Standalone Solar Slows, Hybrids Dominate India’s 50 GW Awards: IEA

India’s renewable energy market, the world’s second-largest, is poised for rapid expansion, with projected additions of nearly 345 GW between 2025 and 2030. Auction-driven utility-scale solar PV will account for nearly 60% of this growth. However, delays in power purchase agreements (PPAs), financial strains on DISCOMs, and rising domestic tariffs are slowing short-term progress.

The latest Renewables 2025: Analysis and Forecast to 2030 report by the International Energy Agency (IEA) highlights these trends, noting that the tender market remains a key indicator of capacity growth.

Global Auction Trends

Globally, competitive auctions are now the main procurement mechanism in China, India, and Europe, accounting for more than half of renewable capacity growth over 2025–2030. Together, these three markets represent around 85% of global tendered capacity during this period.

"Most schemes take the form of contracts for difference, mandated by both China and the European Union, while in the United States, utilities mainly conduct auctions to meet state renewable portfolio standard (RPS) obligations," the IEA noted. "In regions such as Latin America, Africa, and the Middle East, auctions play a smaller role, with other procurement mechanisms more prominent."

Global Context and Firm-Capacity Auctions

Auction mechanisms are now at the forefront of renewable energy procurement in India, China, and Europe, driving over half of projected capacity growth through 2030. IEA report found that, firm-capacity auctions—which pair solar or wind projects with storage—are gaining global traction, representing more than 25% of awarded capacity since 2021. It explained that India currently leads the world in this segment, having awarded over 50 GW, with hybrid projects making up a striking 71% of the total.

Looking back, the study noted that Egypt pioneered firm-capacity auctions for solar PV combined with storage back in 2016. India followed in 2018 with its first hybrid auction linking solar PV and onshore wind. By 2020, Germany and Portugal became the first European nations to hold firm-capacity auctions for renewables paired with battery storage, setting the stage for wider adoption across the continent.

The latest finding also reveals that by the first half of 2025, over 10 countries had run renewable energy auctions for firm or dispatchable capacity involving solar PV and/or onshore wind, spurred by falling storage costs and the need to integrate rising volumes of variable renewables. 

Auction Dynamics and Tender Challenges

In the first half of 2025, India awarded around 8 GW of renewable capacity, nearly one-fifth of global awarded capacity—a 76% drop compared with 2024. The slowdown is linked to limited DISCOM demand, delayed PPA signings, and developer concerns over financial risks, particularly for auctions conducted without central agency backing, such as SECI.

Utility-scale solar accounted for one-third of global auction awards in H1 2025, totalling over 14 GW—a 63% drop from last year, largely due to an increase in merchant projects. In Europe, solar represented 34% of awarded capacity, led by Germany and Poland. India’s total awards fell by about 80%, but solar still comprised almost 45%, consistent with previous years. Elsewhere, PV shares remained below 30%, though they are expected to rise with large tenders later in 2025, including 8 GW in the Philippines.

The auction award rate in India fell to 68% in 2025, down from a stable ~90% in 2022–2024. Hybrid auctions, combining solar, wind, and storage, accounted for nearly half of awarded volumes, continuing the 2024 trend. Standalone onshore wind auctions remained limited, contributing only 13% of total awards. India’s first offshore wind tenders in 2024, targeting 4.5 GW, were cancelled in August 2025 due to limited developer interest.

Rising Tariffs and Domestic Pressures

Another key indicator of market health is the per-unit price of renewable energy. Global solar PV auction prices fell to historic lows in 2024, with India awarding over 23 GW at around USD 33/MWh. By 2025, domestic policies and rising costs will push prices upward.

A 40% basic customs duty on imported modules, domestic content requirements for government-supported projects, and expansion of the Production Linked Incentive (PLI) scheme have raised the average spot price of domestically produced modules in India to USD 0.15/W—roughly 70% above the global average. Hybrid projects combining solar and storage remain costlier than standalone solar PV, with awarded prices around USD 46/MWh—nearly 40% higher than solar alone. Most countries require storage to be co-located with renewable plants to optimize grid capacity, though India and Hungary allow storage to be located independently.

Despite these challenges, India’s renewable capacity could grow 17% higher under an accelerated scenario, potentially surpassing its 2030 targets. Achieving this would require improving DISCOM's financial health, enforcing state-level renewable portfolio obligations, and reducing delays in PPA finalisation.