India's Renewable Energy Landscape Poised for Sustainable Growth

India Ratings and Research (Ind-Ra) has maintained a stable rating outlook for solar and wind projects for FY26, driven by the historical generation profile, factoring in volatility, consistent payments from counterparties, and comfortable internal liquidity. This stability indicates the sector's ongoing expansion, with the addition of renewable energy capacity anticipated to accelerate even more in the upcoming years. A strong pipeline, particularly in solar projects, is projected to represent 35-40 percent of India's energy mix by 2030.

The share of renewables, encompassing large hydro, in the country’s overall energy composition is predicted to remain stable at around 21 percent in FY25, with thermal energy offsetting any deficiencies. By December 2024, India's overall power generation capacity had hit 462 GW, with renewable sources contributing 209.444 GW, including hydroelectric power.

Ind-Ra anticipates a year-on-year rise in energy demand of 5-5.5 percent for FY25, observing that a significant portion of the 30-35 GW extra capacity is expected to come from renewable resources. This will be essential for meeting the increasing energy needs of the country.

"Given the uncertainty and intermittency in renewable energy projects, the need for round-the-clock power and to maintain grid stability, renewable tenders with hybrid/storage/round-the-clock options are expected to garner further traction," said Bharath Kumar Reddy, Associate Director of infrastructure, Ind-Ra.

Vinitha Arunachalam, Analyst, Infrastructure, Ind-Ra, added, "Given the expected energy demand growth and energy transition plans, the country needs to add 50 GW of renewable energy capacity per annum till 2030. With a strong pipeline of 174 GW as of September 2024 and healthy tendering activity, implementation remains key to achieving the set targets."