Frontrunners Rajasthan and Gujarat need policy interventions to supercharge energy transition momentum
Implementing a green tariff, establishing dedicated infrastructure funds, integrating green budgeting practices, promoting distributed renewable energy and investing in grid modernisation and energy storage will help the states
Key Takeaways:
Introducing an incremental green tariff in Rajasthan and lowering Gujarat’s high incremental green tariff will attract consumers to renewable energy by providing a flexible and low-risk path to sustainable power while generating additional revenue for DISCOMs.
Creating renewable infrastructure funds and adopting green budgeting in Rajasthan and Gujarat will secure capital for renewable projects, streamline fiscal strategies, and strengthen economic growth aligned with environmental goals.
Scaling up distributed renewable energy (DRE) and advancing grid infrastructure will help Rajasthan and Gujarat boost renewable capacity, improve grid reliability, and reduce reliance on fossil fuels, driving a resilient transition to clean energy.
While Rajasthan and Gujarat have been at the forefront of renewable energy deployment in the country, some corrective actions in their policies can accelerate the momentum and keep playing a central role in India’s energy transition, a new briefing note by the Institute for Energy Economics and Financial Analysis (IEEFA) states.
The note analyses the progress that the states have made with renewable energy deployment and finds that their progressive policies have helped them become powerhouses in this sector. It adds that taking steps like implementing a green tariff, integrating green budgeting practices, setting up dedicated infrastructure funds, promoting distributed renewable energy, modernising the grid and developing storage solutions will help both states continue to lead India’s energy transition.
“India’s energy transition requires states to make a concerted effort to strengthen renewable energy initiatives. While states that are slower in their transition to clean energy need to ramp up efforts, even leaders like Rajasthan and Gujarat must keep taking stock and corrective measures to ensure they do not lose momentum,” says the note’s co-author Vibhuti Garg, Director – South Asia, IEEFA.
“By adopting the right strategies, states like Rajasthan and Gujarat can effectively navigate the transition to a sustainable energy future, achieving their renewable energy goals while fostering economic growth and environmental sustainability,” she adds.
While Rajasthan currently does not have an incremental green tariff, Gujarat has one of the highest. Both states need to course correct, the note finds.
“By enabling consumers to procure renewable power at a premium, Rajasthan can drive demand for renewable energy, encouraging further investments in renewable energy infrastructure without burdening consumers with high upfront costs,” says the note’s co-author Tanya Rana, Energy Analyst, IEEFA.
“Gujarat should focus on refining its regulatory framework to ensure this pricing does not deter potential consumers,” she adds.
The note recommends that both states integrate green budgeting into their fiscal planning. Green budgeting will allow Rajasthan and Gujarat to prioritise investments in renewable energy and green technologies,” says Rana.
Rajasthan and Gujarat are among the better-performing states in India regarding distributed solar installed capacity. However, given that Rajasthan and Gujarat only have about 7% and 15%, respectively, of their total renewable energy capacity (including large hydro) to distributed solar, there remains substantial untapped potential. The note recommends that both states increase their efforts to promote distributed renewable energy (DRE).
“Promoting DRE can reduce pollution by decreasing reliance on centralised power plants, helping both states meet their renewable energy targets while creating jobs and stimulating economic growth,” says Rana.
The note also recommends the two states set up dedicated infrastructure funds designed to finance renewable energy projects. “These funds can provide the necessary capital for large-scale investments, enabling the states to implement ambitious renewable energy targets effectively,” says Garg.
A multifaceted approach is essential to accelerate the renewable energy transition in Gujarat and Rajasthan. This involves implementing strategic measures that enhance financial resources, improve market dynamics, and support effective governance. The note’s recommendations aim to provide a framework for achieving ambitious renewable energy targets.
Read the report: Cementing Rajasthan’s and Gujarat’s Renewable Energy Leadership
Media contact: Prionka Jha ([email protected]); +91 9818884854
Author contacts: Vibhuti Garg ([email protected]); Tanya Rana ([email protected])
About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. (ieefa.org)
