By: ICN Bureau
Last updated : November 21, 2025 4:03 pm
The growth hinges on the addition of roughly 200 GW of new capacity over next five years
As India races toward a greener power mix, the country's renewable energy sector’s growth is clear. But execution, storage and grid readiness will determine if the 2030 target is met, as per rating agency ICRA.
India’s renewable energy (RE) capacity, including large hydro, is on track to account for over 35% of total power generation by FY2030, up from 22.1% in FY2025, according to ICRA.
The growth hinges on the addition of roughly 200 GW of new capacity over next five years.
However, the pace of new project awards has slowed dramatically. After 47.3 GW of RE capacity was awarded in FY2024 and 40.6 GW in FY2025, only 5.8 GW has been awarded in the first eight months of FY2026. Meanwhile, 40–45 GW of capacity still lacks signed power purchase agreements (PPAs), raising concerns over timely execution.
Girishkumar Kadam, Senior VP & Group Head – Corporate Ratings at ICRA, flagged the key issues: “The slowdown in new project bids and delays in signing PPAs reflect challenges in available transmission connectivity. Grid curtailments, particularly for solar in Rajasthan during peak solar hours, further highlight the need for urgent grid strengthening and storage capacity expansion.”
Battery Storage
With India facing variability in renewable generation, Battery Energy Storage Systems (BESS) are emerging as essential for grid stability.
The government has introduced viability gap funding and extended transmission charge waivers for storage projects until 2028. Since April 2024, over 20 GWh of standalone BESS projects have been awarded, while round-the-clock (RTC), firm and dispatchable renewable energy (FDRE), and solar-plus-storage projects account for ~90% of RE capacity awarded in 8M FY2026.
BESS costs have fallen sharply over the past decade. ICRA estimates that 2–4 hour BESS storage costs Rs. 4–7 per unit, an improvement from Rs. 8–9 per unit in 2022, though still slightly higher than Pumped Storage Hydropower (PSP) at Rs. 5 per unit.
Kadam notes that “despite shorter lifespans and replacement costs, continued battery price declines are expected to boost adoption. Key monitorables include performance metrics like efficiency, degradation, and availability.”
Policy Support
ICRA’s outlook for the RE sector remains stable, supported by strong government policies, competitive tariffs, and growing C&I demand. Yet challenges persist: land acquisition, transmission infrastructure, delayed PPAs, equipment costs, and stressed utility finances could impact project execution.
The sector continues to see strong credit performance, with more upgrades than downgrades.
In FY2025, there were 29 upgrades versus six downgrades; in H1 FY2026, upgrades surged to 49 against 13 downgrades. Upgrades were driven by successful commissioning, solid generation performance, and improved parent credit profiles, while downgrades stemmed from weak generation, commissioning delays, and higher leverage.