Research Report

RE capacity addition improved to 43.2 GW in 11M FY2026 from 24.1 GW in 11M FY2025, driven by a large project pipeline and the rush to commission projects ahead of the expiry of full waiver on inter-state transmission charges. However, the capacity addition is expected to moderate to 40 GW in FY2027 due to transmission and grid connectivity challenges.

• 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 43.2 GW in 11M FY2026, which was higher by 79% over the 24.1-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 inter-state 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)