Indian credit rating agency ICRA recently said that India's installed renewable energy capacity is likely to rise to 250 gigawatts by March 2026 from 201 gigawatts in September 2024. After an improved tender in 2024, this growth will be driven by a project pipeline of 80 GW.

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 increase in renewable energy, especially with the end of the interstate transmission exemption in June 2025.

ICRA said it expects the 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, increasing the share of renewables and large hydropower in the country's power generation from 21 per cent in 2024 to more than 35 per cent in 2030, ICRA said.

To consolidate this growing share, ICRA expects India to need 50 GW of energy storage by 2030, from battery storage and pumped storage hydropower projects.

"The sharp drop in tariffs on BESS projects over the past eight months, driven by the sharp drop in battery prices, is expected to increase the adoption rate of energy storage projects," Kadam said.

The Central node agency is focusing on awarding renewable energy projects that provide round-the-clock, stable, dispatchable electricity to reduce the intermittency risk of renewable energy. These projects are often mixed with energy storage and can help meet demand reliably.

Agencies and railroads have completed auctions for nearly 14 GW of such projects. Electricity prices remain competitive with bids ranging from INR 4.0 /kWh to INR 5.0 /kWh, while bids for coal projects exceed INR 6.0 /kWh. ICRA noted that these projects would face commercial market tariffs due to their excessive scale and expected excess power generation.