Renewables 2.0: Why Energy Companies Must Think Beyond Electricity

To compete in Renewables 2.0, companies have to pivot to expertise in holistic infrastructure, clean fuels, and carbon-reduction partnerships. Instead of bidding on isolated solar and wind projects, forward-looking developers have now taken to creating hybrid energy parks that mesh wind, solar, and storage.

November 05, 2026. By News Bureau

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Deviation Settlement Mechanism

Integrated Business Models

For the past decade, the renewable energy journey of India was defined by one matrix: scale vs. cost. Renewables 1.0 saw the establishment of numerous solar parks and wind farms in places across resource-rich corridors with a primary objective of feeding every unit of power into the grid. This stage was an essential step needed to help drop the prices of green energy, attract global capital, and demonstrate how energy could be generated economically through renewable sources as opposed to fossil fuels.

However, the quantity-based approach has now hit a hard operational wall, as grid infrastructure buildup and Grid balancing measures didn’t keep pace with the generation capacity addition.

The national grid is under significant stress. The amount of solar energy produced during the day often exceeds the demand, leading to expensive curtailments. This resulted in a reduction of generation as significant as 2.3 TWh in India from May to December 2025, and states such as Rajasthan saw curtailments of over 50 percent during peak hours.

There are two factors contributing to this situation. First, there is an oversupply of energy and second, the coal-fired power plants are unable to operate under the minimum technical level, which prevents any absorption of solar energy produced. On top of this situation are some serious transmission issues. Approximately 12 GW, or almost 7 percent of solar energy installed capacity, is unable to deliver the full amount of energy due to problems with the evacuation infrastructure. These also forced a large number of developers to seek INR 3,000 crore compensation from the Central Government for the grid unavailability and delays in infrastructure development.

The regulatory environment has gotten stricter. According to CERC, India’s Deviation Settlement Mechanism (DSM) framework, which penalises generators for discrepancies between their estimated generation (as per their forecast) and the actual generation, is now going to get even stricter with the introduction of narrower tolerance bands for wind and solar starting in 2026. Some states, such as Maharashtra, also advocate for tougher per-unit penalties for deviations in estimates.

The industry has now reached a turning point in development. It is no longer enough to simply put variable renewable energy onto the grid. Renewables 2.0 means a transition from pure generation capacity to delivering firm, reliable, dispatchable, and deeply integrated clean energy with close interval predictability that can meet the requirements of various sectors, cities, and modes of transportation.

The Rise of Integrated Business Models
Under the old paradigm of Renewables 1.0, energy enterprises were largely independent producers selling electricity through standalone, long-term PPAs. Much has changed since then, with the linear model now in rapid decline. To compete in Renewables 2.0, companies have to pivot to expertise in holistic infrastructure, clean fuels, and carbon-reduction partnerships.

Instead of bidding on isolated solar and wind projects, forward-looking developers have now taken to creating hybrid energy parks that mesh wind, solar, and storage. This enables Firm and Dispatchable Renewable Energy (FDRE), which is needed to satisfy requests for the uninterrupted supply of renewable energy from commercial companies. These integrated systems allow companies to diversify their activities beyond electricity, using the surplus electricity during the day to manufacture green hydrogen and green ammonia and thus become partners for more difficult-to-decarbonise industries, like steelmaking, cement, or chemicals.

Technology as the Enabler
The equipment, consisting of the turbines, panels, and batteries, remains the foundation, while software represents the brain of Renewables 2.0. At this stage, operations of hybrid asset facilities depend on smooth synchronisation between electricity generation, storage, and demand from the grid.

This is where AI, IoT, and digital twins converge. AI-powered forecasting models leverage atmospheric data, satellite images, and historic grid patterns to help operators follow tighter demand-side management (DSM) bands while reducing penalties for imbalances. Digital twins – virtual models of physical resources – allow operators to predict weather effects and damages, thus determining the right moments for energy storage vs. dispatching. Finally, IoT devices make predictive maintenance possible, detecting turbine wear and faults in inverters before downtime occurs.

A Shifting Capital Landscape
Capital markets are adapting. Institutional and foreign investors are growing more cautious about funding standalone renewable projects, given curtailment risk and merchant power exposure. Investments are now directed toward diversified and integrated platforms that provide greater surety of cash flow.

The entry of Infrastructure Investment Trusts (InvITs) in renewable energy has strengthened this transition since they help developers combine revenue-generating assets. InvITs allow developers to transfer their developed projects and, thus, to free up money for the newest projects in infrastructure, such as grid-scale battery storage, pumped hydro systems, and smart grid solutions.

Ultimately, Renewables 2.0 represents a shift from managing quantity to managing complexity. The companies that succeed in this next phase will not have the most panels on the ground, but rather the ones capable of intelligently distributing power.

- Krishnan Rajagopalan, Head IPP, Jakson Green