India is the land of contrasting realities. The same is true for India’s renewable energy sector. On one side, we have rapidly developing RE sector, at the same time, we are still heavily dependent on imported solar products and technologies. Today renewable-based power generation in India is among the world’s cheapest and most reliable. Currently, solar PV and large wind power plants with battery storage generate cheaper electricity compared to new coal power plants. While this makes a compelling case for more dependence on renewable power, India has plans to add about 80 GW of coal-based thermal power generation capacity by 2030-31.
As on November 30, 2025, installed capacity of RE power generation, including large hydro, is 252 GW (RE capacity without large hydro 203.6 GW) which is more than 50 percent of the total installed capacity of 509.743 GW. It, thus, achieved its NDC commitment of having more than 50 percent installed capacity using non-fossil fuel generation by 2030, five years in advance.
However, the share of RE power generated (including large hydro) in FY 2023-24 was around 20.7 percent. One significant development happening in renewable energy sector is about increasing pace of total installed capacity. For example, solar power total installed capacity increased by 12.76 GW in FY 2020-21, 12.78 GW in FY 2021-2022, 15.033 GW in FY 2022-23, 23.833 GW in FY 2023-24, and in FY 2025-26, it crossed 30 GW by December 31, 2025 . Annual installed capacity addition of all renewables reached 34.7 GW in FY 2025-26 by Dec 31, 2025. This tempo must be maintained if we want to achieve the target of 500 GW of RE installed capacity by 2030. It is estimated that India will further need upwards of Rs 10,00,000 crores by 2030 to reach its target of 500 GW of installed non-fossil fuel generation capacity by 2030.
As per Renewable Energy Statistics 2025 by IRENA, India ranks 5th worldwide in total electricity generation from renewable energy sources and holds the 3rd position in electricity generation from solar power.
India’s clean energy story is entering an exciting phase with focus on execution and rising investments and leap frogging manufacturing with support from schemes like production linked incentives. 2026 will be the defining year with improved infrastructure, rapid execution of projects and removal of bottlenecks like lack of last mile grid connectivity.
Union Budget 2026-27
• International geo-political developments in recent months, especially the withdrawal of the United States of America (USA) from UNFCC, ISA and other UN-related organisations is expected to create fund shortages (equity and debt) for Indian renewable market. High tariff on Indian goods is also impacting our exports to the USA. The impact of the shift in USA policies is a matter of concern and the response of the government of India through budgetary allocations to ease the pressure on businesses is expected.
• With national goals of 500 GW non-fossil capacity by 2030 and net-zero by 2070, the Union Budget 2026 is expected to prioritise investment enablement, storage integration, and inclusive growth — moving beyond intent toward measurable delivery in renewables .
Market design innovations: Moving forward, with substantial decrease in battery costs, emphasis will be on tenders for hybrid systems (solar + wind) with battery storage for firm and dispatchable RE and performance-linked contracts that value availability and ramping.
PM Surya Ghar Muft Bijli Yojana (PMSGMBY): The world’s largest domestic rooftop solar initiative, has so far solar electrified more than 26.9 lakh households. It reached 7,924 MW capacity as on date. Launched in February 2024, this transformative scheme is rapidly reshaping India’s energy landscape. The scheme will be in focus in 2026. Union budget 2026 allocation for this scheme may see rise after the huge success of this scheme.
PM- KUSUM: The scheme focuses on providing solar power to irrigation pump sets and solarisation of agriculture feeders. The revised version of this scheme PM-KUSUM 2 is expected to be launched in 2026. This would provide support to agrivoltaics systems. Agrivoltaics systems are solar systems installed on agriculture filed in such a way that the land below can be used for agriculture. Thus, producing energy and food on the same land resource. The India Agrivoltaics Alliance (https://indiaagripv.org/) has been working on promoting this concept which addresses the issue of land scarcity while providing regular income to farmers through sale of power or lease rentals for farmland depending on the business model.
GFI for BESS: The grid Controller of India (Grid-India) has proposed incorporating grid forming inverters (GFI) for Battery Energy Storage Systems (BESS) installations above 50 MW capacity, especially when located in weak grid areas or in remote locations. If implemented, this will be a way forward for C&I (commercial and industrial) consumers with rooftop systems to have BESS system and use it as local grid. GFIs provide the missing grid-strength functions necessary for system stability, making them strategically vital for achieving national renewable energy targets. C&I sites will deploy storage for demand charge management and resilience, with embedded EMS optimising co-located solar and storage against dynamic tariffs. Corporates will increasingly seek time-matched renewable supply, favouring storage-backed PPAs and hybrid structures over simple solar-only deals.
Standards and domestic value-add: Continued emphasis on quality assurance and domestic manufacturing depth — spanning modules, inverters, cells, and turbines — will tighten supply chains, reduce import exposure, and align with industrial policy.
Carbon markets and compliance: The build-out of compliance carbon markets and tightening corporate decarbonisation disclosures will nudge corporate PPAs toward 24/7 matched supply and embodied-carbon tracking.
Domestic manufacturing maturity: Expect better module reliability, bankability of domestic Tier-1 suppliers, and pricing stability as cell and wafer lines scale — supporting faster financial closures and EPC timelines.
Land and transmission pragmatics: Developers will prioritise sites with pre-secured evacuation and land aggregation, leveraging plug-and-play parks and shared interconnections to compress build cycles.
Onshore wind revival: Competitive repowering, taller hub heights, and hybrid tenders will revive onshore wind economics, especially in high-CUF corridors where solar alone cannot meet evening peak.
Offshore wind groundwork: 2026 will focus on seabed studies, port logistics, and supply chain commitments, laying foundations for initial auctions and bankable frameworks — critical for diversifying India’s renewable mix beyond land constraints.
Pumped hydro pipeline: Expect state-led concessions and viability gap support for long-duration storage, complementing BESS for seasonal balancing and grid inertia.
Green hydrogen to grow from pilots to clusters: Anchored offtake in refineries, fertilizers, and steel will drive hub-style development near renewables-rich regions, aided by shared pipelines and storage. Hydrogen hub initiative launched by DST is taking shape and in 2026, one can expect hydrogen generation and utilisation projects to be commissioned.
Electrolyser scale-up: Domestic electrolyser manufacturing will expand, with performance guarantees and service models improving bankability — key for cost learning curves and export competitiveness.
Policy clarity on offtake: Expect standardised offtake contracts, certification protocols, and grid access rules to reduce demand uncertainty and enable financing.
Digital operations of transmission and utility grid: Widespread adoption of forecasting, DER management, and flexible ramping products will reduce balancing costs and improve grid reliability, cut down backing down of renewable projects.
Ancillary and capacity markets: More granular market products (reserves, fast frequency response) and time-of-day tariffs will improve price flexibility, nudging portfolios toward storage-backed hybrids.
Embodied carbon and supply chains: Procurement teams will scrutinise lifecycle emissions of equipment and electricity — creating premiums for projects with transparent, low-carbon manufacturing.
Structured finance: Expect more project bonds, securitisation of operating assets, and blended finance for storage and hydrogen, reflecting maturing risk appetites.
Execution excellence: The differentiator in 2026 is delivery: EPC speed, grid readiness, and O&M sophistication matter more than headline tariffs.
ESG and community outcomes: Social license — jobs, local sourcing, and biodiversity safeguards — will be central to approvals and investor diligence.
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