The southern state of Tamil Nadu on the Indian subcontinent is, yet again, making headlines for its advances in clean energy. Since the Indian government began holding auctions for energy companies to bid for the lowest price per unit of wind energy, Tamil Nadu has risen to the world’s top 15 markets in renewable energy production.

A report released by the Institute for Energy Economics and Financial Analysis (IEEFA) includes a list of the amount of renewable energy produced in countries and states around the world, comparing it to the total amount of energy generated in markets around the world. With Denmark making it to the top of the list at 53 percent, Tamil Nadu comes in after the U.S. states of Texas and California at 14 percent. In simpler terms, this means that Tamil Nadu, which was the only Asian market on the report’s list, generates 14 percent of all of its energy from wind and solar energy

Even before the government began auctioning prices per unit of wind energy last December, Tamil Nadu had been holding similar auctions for close to a year. The bids themselves are reverse auctions, meaning that companies bid backwards on the highest wind-producing capacity and the lowest tariff per unit. The success of Tamil Nadu in shifting towards generating renewable, notably wind, energy comes at a time when India is working towards generating 175 gigawatts (175,000 megawatts) by 2022.

Currently, Tamil Nadu generates a whopping 10,800 megawatts of renewable energy, of which, as of February 2018, 73 percent is wind energy. The southern Indian state has come in the lead ahead of other Indian states like Gujrat, which generated 5,429 megawatts, and Maharashtra, which generated 4,752 megawatts during the same month. The three Indian states, in addition to Karnataka, generate 50 percent of the entire country’s renewable energy. Its success is not surprising, granted that Tamil Nadu has some of the country’s oldest wind farms.

As for the state’s solar energy generating capabilities, Tamil Nadu, at 1,697 megawatts, fell to third behind Andhra Pradesh, which generated 2,010 megawatts, and Rajasthan, which generated 1,961 megawatts. These numbers are relevant as of June 2017. And although the state no longer leads the solar energy industry, the BBC reported that the state is working to produce more than half of its energy with zero emission technologies.

The success of Tamil Nadu’s renewable energy generation can be attributed to simple demand-supply economics. The demand at the time for renewable energy came mostly from textile, leather, cement, and automotive companies. But when energy companies in the southern state realized there was a growing demand, suppliers began to generate renewable energy to meet that demand. Coupled with governmental support, Tamil Nadu rose as India’s leader in generating renewable energy.

To facilitate an environment that encouraged opening renewable energy plants, many industries, like the textile industry, were allowed to open their own plants. Additionally, the state’s topography also facilitated the generation of such a significant amount of wind and solar energy. Tamil Nadu receives strong winds for approximately six months a year and sees major sunshine for around 300 days a year, which partially explains its success in generating the amounts of renewable energy it does per annum.

As promising as the renewable energy industry in India may be, there are a number of challenges, such as the need to constantly upgrade infrastructure, that many experts in the field are preparing for. The fear is that plant infrastructure becomes obsolete and, in turn, slows down the generation of renewable energy in the southern state. Another issue facing the industry is the ‘free banking policy’ that the government has put in place since the state began generating renewable energy. The policy allows wind generators to draw power for free in the months that wind is rare in Tamil Nadu, placing a sizeable strain on the power grid across the state. The state’s government is planning to regulate the policy so as to eliminate the potential impact it may have on the industry as a whole.