India's Energy Crossroads: Why Round-the-Clock Renewables Deserve Budget Priority
As the Union budget approaches, India stands at a critical juncture in shaping its energy future. With electricity demand projected to grow by over 6% annually through the latter half of this decade, driven by industrial expansion, urbanization, data center proliferation, and widespread electrification of transport and buildings, the pressure on states to deliver reliable and affordable power is intensifying significantly.
The Uneven Landscape of India's Clean Energy Transition
The vision of a developed India by 2047 hinges not merely on adding capacity but on integrating energy planning into state-level development strategies. While clean energy has become central to India's growth narrative, the spatial distribution of this transition remains strikingly uneven. Renewable capacity additions, manufacturing investments, and supply-chain ecosystems are concentrated in a handful of renewable-rich states, leaving coal-dependent regions—historically the backbone of India's industrial economy—at risk of marginalization in the next growth phase.
The challenge transcends abstract climate compliance and enters the realm of economic reality: limited diversification, mounting fiscal stress, and declining investment attractiveness at precisely the time when growth is becoming increasingly energy-intensive. Without deliberate policy recalibration, the energy transition threatens to exacerbate regional disparities rather than bridge them.
Round-the-Clock Renewable Energy: A Triple-Dividend Solution
A strategic budgetary push for renewable energy round-the-clock (RE-RTC)—reliable clean power delivered through integrated solar, wind, and storage systems—offers a compelling pathway forward. By overcoming the traditional reliability constraints of standalone renewables, RE-RTC enables three interconnected development dividends that the upcoming budget can powerfully reinforce.
First Dividend: Accelerated and Inclusive State-Level Growth
Despite rapid renewable capacity expansion, industrial productivity, urban services, and digital infrastructure remain tethered to coal because conventional solar and wind installations cannot guarantee uninterrupted supply. RE-RTC fundamentally changes this equation by delivering assured power without gaps. Storage-backed renewable projects can be deployed within 2-3 years, significantly faster than the 6-7 years typically required for new coal capacity, enabling states to respond swiftly to escalating demand.
By helping maintain grid balance and meet peak power requirements, RE-RTC allows clean energy to function as a dependable input for manufacturing clusters, data centers, small enterprises, and critical infrastructure projects. Evidence of this growth dividend is already emerging across India. According to recent Lok Sabha data, the production-linked incentive (PLI) scheme for high-efficiency solar photovoltaic manufacturing had generated approximately 43,000 jobs by October, with Gujarat accounting for more than half of this employment. This illustrates how states that strategically align industrial policy, infrastructure investment, and renewable deployment are reaping substantial economic benefits.
Second Dividend: Enhanced Financial Resilience for States and Discoms
Both state governments and electricity distribution companies (discoms) face considerable strain from rising procurement costs, legacy coal-based power purchase agreements (PPAs), and fragile balance sheets. Yet many continue contracting new coal capacity through long-term PPAs, locking in high fixed costs for decades. As renewable tariffs decline and system flexibility improves, such contracts heighten the risk of stranded assets and constrain fiscal maneuverability.
Coal-based power generation faces additional vulnerabilities, including fuel availability uncertainties, logistical disruptions, and water-stress risks that ultimately increase costs for states. Meanwhile, battery energy storage system (BESS) costs—central to reliable RTC supply—have plummeted by over 80% in the past decade. Recent competitive bids have delivered effective tariffs in the ₹2.1-2.8 per unit range, making storage-backed renewables increasingly competitive with new coal-based power generation.
Strategic budget support can accelerate this transition while simultaneously improving discom creditworthiness. RTC deployment also strengthens states' capacity to attract external capital. In 2025, Rajasthan led the nation in fresh investment commitments, with a dominant share directed toward solar energy, followed closely by Maharashtra, Gujarat, and Odisha.
Third Dividend: Improved Public Health and Development Outcomes
Poor air quality imposes substantial economic costs through lost productivity, elevated healthcare expenditures, and diminished quality of life. Unlike partial renewable substitution, RE-RTC can displace coal generation throughout the entire day, delivering sustained air-quality improvements rather than episodic gains. These benefits carry direct fiscal significance: healthier workforces enhance labor productivity and reduce public health spending, complementing budget investments in human capital development.
Furthermore, improved urban livability becomes a crucial factor in attracting investment and skilled talent to industrial regions, creating a virtuous cycle of development and prosperity.
The Budget's Defining Role in India's Energy Future
As the budget formulation process advances, decisions regarding power procurement, storage infrastructure, and grid investment will fundamentally shape how states prepare for escalating energy demand. States that fail to adapt their energy strategies risk confronting higher costs, tighter fiscal constraints, and reduced investment inflows.
Round-the-clock renewable energy represents far more than a transition slogan—it constitutes a fiscally prudent and economically sound pathway that aligns energy reliability with broader development priorities. By placing coal-dependent states at the center of the next development cycle through strategic RE-RTC support, India can pursue a cleaner, more equitable, and more resilient energy future that powers sustainable growth across all regions.
