Research Report

RE capacity addition improved to 31.2 GW in 8M FY2026 from 14.9 GW in 8M FY2025, driven by a large project pipeline and the expiry of full waiver on inter-state transmission charges. The capacity addition is likely to scale up to ~40.0 GW in FY2026, backed by the growing demand for electricity in the country. However, the augmentation of transmission capacity remains key to sustain the scale-up in capacity addition.

• ICRA’s outlook for the renewable energy (RE) sector remains Stable, led by strong policy support, superior tariff competitiveness and the sustainability initiatives by large commercial and industrial (C&I) customers. However, challenges remain on the execution front, including land and transmission infrastructure, delays in signing power purchase agreements (PPAs), exposure to equipment prices and distribution utility finances.
• The sector saw a capacity addition of 31.2 GW in 8M FY2026, which was higher by 109% compared to the 14.9-GW added in the corresponding period of the previous year. Earlier in FY2025, the capacity addition increased to 28.7 GW compared to 18.5 GW added in FY2024, driven by a large project pipeline. This was supported by favourable solar photovoltaic (PV) cell and module prices and the expiry of full waiver on interstate transmission charges with effect from June 30, 2025.

Exhibit 1: Trends in cumulative installed renewable capacity, including large hydro (GW)

Source: ICRA Research, Central Electricity Authority (CEA), Ministry of New & Renewable Energy (MNRE)