According to a report from BMI Country Risk & Industry Research, a division of Fitch Solutions Group Ltd, India is poised to experience a substantial increase of more than 70% in its electricity generation over the next ten years, making it the most significant surge among the world's top electricity producers.

The report suggests that India's energy landscape is on the brink of a transformation, with a strong emphasis on non-hydropower renewable energy sources. By 2032, these renewables are expected to account for 16.9% of the country's total electricity generation. Nevertheless, coal-based generation will continue to play a dominant role, maintaining its position as the primary contributor to India's electricity production, highlighting the nation's dependence on coal.

The surge in electricity generation can be attributed to robust demand driven by population growth, urbanization, and increased requirements in sectors such as construction, manufacturing, and services. This is anticipated to result in an average annual growth rate in electricity consumption of 4.9% until 2032, positioning India just behind Vietnam and the Philippines among Asia's largest economies.

The report also forecasts that coal will contribute nearly 60% to India's power generation growth due to its cost-effectiveness, ample availability of feedstock, and a robust pipeline of coal power plant projects. In contrast, renewables, led by solar and wind energy, are expected to contribute 26% to the overall expansion of power generation. The annual growth rate in renewable electricity generation is projected to average 9.2% over the next decade, driven by the availability of feedstock, particularly in solar power, and a growing supportive policy environment at both the national and local government levels.

India is expected to maintain its position as the world's third-largest power producer, following China and the United States. In the non-hydropower renewables sector, it will rank as the fourth-largest producer, trailing behind China, the United States, and Germany.

However, the report raises concerns about potential risks on the horizon, particularly safeguard duties imposed on solar cell and module imports from China. While these measures aim to boost domestic manufacturing, they could hinder the growth of India's solar power sector.

The report underscores the significant role of government support in driving India's renewable energy growth. The administration of Prime Minister Narendra Modi has implemented various incentives, including subsidy schemes, financing mechanisms, tax incentives, auction systems, and net metering, to stimulate sectoral growth and attract investments. The recently enacted Energy Conservation (Amendment) Bill of January 2023 seeks to limit fossil fuel-based power consumption and establish a carbon trading scheme, aligning the country further with its renewable energy objectives.

Indian state governments are also playing a crucial role in the transition to renewable energy. Many states have set their renewable power targets and formulated specific policies for solar, wind, and wind-solar hybrid projects, offering tax exemptions and other incentives. Rajasthan, with the largest installed capacity of renewable energy among Indian states, stands out as a leader in this regard, boasting 21.2GW of renewable energy capacity as of January 2023, comparable to major developed and emerging markets such as Poland, Vietnam, Canada, and Sweden. Solar energy dominates in Rajasthan, constituting nearly 80% of all renewable installed capacity, supported by favourable state policies such as the Solar Energy Policy.

While the Indian government's protectionist measures, including duties on solar components, aim to enhance domestic manufacturing capabilities, they have led to a 73% year-on-year decline in solar module and cell imports in the fourth quarter of 2022. These measures, though supportive of domestic manufacturing, pose potential challenges to India's renewable energy capacity growth.