Patient capital critical for renewable energy growth: MNRE Secy Santosh Kumar Sarangi

India, the world’s fourth-largest country in terms of renewable energy capacity, is making significant good progress in clean energy as it works towards achieving net-zero emissions by 2070. The country has met its commitment of sourcing 50% of its installed power capacity from non-fossil sources (renewables) five years ahead of schedule. In an exclusive interview with ET Digital, Santosh Kumar Sarangi, Secretary, Ministry of New and Renewable Energy, discusses the sector’s progress, key challenges, and emerging opportunities across its various segments. Edited excerpts:

ET: As the US shuts its doors with 50% tariffs, can India’s solar exports withstand a market where 95% of shipments go to just one destination?
Santosh Kumar Sarangi (SKS): If you look at the previous exports, they were not very high—amounting to about $1 billion to the US annually. A significant share of those exports had already happened before the 25% additional tariff was imposed. So, exports to the US have dropped to zero in the current year, primarily due to the implementation of tariffs. However, that is not a great concern. First, our export volumes were not high enough for a reduction or discontinuation to have a meaningful impact on domestic manufacturing or deployment. Our overall exports have increased by $97 million, around a 31-32% increase, between April and October of this fiscal year compared to FY25, with gains seen both in value and volume.

Second is our domestic demand. In the current year, demand has been fairly high; by the end of October, we had already surpassed last year’s total installation. Last year, we did about 28 GW of renewable energy capacity by October. We have already done nearly 32 GW this year and are likely to surpass 40 GW. Domestic demand for the renewable sector, both in wind and solar, is substantial in the current year. So, domestic manufacturers will not be very adversely impacted.



ET: Even as India’s solar exports face headwinds, domestic consumption has surged, helped by falling component costs. With some analysts expecting demand to potentially outpace supply, can the domestic market step in as a buffer for the industry?
SKS: I don’t think that should be a concern because if you look at our manufacturing capability, it has substantially gone ahead, and many investors have already set up model manufacturing plants. If you look at the solar module manufacturing capacity today, it is already 122 GW, and by the end of the financial year or by June of 2026, we expect it to reach 150 GW. Similarly, we already have 27 GW solar cell manufacturing capacity, and we expect it to touch about 65 GW by June 2026. So, in terms of manufacturing capability to support domestic demand, assuming there is a demand growth, there should be enough capacity.

Further, with schemes like the PM Surya Ghar: Muft Bijli Yojana, where consumers are massively adopting rooftop solarisation, it’s also going to create a substantial domestic demand.


ET: Can solar tariffs come down below Rs 2.50 a unit—do you see that happening for India?
SKS: At some point in time, it can happen. There is a lot of research going on funded by the Ministry of New and Renewable Energy (MNRE) in IIT Bombay. For instance, in research on perovskite solar cell, we have seen that the efficiency, which is currently in the range of 19 to 21% in silicon cells, can go up to 26-27% in perovskite single-junction cells and up to 30%-plus in tandem silicon-perovskite cells. That provides us with a lot of optimism that over the years, as and when we are able to commercialise the lab-level experiments to actual commercialisation, it will substantially come down. It can definitely come down below Rs 2. That is a study being funded by MNRE to do lab skill research and establish the efficiency and stability of perovskite solar cells.
That is an ongoing study which we have funded over a period of time—nearly Rs 150 crores into R&D activities at IIT Bombay for this purpose.


ET: What are the biggest hurdles for the renewable energy sector?
SKS: So, one challenge, of course, is the transmission sector’s ability to keep pace with the renewable energy sector. In the past, a thermal power plant or a coal-based power plant used to take about 5-7 years to become operational. The gestation period allowed for the development of transmission infrastructure during that time. But today, an RE facility can come up in one and a half to two years, while the transmission infrastructure requires a similar timeline of 5 to 7 years. So that, of course, is a bit of a challenge.

Over and above that, integrating RE into the grid is also a challenge due to its variability; one can get solar [energy] only for eight hours. But what happens in the evening hours? What happens in the early morning hours? What happens at night? So, there will be challenges when you may not have RE to meet that requirement.

Wind similarly complements solar in a similar way; during non-solar hours, the impact of wind is higher and can produce electricity. However, wind itself is highly variable. As RE is integrated into the grid at scale, large-scale deployment of battery energy storage system will become essential. With more renewable capacity being added, we need more battery energy storage system to avoid oversupply of electricity during the daytime and to meet demand during peak hours.

If you look at the demand profile of discoms, there is a peak between 7 am and 9 am and another between 7 pm and 11 pm, when electricity consumption rises sharply. In the evening, demand rises as people return home and switch on appliances like TV, AC, and heaters. Similarly, demand rises in the morning as households prepare for the day. Battery energy storage systems can help meet these peak periods, while the rest of the demand can be met through a mix of wind, thermal power, PSPs (pumped storage projects), etc.

Now, renewable energy implementing agencies (REIS), such as NTPC, are trying to structure their bids in a manner that allows the discoms to receive power during this peak demand period. This approach should support better RE integration into the grid and improve offtake of RE projects.

ET: How is MNRE balancing the push for solar and wind with emerging areas?
SKS: If you look at all the top industries of India today, in one form or another, they are trying to set up green energy sourcing facilities for their units. So, a combination of green hydrogen-related initiatives and their implementation in transportation, shipping, steel, etc., will contribute to green energy’s growth. Efforts by the major industries to decarbonise and expand their green footprints and meet energy transition goals will also support this growth. Over time, the impact of distributed RE is also set to expand, with households adopting more and more rooftop solar and farms deploying more solar solutions for their agricultural activities. Together, all of these are going to support RE in a big way, and one can expect major growth coming in these sectors.

Pollution curb measures are another important area, although we are not directly involved. As these measures become more widespread, they are likely to have a meaningful impact, particularly in addressing vehicular emissions and pollution from construction-related activity. So, in course of time, greater use of hydrogen fuel cell cars, EVs, hydrogen, ICE vehicles, will definitely contribute to a reduction in pollution.


ET: Beyond capacity addition, how is India planning to ensure grid stability and integration of intermittent renewable sources?
SKS: Deployment of battery storage is one sure way to do so. Developed countries like China, the US, and Germany have gone ahead in battery deployment on a much larger scale. Some of the other countries that faced outages, like Portugal and Spain, are now rapidly increasing the deployment of battery storage in their RE. And so that has to be the case with India, where deployment of battery energy storage systems at transmission, generation, and distribution levels will have to be more and more prevalent.

And apart from that, other grid integration equipment, such as synchronous condensers and STATCOMs, also help in addressing some of the challenges related to RE in terms of fulfilling the requirements for grid integration.


ET: The global wind industry is facing rising input costs, policy uncertainties, and supply chain disruptions. How are these global headwinds impacting India’s wind sector?
SKS: I think these global headwinds have had an impact because in the recent tender that was done for the offshore-winded Gujarat coast, we didn’t find any bidders in that. So, we had to close down that building. Right now, an assessment of the wind potential is being done in Tamil Nadu, and we are getting a very encouraging result. In Gujarat, the CUF capital stipulation factor was only 37-38%, whereas on the Tamil Nadu coast it is coming to 45-50%—equivalent to what you get in some of the high-potential European countries.

So, the survey that is currently on will be over by January, and we should be in a position to come up with our final documents by February. But that notwithstanding, the higher capital expenditure on account of price increases in steel, copper, and other input materials has actually caused a bit of headwind for the offshore wind sector. So, we’ll have to wait and see, because this is an area where very few Indian manufacturers can participate, as offshore wind plants require some specialised expertise that may or may not exist with many of the Indian manufacturers. We will have to wait and see how many Indian and how many foreign developers are willing to participate in that.


ET: Land is often cited as one of the biggest bottlenecks. How is the ministry addressing these challenges on the ground?
SKS: So, one area will be in terms of manufacturing and the other could be deployment that requires higher land uses. On the deployment side, I think some of the barren areas of Gujarat and Rajasthan, like Kachchh, Bikaner, and the Saurashtra region, still have a lot of potential for capacity addition and utility scale. But over and above that, there is also a new potential of floating solar projects to come up in different parts of the country. In addition, there are pilots being carried out to see the implementation of agri-photovoltaics, which are generally solar panels that are raised on a straighter structure with a fair bit of height, which will not disturb the agricultural operation. So, they are at a height and width where a tractor can pass through agricultural implements. We are doing some of these pilots to see whether these can be implemented in agricultural fields without disturbing the agricultural production system. If we succeed, then land will never be a constraint after that.

As far as the manufacturing units are concerned, the land requirement is not really an issue, but for costs to come down, operational scale is required. So, as we see more and more consolidation because currently the number of module manufacturers is fairly high, in the course of time, those who are small may or may not be in a position to compete with some of the larger players, and we might see a bit of consolidation, but with scale, I think the cost can definitely come down.


ET: How is the ministry working on the solar waste issue?
SKS: Currently, solar waste falls under the e-waste rules, and we expect major solar waste to come after 2033. This timeline is because the initial development of solar installation began around 2002-2003, and the 25-year lifespan of these installations means they will reach end-of-life gradually. In fact, if you look at India’s solar scenario, the majority of deployment happened from 2016-17 onwards; before that it was minimal. So, there has been an instruction to store all solar waste expected from 2029 at a single, centralised location, with reprocessing planned from 2034-35 onwards. Circularity is definitely on our agenda, and we are funding research in different institutions to ensure maximum recycling. Many R&D institutions are now working with MNRE funding to achieve the highest possible recovery of materials.


ET: Financing remains critical. How is India mobilising global and domestic capital for renewable projects at scale?
SKS: So, for projects with a lifespan of 25 years, there is a significant requirement for patient capital. If an investor is looking to recover the cost of loans within nine years, then it becomes a bit of a challenge. Therefore, pension funds and equity investors need to have a bit of patience and sustained financing rather than focusing on short-term returns. So, from this perspective, we have seen strong interest from institutions like the Ontario Teachers’ Pension Fund. These pension funds have already invested in various projects in India and are actively seeking further opportunities.

From a security perspective, these are highly secure projects due to the long-term PSA arrangements between SECI/NTPC and the discoms—to that extent, the developers are fairly secure. So given the kind of arrangement that we have, there should be no concerns regarding the availability of either domestic or international finances.