5 Key Trends Set to Shape India’s Renewable Energy Sector in 2026

Last year, 2025, marked several milestone developments for India’s renewable energy sector. These included the entry of select new solar and BESS-linked companies into the stock market, record-low solar and energy storage tariffs, and the rollout of multiple pro-renewable energy policy measures, among others.

As the sector steps into 2026, the key question is: what trends and developments are likely to define the year ahead? Based on prevailing market signals, evolving policy frameworks, and planned government programmes, Saur Energy outlines the major themes expected to shape India’s renewable energy landscape in 2026.

Rise in solar module prices in India

A combination of global and domestic factors is likely to exert upward pressure on solar module prices in India in 2026. International developments, particularly rising raw material costs, are expected to play a role. Inputs such as silver—largely imported from China—will attract a 9 percent value-added tax, adding to cost pressures for Indian manufacturers.

Further, China has announced the withdrawal of export VAT rebates on solar photovoltaic modules and certain related products, effective April 1, 2026. From the same date, export VAT rebates on battery products will be reduced to 6 percent from the current 9 percent, before being phased out completely by January 1, 2027.

India Ratings and Research (Ind-Ra) has also flagged the likelihood of near-term increases in solar module prices, citing higher input costs and the implementation of the Ministry of New and Renewable Energy’s Approved List of Module Manufacturers–II (ALMM-II) for solar cells from June 2026. Several manufacturers, including RenewSys, Saatvik Solar and Axitec, have already indicated price increases in response to these developments. So far module prices are up 10-15% since December 2025.

Solar-plus-storage projects to reduce renewable energy curtailment

While 2025 saw a sharp rise in tenders and allocations for solar-plus-BESS and standalone BESS projects, 2026 is expected to be the year when some of these projects move into execution. The commissioning of storage-linked renewable projects is likely to significantly reduce curtailment of variable renewable energy by making generation more firm and dispatchable, along with commissioninjg oif key transmission links in Gujarat and Rajasthan, the states most affected by curtailment

A number of large-scale storage-backed projects are expected to come online during the year, marking a critical milestone for the sector. The scale-up of integrated storage at large renewable hubs, including Adani Green’s Khavda project, is expected to set new benchmarks for solar-plus-storage deployment in India.

Consolidation in solar manufacturing post ALMM-II

India is preparing to implement the Approved List of Models and Manufacturers for solar cells (ALMM-II), also referred to as ALCM, which mandates the use of domestically manufactured solar cells in module production. This policy shift comes at a time when only a limited number of solar cell manufacturers are operational, while more than 50 module manufacturers have announced plans to set up their own cell lines.

Given the scale constraints faced by small and mid-sized module manufacturers, 2026 is likely to see increased consolidation and partnerships within the sector as companies seek to comply with the new mandate. This transition is expected to reshape India’s solar manufacturing ecosystem. Firms without a cell line might struggle to source supplies initially, and are likely to face capacity utilisatrion challenges until they do so. That will ease the risks from overcapacity for the wider sector.

C&I segment emerges as a key growth driver

The commercial and industrial (C&I) segment is poised to become a major driver of renewable energy demand in 2026, building on a strong 2025, when the sector, along with residential thanks to  PM Suryaghar, enabled almost 15 GW. Several states have moved towards clearer and more transparent green open access regulations, while central and state regulators have reiterated the rights of C&I consumers to procure clean energy.

Rising commercial power tariffs remain a key motivator, but ESG considerations are increasingly influencing procurement decisions. Many C&I consumers are adopting renewable energy to strengthen sustainability credentials, improve access to green financing, and enhance eligibility for corporate contracts and sustainability-linked ratings.

Valuations of solar IPOs likely to be tested

Public markets opened cautiously but meaningfully to the solar sector in 2025, with the listing of module manufacturer Vikram Solar and the market debut of Pace Digitek, which operates across telecom infrastructure and energy storage solutions. These IPOs reflected investor appetite for scale and integrated capabilities, but pricing remained disciplined rather than exuberant.

Several other solar developers and equipment manufacturers, including Rayzon Solar, Goldi Solar and Prozeal, continue to remain in the IPO pipeline. Valuations in 2025 were largely driven by fundamentals such as order book visibility, manufacturing scale and balance-sheet strength. As the market moves into 2026, valuation expectations are likely to become more selective, with investors focusing on slowing revenue growth due to the base effect, margin sustainability, supply chain localisation and clarity on the use of proceeds. New entrants may face valuation pressure unless they demonstrate scale, defensible positioning and predictable cash flows. Either way, a valuation haircut is a certainty. 

A year of reckoning for vertically expanding solar manufacturers

In 2025, several large solar manufacturers, including Premier Energies, Waaree Energies and Saatvik Solar, expanded into adjacent business verticals such as inverters, aluminium frames, transmission infrastructure, EPC services and even energy storage. Many players have articulated ambitions to evolve into fully integrated energy companies.

In 2026, this diversification strategy is expected to be tested. Shifting policy frameworks, evolving demand dynamics and intensifying competition are likely to determine which companies can successfully execute multi-vertical strategies. The year could see established players leveraging scale and balance-sheet strength to enter new segments, while others reassess expansion plans based on market realities.