India’s renewable sector to ride Rs 6L cr to Rs 7L cr investment wave

Chennai: India's renewable energy capacity addition is expected to remain robust, with the combined installed capacity of solar and wind projected to rise to 310–315 GW by March 2028, from about 206 GW as of March 2026. This expansion will significantly alter the power mix, with renewables expected to account for 45%–47%, up from about a fifth at the start of the decade, 24% in FY2022 and roughly 38% in FY2026, according to analysts at Crisil.The sector continues to benefit from strong government support, with over 100 GW of capacity likely to be added across the current and next fiscals. "Renewable energy is projected to account for Rs 6 lakh crore – Rs 7 lakh crore out of the total Rs 23 lakh crore – Rs 24 lakh crore investment in key infrastructure segments in FY27–FY28, translating to roughly 26%–29% of the overall spend," said Krishnan Sitaraman, chief ratings officer, Crisil. Two key drivers are expected to power capacity addition growth. First, a strong executable pipeline of over 95 GW of utility-scale projects with remunerative tariffs will account for about 60% of capacity addition over the next two years. Second, supportive policies and incentives will boost the commercial and industrial (C&I) segment as well as rooftop installations, contributing the remaining 40%, said Manish Gupta, deputy chief rating officer, Crisil. Growth is expected to remain strong across segments, with utility projects clocking a compound annual growth rate (CAGR) of about 22%, while the C&I segment may grow faster at around 28%. India is also moving toward greater self-reliance in renewable manufacturing, with domestic supply chains strengthening across modules, batteries and ancillary equipment. Ample liquidity and sustained investor interest are further supporting capacity addition, pointed out Gupta. However, challenges persist. Delays in power purchase agreement (PPA) closures and transmission readiness remain key risks. Around half the capacity awarded over the past three fiscals is yet to secure PPAs, exposing projects to offtake risk. Compared with thermal projects—which achieved PPA closure within about a month in 2025—renewable projects, particularly hybrid and storage-based ones, are taking up to nine months. Differences in procurement mechanisms and lower participation from key power-consuming states may be contributing factors. A transmission gap is also emerging, as renewable capacity additions outpace transmission expansion due to shorter gestation periods. This gap is expected to peak in FY2027 before easing from FY2028 as new capacity comes online. Timely execution will be critical to reduce grid curtailment risks.
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