Open Access Fuels India’s C&I Renewables Push; Capacity to Reach 40 GW by FY26: CRISIL

The Indian commercial and industrial (C&I) segment is expected to see renewable energy (RE) capacity rise to 57 gigawatts (GW) by fiscal 2028, up from around 40 GW anticipated by the end of fiscal 2026, according to CRISIL Research.

A key driver behind this growth is the provision of open access for C&I consumers, which has significantly improved access to renewable energy. The segment gained momentum following the implementation of the Green Energy Open Access (GEOA) Rules in 2022 and includes end users such as industrial units and commercial establishments. These consumers directly meet a portion of their power requirements through solar and wind capacity, leveraging existing transmission and distribution infrastructure.

However, continuity in state-level policies remains critical. Changes in policy or any rollback of open access incentives could dampen investor interest in the C&I segment. This assumes greater significance given the linkages between states and their distribution utilities, which face a trade-off: while lower open access charges can accelerate renewable energy adoption and support clean energy targets, they can also reduce profits from C&I consumers—the most remunerative customer segment for discoms.

As a result, states may reassess certain open access incentives if the migration of C&I users affects the financial health of distribution utilities. Such policy shifts could raise the landed cost of power for end users. That said, tariffs are still expected to remain attractive compared with on-grid power.

C&I Leads India’s Power Demand Shift

CRISIL Research has identified the commercial and industrial segment as the largest consumer of electricity in the country. To meet rising renewable demand from this segment, the research underscored the need for the timely expansion of transmission infrastructure for power evacuation, along with policy continuity across states, as essential to sustaining growth.

C&I capacity additions are expected to be driven largely by developers backed by private equity investors, supported by higher returns on equity compared with utility-scale projects due to relatively higher tariffs. This expansion is further reinforced by counterparties with strong credit profiles, which help ensure stable cash flow generation.

CRISIL Research highlighted five key factors underpinning the shift towards renewable energy capacity addition: favourable long-term power purchase agreement (PPA) tariffs compared with on-grid tariffs, corporate net-zero targets, renewable purchase obligations (RPOs), and attractive returns combined with strong counterparty profiles for developers.

Demand is being led by end-user industries such as steel, cement, and data centres, which are increasingly turning to renewables to meet internal decarbonisation targets. Renewable procurement also enables compliance with RPO requirements, further supporting capacity additions, while attractive returns continue to draw developer interest in the segment.

Commenting on this trend, Gautam Shahi, Director at Crisil Ratings, said, “Following the GEOA rules, major industrial states have announced policies for open access to fast-track renewable energy adoption and attract investments. States are offering rebates on cross-subsidy, wheeling, and state transmission utility charges if power is sourced intra-state. Such incentives lower the landed cost of power compared with on-grid tariffs by 25–30%, driving capacity addition in this segment.”

Despite Grid Constraints, C&I Segment Poised to Drive India’s Clean Energy Goals

CRISIL Research also identified inadequate transmission infrastructure for power evacuation—largely due to right-of-way challenges—as a major constraint on capacity additions. Since most C&I projects rely on intra-state networks, delays in transmission development can directly affect project execution timelines. Even so, the healthy credit profiles of C&I developers are expected to continue supporting growth in the sector.

Dushyant Chauhan, Associate Director at Crisil Ratings, said, “The credit profile of our C&I portfolio is strong, supported by attractive tariffs and an average PPA tenure of around 15 years, providing stable revenue visibility. Counterparty risk also remains low, with 65% of the rated capacity tied up with counterparties carrying High Safety credit profiles. Debt protection metrics are expected to remain healthy over the next two fiscals, reflected in a weighted average debt service coverage ratio (DSCR) of 1.4 times.”

Overall, the growing attractiveness of the C&I segment positions it as a key contributor to India’s ambitious goal of achieving 500 GW of non-fossil fuel-based capacity by 2030.