturk, 2017 , Kahia et al., 2019 , and Shahbaz et al., 2020 .

There is permanent bidirectional causality from PRWE to PCDX in the frequency ranges [0.48, 0.92], [1.08, 1.28], [1.57, 1.84], and [2.03, 2.78] while there is also permanent bidirectional causality from PCDX to PRWE in the frequency ranges [0.46, 1.13], [1.34, 1.63] ve [1.83, 3.14]. There is permanent bidirectional causality from NRWE to NCDX in the frequency ranges [0.05, 0.20], [0.51, 0.95] ve [2.33, 3.14], and permanent bidirectional causality from NCDX to NRWE in the frequency ranges [0.09, 0.13], [0.47, 1.20], [1.37, 1.78], and [2.04, 3.14]. For findings, there is a permanent bidirectional causality between the positive and negative shocks of CO 2 emissions and renewable energy consumption in the USA. These findings agree with Bento and Moutinho ( 2016 ); Dogan and Ozturk ( 2017 ); Rafindadi and Ozturk ( 2017 ); Lu ( 2017 ) and; compatible with Kahia et al. ( 2019 ).

Figure  2 shows significant increases in renewable energy consumption sources, and Fig.  3 shows that renewable energy consumption is at a low level among the total energy consumption in the USA. However, renewable energy affects both economic growth and CO 2 emissions. Menyah and Wolde-Rufael ( 2010 ) highlight that renewable energy in the USA is not at a sufficient level to minimize emissions and, therefore, cannot reduce emissions. On the other hand, we have observed recently that renewable energy affects both economic growth and CO 2 emissions due to the increase in renewable energy types and usage areas. According to Çelik ( 2021 ), renewable energy consumption in the USA is not satisfying because there is no causal relationship between renewable energy production and employment. However, renewable energy is the cause of economic growth. Therefore, we can evaluate the study belonging to Çelik ( 2021 ); renewable energy is the cause of economic growth in the USA, but this growth is growth without employment. However, the relationship between renewable energy consumption, economic growth, and employment needs to be reviewed again. Dogan and Ozturk ( 2017 ) emphasize that increases in renewable energy use affect emission levels negatively. After all, it is vital to consider renewable energy consumption to minimize the USA’s negative environmental pressures. Moreover, the number of green energy types should be increased, and their usage areas should be expanded at the same time.

Findings suggest that renewable energy consumption is essential to provide sustainable economic growth and increase environmental quality in the USA. Therefore, diversifying renewable energy sources with necessary green investments and projects and thus increasing the share of renewable energy in total energy consumption is necessary.

5 Conclusion and policy recommendations

Renewable energy consumption is essential in ensuring sustainable economic growth. At the same time, renewable energy consumption has the potential to reduce CO 2 emissions and contribute to the fight against global warming and climate change (Bento & Moutinho, 2016 ; Ito, 2017 ; Dogan & Ozturk, 2017 ; Toumi & Toumi, 2019 ; Dimitriadis et al., 2021 ; Lei et al., 2022 ). Various studies have been conducted to scrutinize the effects of this type of energy due to the importance of renewable energy. The majority of these studies are about country groups. Studies have emphasized the importance of examining the countries individually due to the heterogeneous structure of the countries (Dogan & Ozturk, 2017 ). The relationship between renewable energy consumption, CO 2 emissions, and economic growth in the USA in the 1973-January-2022-June period has been examined in light of these suggestions. Spectral Granger Causality analysis was applied symmetrically and asymmetrically in the study. At the end of the symmetric analysis, bidirectional causality was determined between CO 2 emissions, economic growth, and renewable energy consumption. Different results were obtained from the symmetric analysis as a result of the asymmetric analysis.

Regarding asymmetric analysis results, the relationship between positive and negative shocks differs permanently or temporarily. Therefore, this study reveals the importance of modeling negative and positive shocks separately by examining the relationship between variables. In this respect, this study contributes to asymmetric analyzes that are quite limited in the literature. There is a temporary causality between positive shocks of economic growth and CO 2 emissions in the US. At the same time, there is a permanent bidirectional causality between negative shocks of CO 2 emissions and negative shocks of economic growth. These results show that economic growth can be achieved with low CO 2 emissions. Governments should promote low-emission investments and projects while ensuring economic growth. The study recommends that countries increase energy efficiency to reduce CO2 emissions, support R&D efforts to develop more energy-efficient production processes, and increase public awareness of environmental protection. There is permanent bidirectional causality between the positive and negative components of economic growth and renewable energy consumption in the US. These results show the importance of renewable energy consumption. Using renewable energy is important in the struggle against global warming and climate change. At the same time, its causal relationship with economic growth points to an important opportunity. These findings suggest that renewable energy consumption can help address global warming and climate change without compromising economic growth. Economies should promote the necessary policies and projects to increase the share of renewable energy types among energy sources. The study found a permanent bidirectional causality between the positive and negative components of economic growth and renewable energy consumption. This result shows that economic growth and renewable energy consumption are closely related. Renewable energy resources play an essential role in realizing environmentally friendly economic growth. Initiatives to increase the share and diversity of renewable energy sources should be supported to ensure environmental sustainability and green growth in the US. Although these findings and policy recommendations are specific to the United States, they have important implications for other developed and developing countries. In this regard, it is important to evaluate the results obtained in the US for developing countries.

In conclusion, the paper reintroduces the importance of renewable energy consumption in increasing environmental quality and ensuring sustainable economic growth. In all countries, especially the USA, it is necessary to diversify renewable energy sources and increase their usage. The participation of developed countries, especially the USA, in global green initiatives and their support, may facilitate the fight against global warming. It would not be surprising if the successful results in developed countries spread to other countries. So, developed countries need to be role models for a greener world. In addition, renewable energy sources are important in ensuring a sustainable energy supply. Permanent solutions can be developed with green energy types today when a significant part of the world is in an energy supply crisis. It emphasizes the importance of increasing the share of renewable resources among energy sources to achieve economic growth and control environmental degradation.

This study used Symmetrical and Asymmetric Spectral Granger Causality models for the 1973M01-2022M06 in the USA. When new and larger datasets, different series, and current empirical models are obtained, this study can be replicated for both the USA and other developed and developing countries.

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Zuhal, M., Göcen, S. The relationship between CO 2 emissions, renewable energy and economic growth in the US: evidence from symmetric and asymmetric spectral granger causality analysis. Environ Dev Sustain (2024). https://doi.org/10.1007/s10668-024-05002-9

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