New Delhi: India’s renewable energy sector has logged a record 123 percent growth in capacity addition, reaching 20.1 GW in the first five months of FY2026, up from 9.0 GW in the same period last year, credit rating agency ICRA said in its latest report. The surge, underpinned by a strong project pipeline and favourable market conditions, puts the sector firmly on track to cross 35 GW capacity addition in FY2026. In FY2025, India had added 28.7 GW of renewable energy capacity, significantly higher than the 18.5 GW added in FY2024.
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According to ICRA, the expansion is supported by a project pipeline of 142.8 GW identified by the Central Electricity Authority (CEA), along with attractive solar module prices and rising electricity demand. The agency said it continues to maintain a "Stable" outlook for the renewable energy sector, citing strong policy support, the superior tariff competitiveness of renewables, and growing sustainability commitments from large commercial and industrial consumers. The C&I segment, which accounts for 45–50 percent of India’s electricity demand, is expected to be a key driver of growth. Achieving 20 percent renewable penetration in this segment over the next five years would require around 100 GW of capacity, implying a compound annual growth rate of nearly 30 percent.
Despite the surge in capacity, ICRA flagged a slowdown in tendering activity, with only 3.4 GW auctioned in the first half of FY2026. The report attributed this to delays in the signing of Power Sale Agreements by bidding agencies with state distribution companies, which in turn holds up the finalisation of Power Purchase Agreements with developers. The agency underlined that the timely execution of these agreements, along with the augmentation of transmission infrastructure, remains critical for sustaining the current momentum.
ICRA pointed out that the recent reduction of GST on solar PV modules and wind turbine generators from 12 percent to 5 percent will lower capital costs for new projects by about 5 percent, cutting generation tariffs by around 10 paise per unit for solar power and by 15–17 paise per unit for wind. The agency also highlighted that the cost economics of hybrid projects are improving with a significant fall in quoted bid tariffs for Battery Energy Storage Systems, and it expects India’s storage capacity requirement to touch 50 GW by 2030, met through a mix of battery storage and pumped hydro.
While imported N-type solar modules were priced low at 8–9 cents per watt in August 2025, Indian market prices remained higher at 15–17 cents per watt due to the Approved List of Modules and Manufacturers. The upcoming imposition of ALMM on solar cells from June 2026 is likely to increase module prices in FY2027, a factor developers will need to account for in future bids. The report also flagged that the recent imposition of 50 percent tariffs by the United States on Indian modules is expected to adversely affect the competitiveness and export volumes of Indian equipment manufacturers.
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ICRA said the credit profile of the renewable energy sector remains resilient. In April–August 2025, the sector recorded 15 rating upgrades against 13 downgrades, with upgrades driven by successful project commissioning, satisfactory generation performance and favourable changes in ownership.