India Sees Record Green Energy Share as Power Demand Falls

• Renewables hit 19% of India’s power mix amid lower demand.
• Thermal output fell as rain cut electricity use.
• ₹54 billion approved for 30 GWh battery storage.

India's renewable energy generation increased sharply due to declining power demand and continued additions of renewable capacity, according to a report by HSBC. Renewable energy accounted for 17% of power generation in May 2025, up from 13% in the previous year, and 19% in the initial 10 days of June, compared to 14% in the previous year.

There is a considerable decrease in power demand due to a high base effect, combined with factor of the excess rainfall generating additional effects. Power demand and peak demand fell by 4% and 7% in May, and by 1% each in the early part of June. Above average levels of rain reduced rather mandatorily, without needing to specify the amount of electricity consumed.

With renewable energy having must-run status, thermal plants were forced to cut generation. Therefore, the PLF fell to 65% in May, down from 72% in the previous year.

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The report stated, "Accordingly, coal stocks at power plants reached a significant 61m tonnes (21 days of demand versus 17 days at the same time last year). This also resulted in power prices during solar hours dropping to zero on 25 May. Power deficits, accordingly, remained negligible through the month".

To support renewable energy intermittency and provide overall system stability, the government is adding to battery storage. The government recently announced an additional ₹54 billion in VGF (viability gap funding) to support 30 GWh of battery storage equal to $21 per kWh of incentives by the government. Of these, 25 GWh would be allocated to states, whilst the remaining 5 GWh was allocated to NTPC. This is in addition to the current level of ₹37 billion in existing VGF for 13 GWh of storage that was currently available.

According to HSBC note, "Further, the government also extended the waiver of Inter-State Transmission (ISTS) charges for pumped storage plants (PSP) (construction awarded before June 2028) and co-located battery storage (BESS) for projects (commissioned before June 2028). This will help accelerate the take-up of battery tenders - nearly 10GWh of BESS tender capacity has been awarded since March 2024".