Context:
India is witnessing a robust acceleration in renewable energy deployment, with projections indicating a sharp uptick in capacity additions and investments in the fiscal years 2025–26 (FY26) and 2026–27 (FY27). According to Crisil Ratings, India is expected to add 75 gigawatts (GW) of renewable energy capacity during these two years—a 53% increase from the 49 GW installed over FY24 and FY25. This expansion signals India’s deepening commitment to decarbonisation and energy transition, though challenges in transmission infrastructure and power purchase arrangements continue to pose bottlenecks.

Projected Capacity Growth: 2025–2027:

India’s total renewable energy capacity is expected to reach 233 GW by March 2027, up from approximately 158 GW at the end of FY25. The projected addition of 75 GW in FY26 and FY27 reflects a strong pipeline of 88 GW in utility-scale projects as of March 2025.

A significant portion of this upcoming capacity—approximately 37%—is expected to come from hybrid and storage-linked projects, up from just 17% in FY24–FY25. Hybrid systems, which combine solar and wind power, and storage technologies like batteries and pumped hydro, are increasingly crucial to counter the intermittent nature of renewables.

Crisil estimates a 52% increase in renewable energy investments, rising from ₹2.5 lakh crore during FY24–FY25 to ₹3.8 lakh crore in FY26–FY27. This trend builds on earlier growth:

• FY22–FY23: ₹1.8 lakh crore
• FY24–FY25: ₹2.5 lakh crore
• FY26–FY27 (projected): ₹3.8 lakh crore

The rising share of capital-intensive hybrid and storage-based projects is a key driver of this investment surge. These projects, while costlier, support grid stability and facilitate round-the-clock (RTC) renewable power supply.

Role of Hybrid and Storage Projects:

Hybrid projects integrate solar and wind generation to smoothen fluctuations and extend generation windows beyond peak sunlight hours. Storage-linked installations, involving battery energy storage systems (BESS) and pumped hydro, enable energy retention and later dispatch, crucial for grid balancing.

Crisil Ratings highlights that this growing reliance on hybrid models is not just a technical solution but a structural necessity as India scales up renewables. These technologies mitigate seasonal and diurnal variability and reduce the risk of grid disruptions.

Other Renewable Energy Sources:

Wind Power:

India started harnessing wind energy in the 1990s. As of October 10, 2024, India had installed 47.3 GW of wind power—23.5% of its renewable capacity—making it the second-largest source after solar.

Highlights:

·         States leading in wind power: Tamil Nadu, Gujarat, Maharashtra

·         Global rank: 4th in wind power capacity

·         2014 capacity: 21 GW

·         2024 capacity: 47.3 GW

·         2030 target: 100 GW

The National Wind-Solar Hybrid Policy promotes projects that combine wind and solar, making better use of land and providing more stable power.

Offshore Wind: India aims to install 30 GW of offshore wind capacity by 2030, especially off the coasts of Gujarat and Tamil Nadu.

Hydropower:

Hydropower has been part of India’s energy system for decades. As of October 10, 2024, India had 46.9 GW of hydropower capacity, about 12% of total power generation.

Key Stats:

·         2014 capacity: 40.5 GW

·         2024 capacity: 46.9 GW

·         2030 target: 70 GW

Hydropower is especially useful during times when solar and wind are not generating enough electricity. Projects are mostly located in northern and northeastern rivers.

Pumped Storage Projects: These are like giant batteries. Water is pumped uphill when demand is low and released during peak hours to generate power. It’s a great way to balance variable solar and wind energy.

Biomass and Waste-to-Energy:

India has a large rural economy and growing urban centres. This generates plenty of agricultural and municipal waste that can be turned into electricity.

Biomass:

·         Capacity (Oct 2024): 10.7 GW

·         Mostly used in rural areas using crop residue and forestry waste

Waste-to-Energy:

·         Capacity (Oct 2024): 604.49 MW

·         Converts city waste into electricity

·         Helps reduce landfills and manage urban waste better

Green Hydrogen:

Green hydrogen is made by splitting water using electricity from renewable sources. It’s useful for industries like steel, cement, and chemicals that can't rely on solar or wind alone.

India’s National Green Hydrogen Mission:

·         Launched: January 2023

·         Budget: US$ 2.4 billion (₹19,744 crore)

Breakdown:

·         SIGHT programme (electrolyser and hydrogen production): ₹17,490 crore

·         Pilot projects: ₹1,466 crore

·         R&D: ₹400 crore

·         Other initiatives: ₹388 crore

India’s goal is to:

·         Become a global exporter of green hydrogen

·         Capture part of the 200 million tonnes/year global demand by 2030

·         Develop hydrogen hubs powered by renewables

Challenges and Enablers in India’s Renewable Energy Transition:

Transmission Infrastructure: A Growing Bottleneck

Despite strong capacity and investment forecasts, the pace of transmission infrastructure development remains a critical constraint. The transmission sector is undergoing rapid expansion:

• FY24: Capital expenditure of ₹15,000 crore
• FY25: Capex more than doubled to ₹36,000 crore
• FY26–FY27: Projected capex of ₹90,000 crore to ₹1 lakh crore

Tenders worth ₹1 lakh crore were awarded in FY25, up from ₹48,000 crore in FY24. However, execution risks remain high due to:

• Compressed timelines
• Supply chain constraints, especially in transformers and key components
• Greater project complexity due to geographic dispersal of renewable sites

Financial Struggles of DISCOMs and Legal Uncertainty

India’s renewable energy push is hampered by the poor financial health of power distribution companies (DISCOMs). Many DISCOMs face losses due to low tariffs, poor bill recovery, and inefficiencies. This prevents them from signing new power purchase agreements (PPAs), delaying renewable energy projects and hurting developer cashflows and financing. This concern is also flagged by Crisil. PPAs. As of March 2025, only 50% of PPAs for recently awarded renewable projects had been secured. The shortfall is largely due to:

• Reluctance of state distribution companies (discoms) to enter long-term contracts
• Delay in absorption capacity planning by Renewable Energy Implementing Agencies (REIAs)

·         Unfair procurement practices by some big energy firms raise transparency concerns, damaging investor trust.

However, Crisil anticipates this situation will improve due to:

• Rising power demand
• Increasing Renewable Purchase Obligations (RPOs) for discoms
• Slower pace of thermal power capacity additions

Overdependence on Imported Critical Minerals:

India depends entirely on imports for key minerals like lithium, cobalt, nickel, and graphite—vital for renewable technologies. Major sources include China, Russia, and Japan, raising exposure to price shocks, supply disruptions, and geopolitical risks.

Global refining is also highly concentrated:

·         China processes 68% of nickel, 40% of copper, 59% of lithium, 73% of cobalt

·         It controls 70% of rare earth mining and 85% of processing

To reduce risks, India must diversify mineral sources through partnerships with countries like Australia, the US, and Indonesia.

Conclusion:

India’s renewable energy sector is entering a critical phase of expansion, with substantial increases in both capacity and capital investment expected by FY27. The sector’s growth will be underpinned by hybrid and storage-based innovations, but it faces tangible execution challenges in the form of transmission infrastructure delays and slow PPA closures.

Successfully managing these constraints will be pivotal for India to not only meet its renewable energy targets but also to maintain grid reliability and investor confidence. With thoughtful policy alignment and accelerated infrastructure development, India could well stay on course to becoming a global renewable energy leader.