From pv magazine India

India added 20.1 GW of renewable energy capacity in the first five months of fiscal 2026 (April to August 2025), a 123% increase from 9 GW in the same period last year, according to a report by ICRA. The total includes 17.5 GW of solar and 2.6 GW of wind capacity.

ICRA said the record growth, driven by a strong project pipeline and favorable market conditions, positions the sector to exceed 35 GW of new capacity in fiscal 2026.

The momentum follows fiscal 2025, when renewable additions rose to 28.7 GW from 18.5 GW in fiscal 2024. The firm noted the expansion is supported by a pipeline of 142.8 GW, as reported by the Central Electricity Authority, alongside lower solar module prices and strong electricity demand.

Despite the robust pipeline, bidding activity has slowed, with only 3.4 GW auctioned in the first half of fiscal 2026. ICRA attributed the shortfall to delays in the signing of power sale agreements by state distribution utilities, which has in turn stalled power purchase agreements with winning developers. Timely execution of these contracts and expansion of transmission capacity were identified as critical to sustaining growth.

ICRA maintains a stable outlook for the sector, citing strong policy support, the tariff competitiveness of renewables, and rising sustainability commitments from commercial and industrial customers.

Sector developments

Cost competitiveness: ICRA expects the recent cut in Goods and Services Tax on solar PV modules and wind turbines—from 12% to 5%—to reduce capital costs by about 5%. This is projected to lower generation costs by about 10 paise per kilowatt-hour for solar and 15–17 paise per kilowatt-hour for wind.

Commercial and industrial demand: The commercial and industrial segment, which accounts for 45% to 50% of India’s electricity use, has a strong demand outlook. Achieving 20% renewable penetration over the next five years would require about 100 GW of new capacity, implying a compound annual growth rate of nearly 30%.

Energy storage: Bid tariffs for battery energy storage systems (BESS) have declined significantly, improving the economics of hybrid projects. ICRA expects storage requirements to reach 50 GW by 2030, met through BESS and pumped hydro.

Module pricing: Imported n-type module prices remained low at about 8 to 9 cents per watt in August 2025, while domestic modules cost 15 to 17 cents per watt due to the Approved List of Modules and Manufacturers (ALMM) policy. The planned extension of ALMM to solar cells in June 2026 is likely to push prices higher in fiscal 2027. ICRA also noted that recent US tariffs of 50% on Indian solar exports are expected to weigh on competitiveness.

Sector resilience: The sector’s credit profile remains resilient. In the first five months of FY2026, ICRA recorded 15 rating upgrades against 13 downgrades, supported by timely project commissioning, satisfactory generation performance, and ownership changes.

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