India's RE Generation Share In Power Mix To Hit 35% By FY30: ICRA

Rating agency ICRA expects the share of power generation from renewable energy (RE), including large hydro, to exceed 35% by FY2030, up from 22.1% in FY2025, driven by an estimated 200 GW of new capacity additions over the period. The forecast depends on the execution of the current project pipeline, transmission build-out and timely bidding and signing of power purchase agreements (PPAs) by central agencies.

Girishkumar Kadam, Senior Vice President and Group Head - Corporate Ratings at ICRA, said that last year the RE share in generation stood at around 14% which included 8 percent contribution from hydro power. On the other as per its estimates, the share of renewable energy (excluding hydro) could reach 25%-27% by FY30.  

After 47.3 GW of RE capacity was awarded in FY2024 and 40.6 GW in FY2025, bidding activity has slowed sharply, with just 5.8 GW awarded in the first eight months of FY2026. Industry checks indicate that 40–45 GW of awarded capacity is still awaiting PPAs, ICRA said. 

“The decline in new project bids and delays in PPA signing for large RE capacity by central nodal agencies clearly reflect concerns around available transmission connectivity,” said Kadam. He added that reported grid curtailments in Rajasthan during solar hours, without compensation provisions in PPAs, also remain a concern. Strengthening storage and grid infrastructure “in a time-bound manner” is critical as renewables’ share rises, he said.

BESS Market

India is increasingly banking on Battery Energy Storage Systems (BESS) to manage variability in renewable generation. The government has announced viability gap funding for BESS and extended transmission charge waivers for storage projects until 2028. Central agencies and state discoms have awarded more than 20 GWh of standalone BESS projects between April 2024 and October 2025. Round-the-clock (RTC), firm and dispatchable renewable energy (FDRE), and solar-plus-storage projects accounted for around 90% of RE capacity awarded in the first eight months of FY2026, it added..

Falling battery costs have reduced storage expenses globally. ICRA estimates the levelised cost of storage for 2–4 hour BESS at Rs 4–7 per unit, compared with about Rs 5 per unit for pumped storage hydropower (PSP). Costs have declined from Rs 8–9 per unit in 2022. While BESS remains more expensive than PSP for longer durations, it offers shorter gestation periods and lower execution risks.

Reduction In BESS Cost

Commenting on standalone BESS competitiveness, Kadam said sustained reductions in battery prices would support wider adoption. Based on an average battery cost of about USD 70/kWh in 2025 and including taxes and balance-of-plant costs, capital costs are estimated at USD 120–150/kWh. At these levels and current interest rates, cumulative debt service coverage ratios fall in the 1.15–1.25x range. He said the ability of BESS assets to meet performance parameters such as availability, round-trip efficiency and degradation remains a key monitorable given the limited operational track record.

ICRA maintains a Stable outlook on the RE sector, supported by policy measures, competitive tariffs and rising demand from commercial and industrial consumers. However, execution challenges persist, including land acquisition, transmission readiness, delays in PPA signing, exposure to equipment prices and the financial health of distribution companies.

The sector’s ratings trend remains favourable. In FY2025, RE companies recorded 29 upgrades against six downgrades, while in the first half of FY2026, there were 49 upgrades and 13 downgrades. Upgrades were driven by successful project commissioning, improved generation performance and strengthened ownership or parent credit profiles. Downgrades stemmed from weaker-than-expected generation, commissioning delays and higher leverage, including at holding companies funding equity, which impacted subsidiary ratings.