Zurich Report Identifies Rajasthan, Gujarat and Arunachal as High-Risk Renewable Energy States

Rajasthan, Gujarat and Arunachal Pradesh face the highest climate-related risks to India's renewable energy infrastructure, according to a new portfolio analysis by Zurich, which warns that strengthening climate resilience in these states will be critical to achieving the country's clean energy goals.

The report identifies the three states as carrying the highest absolute Value at Risk (VaR) and the largest share of renewable energy assets falling under critical climate risk categories by 2030. It recommends integrating forward-looking climate assessments into project planning, approvals and site selection to reduce future financial losses.

Rajasthan, India's largest renewable energy-producing state, tops the risk map with 272 assessed project sites representing 82,149 MW of planned capacity. The state's renewable portfolio carries the highest Value at Risk at USD 16.4 billion, with nearly 85 per cent of assets classified under the highest climate risk categories. The report notes that Rajasthan's heavy dependence on solar power makes it central to India's target of installing 500 GW of non-fossil fuel capacity, but frequent temperatures exceeding 50 degrees Celsius pose significant risks to solar panels and associated infrastructure.

Gujarat ranks next with 172 assessed renewable energy sites and 47,530 MW of planned capacity, carrying a Value at Risk of USD 8.6 billion. Around 90 per cent of its renewable assets fall within the highest risk categories. Besides facing hailstorms and tornadoes similar to Rajasthan, Gujarat's extensive coastline exposes its solar and wind projects to cyclones and storm surges. The report also notes that growing electricity demand from the state's expanding electric vehicle manufacturing sector and green hydrogen ambitions could further increase pressure on energy infrastructure.

Arunachal Pradesh presents one of the most severe climate risk profiles despite having only 30 assessed renewable energy sites. The report estimates these projects carry a Value at Risk of USD 13.1 billion, with 96 per cent of assets falling in the critical risk categories. Most of the state's renewable portfolio consists of hydropower projects located in the eastern Himalayan foothills, where high rainfall, landslides, seismic activity and flood risks create a complex and highly vulnerable operating environment.

The analysis also highlights varying levels of climate exposure across other states. Karnataka records the lowest proportion of renewable assets in the highest risk categories at just 5 per cent. In contrast, Uttarakhand has 94 per cent of its renewable assets classified as high risk due to extreme Himalayan precipitation, flooding, slope instability and changing hydrological conditions.

Uttar Pradesh also faces significant climate threats, with 78 percent of renewable assets falling in the highest risk categories. Flooding from the Ganga river system and increasing frequency of extreme heat events are identified as the primary hazards affecting the state's renewable energy infrastructure.

Zurich said that multi-hazard stress testing of renewable energy projects can help quantify potential financial losses and evaluate the benefits of mitigation measures. The report recommends making climate risk screening a standard requirement during project siting, approval and permitting processes to improve the long-term resilience of India's renewable energy sector.