India reportedly became the world’s third largest renewable energy market after China and the US as of March 2026, with its installed capacity reaching 274.6 GW (including large hydro). Almost 55 GW of new renewables capacity was added in 2025-26, compared to just 8.6 GW of thermal power. Thus, renewable energy is a key contributor to the electrification efforts of the country, which is critical considering the current geopolitical situation and looming energy crisis in many global markets.
Solar energy continues to retain its position as the dominant renewable energy source in the country, crossing the 150 MW milestone as of March 2026. Wind power reached 56 GW, while bioenergy stood at 11.7 GW. While thermal power still contributes around half of India’s installed power capacity, solar power is slowly gaining traction, with more than a quarter share currently. Renewable energy generation in 2025-26 was almost five times higher than the 2015-16 levels. At this pace, renewable energy capacity is expected to outplay thermal energy capacity in the near future, with battery energy storage systems (BESS), hybrids and firm and despatchable renewables (FDRE) and green hydrogen projected to play a key role in India’s energy transition journey.
The latest market report by Renewable Watch Research on Renewable Energy in India, released in May 2026, highlights the key growth trends, policy developments, tenders and projects, key financings and deals, as well as the outlook across the different renewable energy segments – solar, wind, bioenergy, hybrids and energy storage, and green hydrogen. Further, it also presents the major developments in the corporate green markets as well as recent trends on power exchanges. This article presents a short summary of the report…
Supportive policy interventions
The transition towards clean energy is visible in the changing policy regime as well. For instance, the budgetary allocations for the Ministry of New and Renewable Energy have increased to Rs 329.14 billion for 2026-27, up from Rs 265.49 billion in 2025-26. Further, the policy focus has moved from utility-scale MW deployment to more diversified and inclusive clean energy growth that prioritises distributed energy sources, domestic manufacturing, energy storage, green hydrogen and transmission systems.
In the last quarter of 2025-26, the government released key long-term roadmaps focused on ensuring grid reliability, including the Roadmap to 100 GW of Hydro Pumped Storage Projects, the National Generation Adequacy Plan and the Transmission Plan for integrating over 900 GW of non-fossil fuel capacity by 2035-36. Several reforms were introduced under the PM Surya Ghar: Muft Bijli Yojana to promote rooftop solar adoption, improve subsidy disbursement and streamline implementation. Further, timelines were extended under the PM-KUSUM scheme to address financing delays faced by developers and farmers. Efforts are also being made to strengthen domestic manufacturing through the Approved List of Models and Manufacturers for solar and wind equipment, GST reductions on renewable equipment, domestic content requirements and production-linked incentives. In addition, new measures have been introduced for green hydrogen certification, battery storage deployment, renewable consumption obligations and carbon credit trading.
Corporates choose green power
Another indicator of the green energy transition is the increasing shift of commercial and industrial consumers to renewable power through captive, group-captive and open access power arrangements. Numerous companies across different sectors like manufacturing, data centres, automotive, textiles and cement announced renewable energy procurement deals throughout 2025-26.
Green energy markets such as the green day-ahead market and green term-ahead market are also witnessing higher trading volumes. For instance, by the fourth quarter of 2025-26, the IEX Green Market achieved an increase of 26.5 per cent compared to the same period of the previous year. Emerging mechanisms such as virtual power purchase agreements are expected to drive future growth in this space.
Solar continues to shine
No segment has shaped India’s renewable story more than solar power. Annual solar installations surged from just 5,658 MW in 2016-17 to 44,614 MW added during 2025-26. Rajasthan, Gujarat, Maharashtra, Tamil Nadu and Karnataka continue to dominate installed capacity. Ground-mounted projects dominate the market with over 114 GW installed. This growth momentum is likely to continue with a strong pipeline of upcoming projects. A total of 54 solar parks have been sanctioned, out of which roughly 50 per cent is yet to be developed. In addition, 14 utility-scale solar auctions with 13.92 GW capacity were conducted between August 2024 and March 2026. Meanwhile, rooftop solar has reached 25 GW and is expanding steadily as distributed energy adoption grows.
Increasing emphasis is being placed on solar-plus-storage projects to ensure round-the-clock (RTC) renewable power supply and grid stability. Competitive utility-scale solar tariffs generally ranged between Rs 2.34 and Rs 3.52 per kWh. Further, India witnessed a sharp decline in solar module prices between November 2025 and March 2026, with prices reportedly falling by nearly 19-22 per cent. Prices are expected to decline further once local manufacturing expands in the country, which stands at 172.6 GW for solar modules and 27 GW for solar cell manufacturing as of March 2026.
Wind and bioenergy regain momentum
For several years, India’s wind sector struggled with slow capacity additions, policy uncertainty and intense competition from low-cost solar power. That trend is now reversing, and wind capacity additions rose sharply to 6,057 MW in 2025-26, marking a nearly 46 per cent growth over the previous year. Gujarat remains India’s largest wind market, followed by Tamil Nadu and Karnataka. 20 new tenders and 6 auctions for standalone wind power projects in 2025-26 indicate a strong pipeline for wind growth. Tariffs discovered in standalone wind auctions ranged between Rs 3.43 and Rs 3.97 per kWh, thereby maintaining competitiveness with conventional power.
While legacy bioenergy segments have plateaued due to seasonal feedstock constraints, tariff uncertainties and high capital costs, the sector’s momentum is now being driven by the compressed biogas (CBG) and bio-ethanol segments supported by robust policy support in the form of programmes such as SATAT, GOBARdhan and financing schemes. Numerous public and private players, including Bharat Petroleum Corporation Limited, Indian Oil Corporation Limited, GAIL India Limited, Hindustan Petroleum Corporation Limited and Reliance Industries Limited, have announced large-scale investments in CBG, bioethanol and waste-to-energy infrastructure across the country. Future growth is expected to accelerate with supportive state policies, blending regulations and demand-side push from oil marketing companies and city gas networks.
Age of energy storage
India’s policymakers, regulators, grid operators and discoms have realised that India’s renewable growth cannot continue without large-scale energy storage deployment. Thus, BESS and pumped storage projects (PSPs) are gaining rapid traction for grid balancing and renewable integration. For instance, 74 new tenders were issued and 27 auctions conducted in 2025-26 across the energy storage segment.
According to projections, India’s storage requirement could reach 174 GW by 2035-36, including 80 GW of battery storage. Battery storage tariffs are already declining sharply, and recent bids discovered tariffs of Rs 148,000 per MW per month for two-hour storage and Rs 285,000 per MW per month for four-hour storage. Meanwhile, PSP is receiving renewed policy support and a potential to develop 267 GW of PSP capacity has been identified across the country. 10 PSPs are under operation already, 11 are under construction, and 5 new projects have received concurrence from the Central Electricity Authority.
At the same time, there is increasing demand from utilities to procure firm renewable power instead of standalone solar or wind power, leading to a slew of tenders in this space. 10 new tenders were issued and 8 auctions were conducted in 2025-26 across the wind-solar hybrid, FDRE and round-the-clock segments. Average tariffs remain competitive with conventional power in 2025-26 – Rs 3.35-Rs 3.74 per kWh for solar-wind hybrids and Rs 4.76-Rs 6.74 per kWh for FDRE projects.
Green hydrogen for hard-to-abate sectors
Green hydrogen is emerging as a strategic energy source, with applications across refining, fertilisers, steel, shipping and mobility. India has already commissioned around 8,000 tonnes per annum of green hydrogen capacity. Competitive bidding is rapidly lowering prices, reducing the gap between grey and green hydrogen. In February 2026, a record-low green hydrogen price of Rs 279 per kg was discovered in a Numaligarh Refinery tender.
Further, in 2025, under the SIGHT Mode-1, Tranche-2A auction, the lowest discovered green ammonia price was Rs 49.75 per kg. India’s electrolyser manufacturing ecosystem is gradually developing as well, and current domestic capacity stands at approximately 2.1 GW annually. Demand-side mandates and supply-side incentives are expected to play a major role in scaling the ecosystem further.
Projections and outlook
The report tracked 166 GW of upcoming projects in the pipeline, with standalone solar power projects (111 GW) dominating the mix, followed by wind projects and hybrid/RTC projects. A major issue is that India’s renewable growth is skewed and remains concentrated in a few high-performing states like Rajasthan and Gujarat. This creates delays in the implementation of evacuation systems, which often slow project commissioning and increase costs. Inadequate transmission infrastructure can also lead to grid curtailment issues. Land acquisition hurdles and regulatory uncertainty compound project development challenges. These issues need to be resolved urgently to ensure that the massive renewable energy pipeline can be brought online in time.
Financing also remains difficult for many players, especially for projects that are smaller in size or based on new technologies. The National Generation Adequacy Plan projects that 764 GW out of 1,121 GW of total installed power capacity will be renewables-based by 2035-36. Our estimates suggest an incremental capacity addition of about 936 GW over the next 11 years (till 2047), with an average annual addition of nearly 85 GW. The report has tracked over $20.47 billion of funding in 2025-26 in the Indian renewable energy sector, including $12.83 billion in debt instruments and about $7.63 billion in equity – signalling the requirement of massive enhancement in financing.
In conclusion, solar remains the dominant growth contributor in the renewables sector, with wind recovering moderately and energy storage becoming commercially viable. Strong policy initiatives, competitive tariffs and equipment prices, growing concerns around energy security and rising corporate demands are boosting growth – but infrastructural, financing and regulatory bottlenecks still need to be addressed for India to ensure its energy security through the renewable energy transition.
To access the Table of Contents of the Renewable Energy in India Report, May 2026, please click here
