Renewables - COE Chakra

Renewables Sectoral Insights

India is advancing a foundational energy shift with its commitment to installing 500 GW of non-fossil fuel capacity by 2030. The transition is anchored in two core technologies: solar and wind, which together are expected to comprise up to 80% of clean capacity by the end of the decade. This expansion is not only driven by decarbonization goals but also by energy security, growing electricity demand, and increasing corporate procurement of renewables. Policy reforms, digital grid upgrades, and the adoption of round-the-clock hybrid models are accelerating the sector’s evolution from capacity procurement to dispatchable clean energy delivery.

At the heart of this growth lies the solar sector, which is set to add ~145 GW by 2030. Domestic manufacturing is scaling under the Production Linked Incentive (PLI) scheme, with planned capacity additions across the polysilicon, wafer, cell, and module value chain. While downstream module assembly is gaining maturity, upstream inputs remain import-dependent, exposing developers to cost volatility. Policy instruments like the Approved List of Models and Manufacturers (ALMM) and customs duties aim to encourage self-reliance, but cost gaps versus Chinese imports persist. Solar deployment continues to be led by utility-scale projects, with innovations like floating solar and agrivoltaics gaining traction to address land constraints.

Wind power, historically a stronghold in India’s renewable mix, is set for a revival. Capacity is expected to double from ~56 GW to 100 GW by 2030, driven by hybrid tenders, repowering initiatives, and offshore wind policy frameworks. India maintains significant manufacturing capabilities across nacelles, blades, and towers, yet capacity utilization remains suboptimal due to weak domestic demand and limited tower infrastructure. Transmission congestion and delays in securing project approvals are key inhibitors. Addressing these bottlenecks through targeted investments in logistics-intensive components and faster permitting could unlock latent capacity and bolster export competitiveness.

Pumped Storage Projects (PSPs) are becoming essential for managing power supply changes and keeping the grid stable as we use more renewable energy. According to the Central Electricity Authority's (CEA) roadmap report published in January 2026, India has an estimated technical potential of about 267 GW, out of which ~96 GW of capacity is in various stages of planning and development. Because of this massive potential, PSPs are now being included in hybrid power projects to provide long-lasting energy storage. The business model for PSPs is improving, helped by benefits like must-run status, grid charge waivers, and viability gap funding. However, the sector still faces challenges like long building times, regulatory hurdles, and complex engineering needs at specific sites. To speed up PSP growth, the industry needs to shift toward closed-loop and modular reservoir designs, along with quicker approval processes.

Underpinning all segments is a broad policy architecture spanning central and state governments. Renewable Purchase Obligations (RPOs), open access reform, storage-linked tendering, and manufacturing incentives are driving demand and de-risking investment. States like Gujarat, Tamil Nadu, and Karnataka are leading with tailored policies on land allocation, repowering, and single-window clearances. However, uneven implementation across states and ambiguity around long-term tariff frameworks continue to affect investor confidence. Strengthening inter-agency coordination and codifying a national renewable energy law could enhance predictability and streamline project development.

As the sector matures, environmental, social, and governance (ESG) performance is emerging as a key differentiator. Developers with strong ESG credentials benefit from lower-cost capital, faster land acquisition, and improved community alignment. Policy shifts such as SEBI’s BRSR Core and blade recycling mandates are pushing ESG into mainstream compliance. Meanwhile, developers are addressing biodiversity risks, water usage, and material circularity through design innovations and local partnerships. Governance reforms around supply chain ethics, cybersecurity, and disclosure frameworks are reshaping stakeholder expectations.

Project bankability is improving as capital markets adapt to the unique contours of renewables. Financing instruments such as green bonds, sustainability-linked loans, and infrastructure investment trusts are gaining momentum. Project developers are de-risking cash flows through SECI-anchored power purchase agreements and payment security mechanisms, yet off-taker risk from state DISCOMs remains a concern. Manufacturing investments, particularly upstream, are still hindered by limited access to low-cost debt and tariff unpredictability, underscoring the need for capital structuring innovation and policy alignment.

India’s renewable energy sector is well-positioned to lead global Energy Transition efforts, but its success depends on how effectively policy, capital, infrastructure, and execution capabilities evolve in parallel. Scaling domestic manufacturing, closing infrastructure gaps, enforcing consistent regulation, and embedding ESG standards will be essential to converting policy ambition into durable growth and investment-grade outcomes.

Access Detailed Sectoral Insight Reports

• Sectoral Insights Renewables April 26  (1886 KB)