Context

• India has aggressively expanded its clean energy capacity, with non-fossil fuel sources making up about 50% of total installed electricity capacity as of June 2025.
• The grid emission factor has risen from 0.703 tCO₂/MWh in 2020–21 to 0.727 tCO₂/MWh in 2023–24, meaning the power consumed today is dirtier than it was five years ago.
• This paradox, rising renewable capacity accompanied by increasing emissions, highlights the complex realities of India's decarbonization journey.
• Understanding the mismatch between capacity and generation, the timing dynamics of renewable supply and demand, and the critical role of energy efficiency offers a pathway toward resolving this contradiction and achieving a truly clean power system.

The Capacity–Generation Mismatch

• India’s clean energy progress is often assessed by the growth of installed renewable capacity. Yet, capacity does not equate to delivered electricity.
• Renewable sources such as solar and wind typically operate at only 15–25% of capacity due to intermittency, whereas coal and nuclear power plants function at much higher utilisation levels of 65–90%.
• As a result, despite half the installed capacity being non-fossil, renewables supply only about 22% of actual electricity generation.
• The rest continues to come from fossil fuels, predominantly coal. In a rapidly growing economy with rising electricity demand, coal has filled the energy gap, pushing up total emissions.

Temporal Demand–Supply Challenges

• India’s electricity demand profile further complicates decarbonization efforts.
• Solar energy peaks during the afternoon but declines sharply by evening, just as household and commercial electricity demand surges.
• This mismatch forces coal-based power plants to serve as the grid’s primary backup, particularly during peak hours and at night.
• While renewables are growing fast, the system lacks the flexibility needed to rely on them during critical demand periods.
• Round-the-Clock renewable power solutions are emerging and are already cost-competitive with new coal plants, yet scaling them requires extensive land acquisition, transmission infrastructure, and financing areas where progress remains slow.

Energy Efficiency as a Strategic Necessity

• Energy efficiency emerges as a crucial, often overlooked, solution to India's clean energy paradox.
• Known as the first fuel, efficiency reduces electricity demand before it even arises, easing pressure on fossil-based generation.
• Efficient appliances, industrial equipment, cooling systems, and building standards can flatten peak demand curves, enabling better integration of renewable energy resources.
• Evidence from the Bureau of Energy Efficiency shows India saved roughly 200 Million Tonnes of Oil Equivalent and avoided around 1.29 gigatonnes of CO₂ between FY2017-18 and FY2022-23, a testament to the transformative potential of efficiency-driven policies.
• For a nation facing relentless growth in energy demand, efficiency is not optional; it is central to successful decarbonization.

Policy Directions for a Flexible, Low-Carbon Grid

• For India to unlock the full value of its renewable energy capacity, complementary policy measures are essential.
• These include enabling households and businesses to use stored battery power through virtual power plants, enforcing higher efficiency standards for appliances, incentivising small industries to adopt efficient machinery, and introducing dynamic electricity pricing to shift consumption toward periods of high renewable availability.
• Additional steps such as scrapping outdated equipment and allowing distribution companies to procure high-efficiency, clean energy services, such as green cooling, can accelerate transition efforts.
• The Central Electricity Authority projects a decline in India’s grid emission factor to 0.548 by 2026-27 and 0.430 by 2031-32, but achieving this trajectory requires prioritizing system flexibility and energy efficiency alongside renewable expansion.

Conclusion

• The path to resolving this contradiction lies not only in building more renewable energy plants but also in redesigning the energy system to better utilize them.
• Energy efficiency must become the foundation of India’s decarbonization strategy, complemented by flexible grid infrastructure, advanced storage solutions, smart pricing mechanisms, and progressive regulatory reforms.
• By embracing efficiency as the first fuel and prioritizing flexibility over fossil-based backup power, India can ensure that clean energy capacity translates into truly clean electricity, securing a sustainable, low-carbon future.