As geopolitical tensions reshape global energy markets and supply chains, India’s renewable energy sector is entering a more complex and strategically important phase. From rising freight and financing costs to the growing push for storage, open access and domestic manufacturing, the clean energy transition is increasingly being viewed through the lens of energy security rather than climate commitments alone. In an interaction with BW Businessworld, Vinay Pabba, CEO Vibrant Energy discusses how Middle East tensions are influencing India’s renewable strategy, why open access remains structurally viable despite regulatory friction, whether C&I tariffs have bottomed out and why he believes India’s 2030 renewable energy targets are now ‘within striking distance.
’How does the current geopolitical situation in the Middle East impact India’s renewable sector, particularly in terms of supply chains and project costs?
The current geopolitical situation in the Middle East impacts India’s renewable sector first through fuel costs and then indirectly through project economics. When a large part of crude and LNG moves through the Strait of Hormuz, any conflict immediately affects India’s fuel bill. Oil prices have already risen well above pre-war levels, while freight and insurance premiums have also increased sharply. This affects every kilometre of logistics and every tonne of steel and cement used in solar and wind projects. At the same time, the crisis is strengthening the political case for clean energy because the Indian government, utilities and even the military increasingly see renewables as a hedge against imported fuel volatility. On one side, there is temporary cost pressure, but on the other, there is a structural shift in intent that will likely translate into more renewable tenders, more storage deployment and greater focus on decentralised assets. In supply chains, the impact so far has been more friction than fracture. Freight and transit times, especially for inputs coming from West Asia, have become volatile, forcing developers to build higher contingencies and longer buffers into EPC timelines. Since India still relies heavily on Chinese and Asian sources for modules, inverters and batteries, the larger concern is that any overlap between Middle East tensions and broader trade disruptions in Asia could become catastrophic. There are also second-order effects. Petrochemical and metal supply chains have become more expensive and unstable, affecting cables, resins, polymers, tower coatings and several other components that may not make headlines but significantly affect renewable project budgets.
Another major impact is on the cost of capital. Global conflicts such as Russia-Ukraine earlier and now the Iran war have raised risk premiums and made electricity more expensive in Indian markets because companies are paying extra for certainty of supply. Renewable projects are highly front-loaded capex assets, and financing already accounts for nearly 60–70 per cent of the levelised cost. A higher risk perception and rising currency hedging costs, especially with currency depreciation, can quickly turn a winning bid into a stressed or unviable project. However, India continues to deliver some of the world’s lowest solar and wind tariffs due to strong irradiation, good wind resources, relatively low capex and a policy ecosystem that has matured over the last decade. Contingency budgets and interest rates have increased, but the fundamental competitiveness of renewables against imported fossil fuels has strengthened with every oil price spike. The broader outcome is that geopolitics is forcing India’s renewable sector to mature. The conversation is shifting towards domestic manufacturing, storage, grid upgrades and diversification of sourcing instead of only chasing megawatt targets. Companies that emerge stronger from this phase will be those treating supply-chain resilience and risk pricing as core design parameters rather than fine print. As Canadian Prime Minister Mark Carney said recently in Davos, “A country that can’t feed itself, fuel itself or defend itself has very few options. When the rules no longer protect us, we must protect ourselves.” That statement captures the deeper impact of the current crisis on the renewable energy sector.
Do you see global energy tensions influencing India’s policy stance on renewables and energy security?
Global energy tensions are no longer just headlines for India. They are starting to show up in discussions around India’s renewable and energy security policies. Every major energy shock, from the Russia-Ukraine conflict to the current Middle East crisis, reminds policymakers that India still imports around 85 per cent of its crude oil and a large share of its gas, much of it linked to global trade routes and overseas supply chains. That vulnerability is now clearly shaping policy conversations. Energy security is increasingly being defined not just as securing more fuel or more electricity, but as diversification, where renewables, storage and electrification play a central role. This can be seen in the push to accelerate approvals and clearances for solar, wind and battery storage projects at a time when gas supply and LNG prices remain volatile. At the same time, the government is expanding strategic petroleum reserves while also talking more seriously about electric vehicles, public transport and maritime security for energy trade routes. Fossil fuel buffers and clean energy infrastructure are effectively being built together. There is a dual-track approach emerging, where both conventional and renewable energy systems are being strengthened simultaneously. In the short term, India is likely to continue relying on coal and expanded gas infrastructure whenever global shocks disrupt markets because those remain the quickest ways to ensure uninterrupted power supply and keep the economy functioning during periods of instability.
At the same time, those very shocks are accelerating India’s long-term renewable commitments. Targets such as 500 GW of non-fossil fuel capacity by 2030, green hydrogen programmes and large-scale storage tenders all point to a growing recognition that dependence on imported fossil fuels is now being viewed as a structural risk and not merely a pricing issue. Conversations in policy circles are increasingly framing renewables not just as climate obligations, but as strategic national assets. Renewable energy is beginning to be seen as a form of insurance for India’s broader economic and foreign policy interests. Every additional megawatt of solar or wind capacity reduces some degree of dependence on imported energy and exposure to geopolitical disruptions. There is also a visible shift in how energy transition discussions are being positioned. The focus is moving beyond sustainability and emissions targets toward resilience, diversification and long-term energy independence. Renewable energy, storage and electrification are increasingly being linked to national preparedness and economic security. From the perspective of policymakers and industry stakeholders, the current geopolitical environment is accelerating the need to build a more diversified and self-reliant energy system. As renewable capacity expands, the country becomes less vulnerable to supply disruptions, volatile fuel prices and external geopolitical conflicts. The larger message emerging from these developments is that India’s renewable energy transition is no longer being driven only by climate goals, but also by the need to reduce strategic dependence on imported fossil fuels and strengthen long-term energy security.
Is open access still structurally viable, or are state-level restrictions beginning to limit its growth?
Open access remains structurally viable, but it is no longer a simple build-and-forget model. It is increasingly becoming a state-by-state strategy game where regulatory and policy innovation matter as much as tariff arbitrage. At a structural level, the demand signals remain very strong. In 2025 alone, India added close to 8 GW of open access clean energy capacity. Corporates continue to seek cheaper and cleaner power, while newer demand drivers such as data centres are emerging due to rising AI-related energy requirements. Traditional industrial consumers including steel and cement companies are also driving demand, particularly those with export commitments that face carbon border adjustment taxes in European markets. These factors are making open access an important instrument for companies looking to meet their own Scope 2 sustainability targets. This is one of the key reasons behind the record 8 GW of clean energy open access additions across the country in 2025. There is also a growing pipeline of open access projects emerging across India as more industries seek long-term energy cost stability and lower carbon exposure.
Government policy support has also strengthened the sector. Central government frameworks and regulations such as the Green Energy Open Access Rules have lowered eligibility thresholds for consumers and, more importantly, helped standardise charges and processes across states. That standardisation has become a significant tailwind for the industry because one of the biggest challenges in open access historically has been inconsistent implementation and varying state-level regulations. The current framework sends a clear signal that open access is expected to remain a long-term part of India’s clean energy transition and that there is regulatory backing to support its growth. At the same time, the market is becoming more sophisticated and competitive. Success increasingly depends on understanding state-specific regulatory structures, transmission frameworks and policy environments rather than relying only on lower renewable tariffs. The broader direction, however, remains positive because demand for clean and cost-effective power continues to rise across sectors. As industrial consumers focus more heavily on sustainability commitments, export competitiveness and energy security, open access is likely to remain an important mechanism for renewable energy adoption in India.
How do you see the relationship between DISCOMs and private renewable players evolving?
Open access is very much viable, but what is happening on the ground is that states offering clarity on charges, banking and timelines are attracting capital, while states that do not provide this kind of visibility are losing out to their neighbours. As developers working on C&I and open access projects, we are now building our models on two layers of risk — the normal project risk and the regulatory behaviour risk. The anxiety today comes from the fine print of open access rules within the power sector. DISCOMs under financial stress in some states are responding in the conventional way by raising charges, increasing cross-subsidy surcharges, tightening banking provisions and creating procedural friction, which can slow or shift growth rather than kill it entirely. If you are a CFO looking at a 25-year open access PPA, regulatory unpredictability matters as much as the headline tariff because it directly affects returns and the overall financial model. What is happening on the ground is effectively a sorting process. States that offer clarity are attracting investment, while states that do not are increasingly being ignored.
Are renewable tariffs in the C&I segment bottoming out, or do you see upward pressure ahead?
There is a clear change in the tone of conversations around C&I tariffs. Tariffs in the C&I renewable energy space are now much closer to the bottom than most people think. The next phase of the C&I tariff story is likely to focus more on the quality and shape of power rather than simply chasing a 10–15 per cent reduction in tariffs. Over the last few years, C&I consumers benefited from a sweet spot where conventional grid tariffs kept rising while solar and wind costs continued to decline. This steadily increased the arbitrage opportunity and made renewable energy extremely attractive in several states. That is one of the key reasons why the sector has seen such rapid scaling of C&I renewable capacity. India currently has close to 35 GW of C&I clean energy capacity, and forecasts suggest this could go well beyond 60 GW in the next few years, implying annual growth rates of nearly 45–50 per cent. However, the market dynamics are now changing. Module prices have largely bottomed out, interest rates remain elevated and grid and network charges are becoming increasingly cost-reflective. As a result, the phase where renewable tariffs became cheaper every year is beginning to slow down, indicating that tariffs are nearing their bottom.
There are three major sources of upward pressure on tariffs going forward. The first is input and financing costs, including volatility in module pricing, increasing battery storage costs, commodity inflation and higher interest rates. The second is regulatory friction, particularly rising open access charges, tighter banking rules and policy uncertainty in some states. These factors increase risk premiums, especially when DISCOMs are under financial stress. The third factor is the growing shift toward round-the-clock power expectations from C&I customers. Once storage and firming solutions are added to replicate a 24x7 power product, the blended tariff naturally becomes higher than that of a pure daytime solar project. As battery storage becomes a larger part of the energy mix, tariffs are expected to move upward structurally. That is the direction in which the market appears to be heading.
At current costs, does battery storage make commercial sense at scale?
Adding batteries to the energy mix makes commercial sense today in very specific use cases, particularly at a system scale rather than at an individual project scale. It is still not a universal or automatic add-on for every megawatt of renewable energy added to the grid. At the distribution and grid level, however, the sector has already moved well beyond the PowerPoint and conceptual stage for battery adoption. Regulators have cleared India’s first standalone BESS projects on commercial terms, with discovered tariffs that are significantly lower than earlier benchmarks. That is a strong signal that storage can compete with traditional peaking power and network investments in the right locations.
Are India’s 2030 renewable energy targets realistically achievable at the current pace?
If you look at the last 15 years, the safest bet in Indian infrastructure has been not to underestimate renewables. Every time the industry believed a target was too ambitious, the sector surprised everyone on the upside. On the 2030 renewable energy targets, I am actually very optimistic. India has already crossed its earlier non-fossil fuel 50 per cent share target ahead of schedule, and the ecosystem today is very different from what it was even five years ago. There is now scale in domestic manufacturing, a deep pool of developers, global capital that understands Indian market risks and a very clear political consensus that the energy transition is strategic rather than optional. There is definitely a need to accelerate the current pace, but that acceleration is already visible in the pipeline. Larger renewable tenders are becoming common, hybrid projects are moving mainstream, storage is finally shifting from discussion rooms to actual deployment and there is a serious push toward transmission buildout. In my own business, the conversation with customers has changed completely. Earlier, the question used to be whether companies should adopt renewables at all. Today, the question is how quickly additional renewable capacity can be added. Many large data centre customers are now asking for 500 MW-scale renewable projects to be delivered within a year. That is the level of demand emerging in the market today, and the demand pull is extremely strong.
I also believe India’s ability to move quickly once policy direction is locked in is often underestimated. The country has already demonstrated this in areas such as digital payments and highway infrastructure, and the same momentum is now beginning to appear in clean energy. My sense is that if India gets grid expansion and state-level execution even 70–80 per cent right, the country will not only meet the 2030 renewable targets but could potentially make those targets the baseline for what comes next. These targets are no longer just aspirational announcements. They are increasingly within striking distance. The bigger question may eventually become how much further beyond 500 GW India needs to go, rather than whether the country will fall significantly short of the target. That is the level of optimism I currently see within the sector. |
