India is set to add 75 gigawatt (GW) of renewable energy in 2025-26 (FY26) and FY27, up 53 per cent from 49 GW added in FY24 and FY25, Crisil Ratings said. Investments in renewables are also expected to surge by 52 per cent from Rs 2.5 lakh crore to Rs 3.8 lakh crore in FY26 and FY27, largely on account of increasing share of hybrid projects that are more capital intensive, the ratings agency said. However, delays in adding adequate transmission infrastructure could adversely impact future capacity addition, it added.
“We expect the strong growth momentum in the renewables sector to continue with 75 GW of capacity to be added over this fiscal and the next, taking the overall capacity to 233 GW by March 2027. This will be led by a strong pipeline of around 88 GW of utility projects outstanding as of March 2025,” Krishan Sitaraman, chief ratings officer at Crisil, said.
Of the total 75 GW renewable capacity to be added over the next two financial years, around 37 per cent will come from hybrid and storage-linked projects, significantly larger than the 17 per cent share in FY24 and FY25. Hybrid projects mix solar and wind capacities to support more consistent generation, while storage-linked projects use batteries and pumped hydro to save excess power generation for later use.
“The rising share of hybrid projects is a key requirement on account of the intermittent nature of renewable power, as solar generation happens during the daytime and wind power is seasonal. Hence, increasing the share of renewables in the generation mix has a potential to disrupt the grid balance. Hybrid projects, with or without battery storage, provide an optimal solution to support round-the-clock power generation,” Sitaraman said.
Crisil Ratings said investments in renewables were recorded at Rs 1.8 lakh crore in FY22 and FY23, which increased to Rs 2.5 lakh crore in the following two fiscals, and is expected to grow by half to Rs 3.8 lakh crore in FY26 and FY27. The surge in investments will partly be on account of rising share of hybrid and storage projects, which are more capital intensive.
A key challenge facing the sector is the inability of transmission infrastructure to keep pace with capacity addition. “The need for augmenting transmission capacity to keep pace with the growing renewable capacity is there. And hence, we are seeing an uptick in transmission project awarding. That has ramped up significantly. If all of that gets implemented, then it would go a long way in helping renewable evacuation,” Sitaraman said.
The transmission sector recorded capital expenditure worth Rs 36,000 crore in FY25, more than double of Rs 15,000 crore in FY24. Tenders worth Rs 1 lakh crore were awarded in FY25, compared to Rs 48,000 crore in the previous financial year. Crisil has projected capex of between Rs 0.9-1 lakh crore in FY26 and FY27.
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“However, there is a risk of a shortfall because of the potential for delays in execution. These could arise as the country is now implementing a much higher pace of transmission projects than seen in the past. What is projected to be executed in FY26 and FY27 is double of what we saw in the previous two years. That exposes projects to risk of delays, especially with respect to the supply of equipment such as transformers and other components,” according to Sitaraman.
Renewable projects are also facing difficulties in securing buyers through renewable energy implementing agencies (REIAs), with not enough states signing power purchase agreements (PPAs).
“For a majority of the projects awarded in the past one to two years, the progress of power purchase has been slow, with only 50 per cent of such PPAs closed as of March 2025. However, we expect improvement going forward as India’s demand for power, as well as discoms’ renewable power obligations, would increase further while thermal capacity addition will take time,” Sitaraman said.
According to a recent Grid-India resource adequacy report, the country will add 45 GW in the ongoing FY26, led by solar (26.5 GW), wind (6.3 GW), coal (4.4 GW), battery energy storage (3.3 GW), hydro (1.6 GW), pumped storage (1.5 GW), and nuclear (1.4 GW).
