India’s renewable energy sector has demonstrated significant growth, with capacity additions reaching 20.1 GW in the first five months of Fiscal Year 2026, marking a 123% increase compared to the same period last year. This surge is driven by a substantial project pipeline of 142.8 GW, competitive solar module prices, and robust electricity demand. The sector is expected to exceed 35 GW of capacity addition by the end of FY2026, with the commercial and industrial segment driving significant future growth.
Despite the strong pipeline, there has been a slowdown in bidding activity, with only 3.4 GW auctioned during the first half of FY2026. This decline is attributed to delays in signing Power Sale Agreements (PSAs) and Power Purchase Agreements (PPAs). Timely execution of these agreements and enhancements in transmission infrastructure are critical to maintaining the sector’s growth trajectory.
The outlook for the renewable energy sector remains stable, backed by strong government policy support, tariff competitiveness, and increasing sustainability commitments from commercial and industrial customers. The reduction of Goods and Services Tax (GST) on solar photovoltaic modules and wind turbine generators is expected to lower capital costs and reduce generation costs. Battery Energy Storage Systems (BESS) are also gaining traction, with energy storage capacity expected to reach 50 GW by 2030.
The sector’s credit profile remains resilient, with 15 credit upgrades against 13 downgrades in the first five months of FY2026. Upgrades were driven by successful project commissioning, solid generation performance, and favorable ownership changes. However, the sector faces challenges such as module price trends, with imported N-type solar module prices remaining low, but Indian market prices higher due to the Approved List of Modules and Manufacturers (ALMM).
To sustain the momentum and meet ambitious capacity addition targets, timely execution of power agreements and infrastructure improvements will be crucial. The Indian government’s policy support and the sector’s technological advancements are expected to drive growth, with the commercial and industrial segment playing a significant role in the future. Overall, India’s renewable energy sector is on a strong growth path, with a robust project pipeline, policy incentives, and technological advancements driving its expansion.