India's renewable energy installed capacity could rise to 250 GW by March 2026 from 201 GW in September 2024, credit rating agency ICRA said recently. The growth will be driven by an 80 GW project pipeline after improved bidding in 2024.
Solar installed capacity will reach 132 GW by March 2026 and 91 GW by September 2024. ICRA said it expects annual solar capacity additions of 22 GW in 2025 and 27.5 GW in 2026.
Senior Vice President Girishkumar Kadam noted that a strong project pipeline and favorable solar module prices will drive the addition of renewable energy, especially with the end of the interstate transmission exemption in June 2025.
ICRA said it expects rooftop and commercial & industrial (C&I) solar segments to contribute significantly to India's capacity additions, but delays in land acquisition and transmission connections remain execution challenges, which could hamper growth, Kadam said.
India's renewable energy capacity is likely to increase over the next five years, ICRA said, raising the share of renewables and large hydro in the country's power generation from 21% in 2024 to more than 35% by 2030.
To integrate this growing share, ICRA expects India to require 50 GW of energy storage by 2030, sourced from battery storage and pumped storage hydro projects.
"The sharp fall in tariffs for BESS projects over the past eight months, driven by a sharp fall in battery prices, is expected to boost the adoption of energy storage projects," Kadam said.
The central nodal agency is focusing on awarding renewable energy projects that provide round-the-clock, stable, dispatchable power to reduce the intermittent risk of renewables. These projects are often hybridized with energy storage, which can help meet demand reliably.
The agencies and railways have completed auctions for nearly 14 GW of such projects. The tariffs remain competitive with bids ranging from INR 4.0/kWh to INR 5.0/kWh, while coal projects bid over INR 6.0/kWh. ICRA noted that these projects will face merchant market tariffs due to their large size and expected excess generation.