India’s Renewable Energy Additions Surge 123% in First Five Months of FY2026

India added 20.1 GW of renewable energy (RE) capacity during the first five months of FY2026 (April–August 2025), marking a 123 percent increase compared to 9 GW added in the same period last year, according to a recent ICRA report. Of the new capacity, 17.5 GW came from solar installations, while wind projects contributed 2.6 GW.

ICRA noted that this record growth, supported by a strong project pipeline and favourable market conditions, sets the stage for over 35 GW of new renewable additions in FY2026. The momentum builds on FY2025’s robust performance, when India commissioned 28.7 GW of new capacity, up significantly from 18.5 GW in FY2024.

Project Pipeline and Market Drivers

The Central Electricity Authority (CEA) estimates a renewable pipeline of 142.8 GW, highlighting the sector’s expansion potential. Module prices have remained favourable, and rising power demand continues to spur renewable uptake across the country.

However, ICRA cautioned that the sector’s future trajectory depends on addressing bidding bottlenecks and transmission capacity. While the pipeline remains healthy, only 3.4 GW was auctioned in the first half of FY2026 due to delays in the signing of Power Sale Agreements (PSAs) by bidding agencies with state distribution companies. These delays also stall Power Purchase Agreements (PPAs) with project developers. Timely execution of these agreements and accelerated grid augmentation have been identified as essential for sustaining momentum.

Outlook Remains Stable

Despite these challenges, ICRA maintains a Stable outlook for the RE sector. The assessment is reinforced by strong government policy support, the growing tariff competitiveness of renewables, and the increasing commitment of commercial and industrial (C&I) consumers to sustainability goals.

One of the key enablers for renewables is the recent reduction in Goods and Services Tax (GST). Rates for solar modules and wind turbine generators have been cut from 12 percent to 5 percent, lowering capital costs by about 5 percent. 

ICRA expects this to translate into a decrease in the cost of generation by around 10 paise per unit for solar power and 15–17 paise per unit for wind. This boosts project viability and positions renewables more strongly against conventional power sources.

The C&I power consumption segment, accounting for nearly half of India’s electricity demand, remains a major growth driver. ICRA estimates that achieving a 20 percent renewable penetration in this segment over the next five years will require almost 100 GW of new renewable capacity. This implies a compound annual growth rate (CAGR) of close to 30 percent, highlighting strong demand-side fundamentals.

Energy Storage Expansion

Energy storage is emerging as a critical component of India’s energy ecosystem. Tariffs for battery energy storage systems (BESS) have fallen significantly, improving the economics for hybrid renewable projects. 

By 2030, India’s energy storage requirement is projected to reach 50 GW, which is expected to be met through a mix of BESS and pumped hydro storage systems.

Module Price Challenges

On the supply side, module market dynamics remain complex. Imported n-type modules remained relatively low-priced at 8–9 cents/watt in August 2025. In contrast, domestic modules were priced higher at 15–17 cents/watt, largely due to the Approved List of Modules and Manufacturers (ALMM) requirement. 

With solar cells set to be included under ALMM from June 2026, ICRA expects further upward pressure on module prices in FY2027, a factor developers will need to account for in new bids. 

Meanwhile, the recent imposition of a 50 percent tariff by the US on Indian solar exports may dampen the global competitiveness and volumes of Indian equipment manufacturers.

Sector Resilience

Despite policy and pricing headwinds, the sector’s credit profile remains resilient. In the first five months of FY2026, the sector witnessed 15 rating upgrades versus 13 downgrades. The upgrades were primarily driven by smooth project commissioning, satisfactory operational performance, and favourable ownership changes.

ICRA concluded that while India’s renewable capacity additions are on a record-setting trajectory, sustained growth will depend on resolving PSA-PPA bottlenecks, ensuring timely policy execution, and accelerating grid infrastructure development.