Imagine spending billions building state-of-the-art kitchens across a city, only to discover nobody’s particularly hungry. That’s essentially what’s happening with India’s renewable energy sector in 2025—a boom in clean power capacity that’s rapidly outpacing actual electricity demand, creating a paradox where success breeds its own problems. India hit 50% non-fossil fuel capacity earlier this year, ahead of schedule on its ambitious march towards 500 gigawatts by 2030. Celebrations were muted, however, because a significant portion of this shiny new renewable capacity sits idle or curtailed, unable to find buyers or grid infrastructure capable of evacuating the power it generates. Industry officials warn that without integrated planning addressing this fundamental mismatch, India risks transforming what should be a triumph into an expensive lesson in putting the cart before the horse.
When Supply Races Ahead of Demand
India’s renewable power output surged at its fastest rate since 2022 during the first half of 2025, an achievement that would ordinarily merit unqualified praise. The problem? Demand growth has lagged stubbornly behind capacity additions, creating surplus power in several regions that forces renewable plants to curtail generation. It’s the energy sector’s version of overproduction—factories running at partial capacity not because they can’t produce more, but because nobody needs what they’re making.
This surplus isn’t merely inefficient; it’s costly. Managing excess energy requires sophisticated grid balancing, backup conventional power to handle variability, and transmission infrastructure that often doesn’t exist where needed. Officials emphasize that without increasing demand to match the capacity being built, the system becomes both operationally inefficient and economically unsustainable. Renewable plants designed to run at optimal capacity find themselves throttled back, their potential revenue curtailed along with their generation, undermining the commercial viability that attracted investment in the first place.
The root issue lies in how India’s transmission infrastructure was planned—based on potential renewable zones rather than actual electricity needs. This geographical mismatch creates absurd situations where abundant renewable power is generated in remote areas whilst demand centres elsewhere lack adequate connectivity. The result? Skyrocketing transmission charges for moving high-voltage power across vast distances through infrastructure that wasn’t designed for these patterns. These excessive costs directly impact power prices, making utilities increasingly reluctant to sign long-term power purchase agreements. Experts warn that if this mismatch persists, substantial renewable capacity may remain stranded—built, commissioned, and utterly useless.
Infrastructure That Cannot Keep Pace
The strain on India’s transmission network grows more evident monthly. The government attempts to address this through revised transmission plans every six months based on real-time data and weather forecasts, but planning cycles cannot match the speed at which renewable projects are commissioned. The current grid setup often simply cannot handle the renewable energy surge, translating into increased costs for utilities and ultimately consumers. These costs stem primarily from the need to build additional transmission lines matching renewable zones’ geographical locations rather than where demand actually exists.
This infrastructure lag creates a vicious cycle. Developers choose sites based on resource availability—where sun shines brightest or wind blows strongest—which often correlates inversely with population centres and industrial demand. Building transmission to connect these resources requires years of planning, land acquisition, and construction, whilst renewable projects can be commissioned in months. The temporal mismatch means infrastructure perpetually chases capacity, never quite catching up.
Resource adequacy planning at both national and state levels offers potential solutions by ensuring power generation aligns with demand and infrastructure capabilities, reducing wastage and curtailment. The government actively encourages storage solutions such as batteries to handle excess capacity during low demand periods, but implementation remains patchy. Large-scale battery storage remains expensive, and whilst costs are declining globally, deployment in India hasn’t matched the scale needed to meaningfully buffer the supply-demand gap.
More fundamentally, India lacks a comprehensive demand response market that could intelligently shift consumption based on real-time prices. Such markets, common in more mature power systems, allow industrial consumers and even residential users to adjust usage patterns when prices signal surplus or scarcity. Without these mechanisms, the grid operates crudely—generation either feeds into the system or gets curtailed, with limited flexibility between those extremes.
The Cost of Misalignment
The inability to match renewable generation with demand has driven power costs upwards significantly. Excess capacity and transmission inefficiencies translate directly into higher tariffs for consumers and distributors, particularly in regions with limited demand growth. As market volatility increases, projects face cancellation risks if they cannot secure viable power purchase agreements or evacuate generated power efficiently.
Several large renewable projects commissioned after June 2025 already struggle to secure sale agreements, highlighting how quickly theoretical capacity becomes practical liability without corresponding demand or infrastructure. The financial implications extend beyond individual projects—banks become warier of renewable financing, developers demand higher returns to compensate for evacuation risk, and utilities factor uncertainty into tariffs passed to consumers. What began as a supply-demand mismatch cascades into systemic market instability.
Experts consistently warn that unless India accelerates efforts to integrate renewables with flexible demand and storage, costs will continue rising whilst surplus capacity remains persistent. The solution requires holistic thinking—encompassing system-wide planning, grid modernisation, and technology adoption—to prevent underutilisation of renewable investments. As one official candidly stated, “Until we see the system holistically—planning, execution, grid operation, and cost—we will go wrong.”
India’s rapid renewable energy rollout represents both achievement and cautionary tale. The country is unquestionably making significant strides towards a cleaner energy future, commissioning renewable capacity at impressive rates and hitting interim targets ahead of schedule. Yet demand-supply mismatch, transmission bottlenecks, and inflexible grid mechanisms threaten to transform progress into pyrrhic victory—capacity that exists on paper but delivers neither environmental benefit nor economic return.
Sustaining growth and controlling costs demands a more integrated approach: aligning capacity expansion with actual demand rather than aspirational targets, investing seriously in storage and demand response mechanisms, and upgrading grid infrastructure proactively rather than reactively. Only through these measures can India fully capitalise on its renewable potential and meet ambitious climate commitments without risking underutilisation or financial inefficiencies. The alternative—continuing to build capacity faster than the system can absorb it—transforms what should be a clean energy revolution into an expensive monument to misaligned planning. India has demonstrated it can build renewable capacity rapidly; now it must demonstrate it can use that capacity effectively.