India’s renewable energy capacity is set to soar, with projections indicating it could reach 250 GW by March 2026, up from 201 GW in September 2024, according to ICRA. The growth will be powered by a robust 80 GW project pipeline following improved tendering processes in 2024.
Solar energy will lead the charge, with India’s solar capacity expected to reach 132 GW by March 2026, compared to 91 GW in September 2024. ICRA forecasts the addition of 22 GW in 2025 and 27.5 GW in 2026. Senior Vice President Girishkumar Kadam highlighted that the expanding project pipeline and favorable solar module prices will be key drivers of growth, particularly as inter-state transmission waivers end in June 2025.
Despite this promising outlook, challenges persist. Kadam noted that delays in land acquisition and transmission connectivity could hinder progress. However, the rooftop and commercial & industrial (C&I) solar segments are expected to make significant contributions to India’s renewable energy capacity in the coming years.
ICRA also forecasts a substantial shift in India’s energy mix, with renewable energy and large hydro expected to make up more than 35% of national electricity generation by 2030, up from 21% in 2024. To integrate this growing share of renewables, ICRA projects India will need 50 GW of energy storage by 2030. This will likely be sourced from battery energy storage systems (BESS) and pumped storage hydro projects.
In recent months, a sharp decline in battery prices has led to a significant reduction in BESS project tariffs, which will likely boost the adoption of energy storage solutions. Central agencies are focusing on awarding renewable energy projects that combine generation with storage to mitigate the intermittency risk of renewable sources.
Nearly 14 GW of such round-the-clock, hybrid projects have already been auctioned, with competitive tariffs ranging from INR 4.0/kWh to INR 5.0/kWh, a stark contrast to the higher tariffs for coal-based power. However, ICRA notes that these projects could face merchant market tariffs due to oversupply and anticipated power generation surpluses.
India’s renewable energy journey continues to unfold, with both promising opportunities and significant execution challenges ahead.
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