Sectoral Analysis

Indian Journal of Socio-Economic Studies

Vol I | No 1 | January – March 2026 | page 66–72

Renewable Power in India: A Decade of Structural

Transformation (FY2016–FY2026)

Growth Drivers, Investment Patterns, Institutional Mechanisms and the Road Ahead

Shashikant Hegde

ORCID ID: 0009-0008-8165-8213

This paper analyses the structural transformation of India's renewable energy (RE) sector over the decade FY2016 to

January 2026, examining capacity expansion, investment reorientation, institutional mechanisms and system-integration

challenges. India's total installed renewable capacity grew from approximately 90 GW in FY2016 to 263 GW by January 2026 —

a near-tripling driven primarily by solar photovoltaic deployment and supported by wind, hydro and bioenergy. Renewable sources

(including large hydro) surpassed thermal capacity in the installed mix by FY2026 and the 50% non-fossil capacity milestone

under India's Nationally Determined Contribution (NDC) was achieved ﬁve years ahead of the 2030 target. Investment data

(FY2016–FY2025) from ProjectsToday.com document a sustained shift in electricity-sector capital towards renewables, with fresh

renewable investment reaching ₹11.76 lakh crore in FY2025 alone, reﬂecting a decade-long CAGR of 27%. Key institutional

mechanisms — competitive tariﬀ-based bidding, centralised procurement through the Solar Energy Corporation of India (SECI)

and the Production Linked Incentive (PLI) programme for domestic manufacturing — are examined as enablers of this

transformation. The paper also identiﬁes binding constraints: transmission bottlenecks, distribution company (DISCOM)

ﬁnances, land acquisition barriers and the emerging imperative of grid ﬂexibility through pumped storage hydropower (PSH) and

battery energy storage systems (BESS). The analysis concludes that while headline capacity growth has been exceptional, the sector's

nextphasewill bedetermined by depth of system integration, storage deployment and sustained infrastructure investment.

renewable energy; solar power; India; installed capacity; investment trends; SECI; PLI; grid integration; pumped

storage; BESS;energy transition; Uttarakhand

economy (International Renewable Energy Agency [IRENA],

2023).

ndia's electricity system is a concurrent-list subject under

This paper reviews RE developments — solar, wind, bioenergy

the Constitution, with state governments and their

and hydro (large and small) — between FY2016 and January

distribution companies (DISCOMs) responsible for last-

2026, with particular attention to capacity trends, investment

patterns (FY2016–FY2025), policy and institutional

frameworks, manufacturing development, grid infrastructure

and structural constraints. In January 2026, India formally

reported achieving approximately 50% of installed capacity

from non-fossil sources, ꢀve years ahead of the 2030 NDC

pathway — amilestone that frames the paper's analysis.

mile supply. Against this governance backdrop, renewable

energy (RE) has undergone

structural shift from

supplementary resource to central planning variable over the

decade FY2016–FY2026. Two primary drivers accelerated this

transition: declining technology costs as global solar and wind

supply chains scaled and India's escalating energy-security and

climate imperatives under the Paris Agreement and its updated

Nationally Determined Contributions (NDCs).

India's per capita carbon emissions remain below global

averages, yet its aggregate emissions rank third globally —

reinforcing the urgency of a clean-energy transition. The

electricity demand trajectory, projected to reach 446 GW by

2035 (Ministry of Power, 2023), makes renewable scale-up a

strategic economic necessity alongside its environmental

rationale. The sector's transformation has also been

accompanied by material co-beneꢀts: projected job creation of

over 10 million by 2030, reduced fossil fuel import dependency

and an estimated annual investment need of USD 25–30

billion that positions RE as a growth driver across the broader

Solar 140.6 GW

Hydro 56.3 GW

263 GW

Total

Wind 54.6 GW

Bioenergy 11.6 GW

Source: Ministry of New and Renewable Energy (MNRE) & Central

Electricity Authority (CEA), 2026.

Shashikant Hegde is the Founder of India's ꢀrst online project investment database — ProjectsToday.com.

The views expressed in this article are those of the author and not of the organisation he represents.

Vol I | No 1 | January – March 2026

As of 31 January 2026, India's installed renewable capacity

totalled 263,189 MW (263 GW), comprising solar (140,602

MW; 53.4%), large and small hydro (56,323 MW; 21.4%), wind

(54,650 MW; 20.8%) and bioenergy (11,614 MW; 4.4%), as

shown in Figure 1 and Table 1. This represents a near-tripling

from the 89,875 MW recorded at the start of FY2016 (MNRE

&CEA, 2026).

Solar

1,40,602

54,650

53.4%

20.8%

21.4%

4.4%

Wind

Hydro Power (Large + Small)

56,323

Bioenergy

Total

11,614

Solar capacity expanded most dramatically — from 7,124

MW in FY2016 to 140,602 MW by January 2026, a 20-fold

increase driven by tariꢀ-based competitive auctions, declining

module prices and large-scale solar park development. Wind

capacity grew more modestly, from 26,777 MW to 54,650

MW, reꢁecting the more geographically concentrated nature of

high-wind resource zones. Hydropower, including large hydro,

2,63,189

100.0%

Source: MNRE & CEA (2026).

expanded from 47,057 MW to 56,323 MW, with a notable

acceleration in FY2026 attributed to pumped storage project

additions. Figure 2 contextualises these renewable gains within

the total installedcapacity mix.

Source: MNRE & CEA (2026); Table 2. Note: FY2026 data as of January 2026.

As Figure 2 and Table 2 document, total installed capacity

across all sources expanded from 306,330 MW in FY2016 to

520,511 MW by January 2026. The renewable share of total

installed capacity rose from 29.3% to 50.6% over the same

period. Thermal capacity also grew in absolute terms — from

210,675 MW to 248,542 MW — but its relative share declined

from 68.8% to 47.7%. Figure 3 isolates the comparative

trajectory of renewable and thermal installed capacity, showing

the crossover point around FY2025–26 when renewables

(including hydro) surpassed thermal fortheꢂrst time.

Source: MNRE & CEA (2026). Renewable includes solar, wind, hydro and bioenergy.

Indian Journal of Socio-Economic Studies

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

FY2022

FY2023

FY2024

FY2025

FY2026*

2,10,675

2,18,330

2,22,907

2,26,279

2,30,600

2,34,728

2,36,109

2,37,269

2,43,217

2,46,935

2,48,542

5,780

6,780

8,180

8,780

89,875

47,057

48,858

49,779

49,992

50,382

50,996

51,571

51,794

51,931

52,829

56,323

7,124

12,783

22,346

29,097

35,607

41,236

53,997

66,780

81,814

1,05,646

1,40,602

26,777

32,280

34,145

35,626

37,744

39,247

40,358

42,633

45,887

50,038

54,650

8,917

9,116

9,674

3,06,330

3,28,147

3,45,631

3,57,871

3,71,334

3,83,521

3,99,497

4,16,059

4,41,970

4,75,212

5,20,511

1,03,037

1,15,945

1,24,811

1,33,955

1,42,013

1,56,608

1,72,010

1,90,573

2,20,096

2,63,189

10,096

10,221

10,534

10,682

10,802

10,941

11,583

11,614

* January 2026 data. Source: MNRE & CEA (2026).

electricity-sector investment expanded at a compound annual

growth rate (CAGR) of 24% over the decade, while the

combined renewables segment grew faster at a 27% CAGR,

conꢀrming that policy intent translated into a progressively

renewable-heavycapital pipeline (ProjectsToday.com, 2025).

Fresh project investmentdata fromProjectsToday.com(Table3)

reveal a sustained and accelerating reorientation of electricity-

sector capital toward renewables over FY2016– FY2025. Total

Source: ProjectsToday.com (2025). Note: Investment data represent announced project values.

As Figure 4 illustrates, FY2025 marked an exceptional

acceleration: total electricity-sector investment reached

₹14,17,097 crore and renewables alone accounted for

₹11,75,824 crore — representing 83.0% of all electricity

investment. Hydropower investment announcements grew at

the fastest sub-segment CAGR of 57%, followed by wind at 46%

and solar at 21%, suggesting that developers increasingly treat

storage-capable hydro as strategic infrastructure. The year-on-

year series, conꢀrmed in Table 3, shows that investment growth

was concentrated in the later years of the decade, particularly

post-FY2022, consistent with the 'episodic burst' character of

large projectannouncementsandauction outcomes.

Figure 5 documents the structural shift in investment

composition: thermal's share of electricity investment fell from

35.3% in FY2016 to 11.4% in FY2025, while renewables rose

correspondingly from 64.7% to 83.0%. This compositional shift

does not imply the absence of thermal proposals; rather, the

renewable pipeline expanded at a pace that structurally diluted

thermal's relative weight — reꢁecting the sector's evolving

planning logic of variable renewables at scale supported by

transmission andꢁexibility resources.

Vol I | No 1 | January – March 2026

Source: ProjectsToday.com (2025).

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25

CAGR

1,62,627

91,814

69,239

1,05,166

90,493

35,809

1,26,172

99,993

88,694

1,48,102

3,87,118

7,17,694

11,75,824

27%

2,564

16,715

2,904

17,088

41,013

15,870

52,975

95,697

61,739

30,006

84,027

57,675

60,332

63,213

6,368

9,757

2,477

19,491

108

12,061

31,368

35,851

58,799

57,461

1,322

35.3%

1.4%

32,509

38,513

4,667

15,024

3,726

17,181

24,767

46,729

43,969

1,92,604

19%

33,430

26,809

18,731

10,866

1,291

23,561

89,705

1,61,273

11%

48.3%

17.5%

15.8%

10.9%

0.9%

1,52,982

1,18,724

99,560

1,49,394

4,10,678

8,07,399

14,17,097

24%

1,75,297 1,74,373

4,75,849 1,82,120

5.7%

11.1%

11.4%

—

2,37,503 6,63,106 2,74,498

57% 21% 46%

Source: ProjectsToday.com (2025).

(PPAs) converted policy intent into bankable, investable

demand. Competitive auctions drove solar tariꢃs from over

₹7/kWh in 2014 to below ₹2.50/kWh by 2020, dramatically

improving the economics of solar deployment (Central

Electricity Regulatory Commission [CERC], 2023).

India's policy framework for renewable energy rests on three

interconnected pillars: articulation of long-term quantitative

targets, competitive procurement mechanisms and enabling

infrastructure investment. The 500 GW non-fossil capacity

target and the 50% non-fossil share of installed capacity by 2030

— both aligned with the updated NDC submitted under the

Paris Agreement— provided the directional anchor fordecade-

long investment planning. The early achievement of the 50%

milestone in January 2026 (Ministry of New and Renewable

Energy [MNRE], 2026) reꢁects the eꢂcacy of this target-

setting in mobilising both publicand private investment.

The Draft National Electricity Policy (NEP) 2026, set to

replace the 2005 policy, targets per capita consumption of

2,000 kWh by 2030 (up from 1,460 kWh in FY2025) and

introduces provisions for automatic tariꢃ revision linked to a

price index, along with market-based incentives for Battery

Energy Storage Systems (BESS) and Pumped Storage Projects

(PSP). The Electricity (Amendment) Bill 2025 advances

distribution sector reform through shared network frame-

works for multiple DISCOMs, phased cross-subsidy elimi-

nation and an Electricity Council modelled on the GST

Council structure.

The shift from feed-in tariꢃs to tariꢃ-based competitive

bidding transformed the procurement architecture.

Standardised request-for-proposal (RFP) formats, reverse

auctions and long-duration Power Purchase Agreements

Indian Journal of Socio-Economic Studies

Among major schemes, the PM Surya Ghar: Muft Bijli

Yojana (2024) allocated ₹75,021 crore toward rooftop solar for

one crore households, with 24 lakh households adopting

rooftop solar and 7 GW of capacity installed by December

2025. The PLI Scheme for High Eꢂciency Solar PV Modules

(Tranches I and II) has allocated over ₹24,000 crore, attracted

approximately ₹52,900 crore in investment and created 44,400

jobs. PM-KUSUM has facilitated 9.2 lakh standalone solar

pumps under Component B, while 55 approved solar parks

across 13 states carry a combined sanctioned capacity of

approximately 40 GW (MNRE, 2025). The FY2026-27 Union

Budget reinforced these trajectories with a ₹22,000 crore

allocation for rooftop solar, enhanced PM-KUSUM outlay

from ₹26 billion to ₹50 billion and BESS customs duty

exemptions previously available only to EV battery

manufacturers (Ministry of Finance, 2026).

(ALMM) requirement — mandating the use of domestically

manufactured modules for government-supported projects —

and the reduction of GST on solar devices from 12% to 5%

(eꢃective September 2025) reinforced the manufacturing

incentive. The 100% FDI automatic route for renewable energy

further supported capital inꢁows. PLI's second-order eꢃects

that investors monitor include capacity ramp-up timelines,

domestic versus import module pricing parity, module quality

and bankability and policy stability around trade measures

(duties, ALMM scope and exemptions).

A deꢀning shift of the decade was the recognition of

transmission and distribution (T&D) infrastructure as co-

equal pillars of renewable deployment. The National

Electricity Plan highlights a major scale-up of the transmission

network and transformation capacity through 2032 to match

renewable growth in resource-rich but demand-remote

locations. The Power Grid Corporation of India (PGCIL) is

overseeing inter-state transmission corridors connecting high-

solar western states (Rajasthan, Gujarat) and high-wind

southern states (Tamil Nadu, Karnataka) with consumption

centres.

The Solar Energy Corporation of India (SECI), a Navratna

Central Public Sector Undertaking under MNRE, functions

as the designated Renewable Energy Implementing Agency

(REIA) for MNRE schemes and a Category-I power trading

licensee under CERC. Since its formation, SECI has executed

Power Sale Agreements (PSAs) covering more than 60 GW of

renewable capacity (solar, wind and hybrids). Table 4

summarises SECI's principal market functions and their

investmenteꢃects.

The Revamped Distribution Sector Scheme (RDSS)

targets aggregate technical and commercial (AT&C) loss

reduction to 12–15% nationally, closing the average cost of

supply–average revenue realised (ACS–ARR) gap to zero and

scaling prepaid smart metering to 250 million consumers. The

Union Budget FY2026-27 raised RDSS allocation to ₹18,000

crore and linked additional state borrowing (0.5% of GSDP) to

measurable AT&C loss performance, creating ꢀscal incentives

for distribution reform. Without DISCOM ꢀnancial

improvement, renewable PPAs face payment delay risk,

directlyweakening bankability.

Centralised

competitive bidding

Scale + tariꢃ price

discovery

Improved revenue visibility;

basis for project ꢀnance

Standard PPAs/PSAs

Lower contracting

Faster ꢀnancial closures;

friction across states lender comfort

New tender products

Better grid-aligned

Shifted RE from energy-only

to system-service mindset

(hybrid/FDRE/storage) procurement

Source: SECI Annual Reports (2024); MNRE (2025).

As solar and wind penetration increased, grid ꢁexibility — the

ability to store, shift and dispatch energy to manage ramps and

reserve capacity — emerged as the binding system constraint.

Pumped Storage Hydropower (PSH) functions as large-scale,

long-duration storage: it absorbs surplus midday solar

generation and dispatches during peak evening demand,

directly addressing the solar ramp-down challenge. By end-

2025, India had approximately 7 GW of PSH operational and

12 GW under construction across 10 projects. In January 2026,

the Central Electricity Authority (CEA) released a dedicated

Roadmap to 100 GW of Pumped Storage, signalling PSH as a

national strategic priority (CEA, 2026). PSH investment

CAGR of 57% (FY2016–FY2025, Table 3) conꢀrms that the

market recognised this strategic value ahead of the formal

Rapid renewable deployment exposed a strategic vulnerability

in India's energy supply chain: heavy import dependence for

photovoltaic (PV) modules and upstream components. The

PLI framework explicitly targeted the development of

domestic manufacturing capacity for high-eꢂciency solar PV

modules. Combined Tranches I and II allocated approximately

₹18,500 crore to support 48,337 MW of domestic solar PV

manufacturing capacity, with Tranche I awarding approxi-

mately 8,737 MW of integrated capacity in November–

December 2022. As of September 2025, PLI-supported

manufacturing capacity had reached approximately 144 GW

perannum (MNRE, 2025).

The Approved List of Models and Manufacturers

Vol I | No 1 | January – March 2026

roadmap.

Battery Energy Storage Systems (BESS) constitute the

Kudgi. BESS customs duty exemptions in Budget FY2026-27

are expected to materially reducegrid-scale BESS CAPEX.

shorter-duration, faster-response complement to PSH. India's

cumulative installed BESS capacity reached 758.4 MWh by

end-2025, following the commissioning of ꢀve projects

totalling 547 MWh during the year. The government has

provided Viability Gap Funding (VGF) for 30 GWh of BESS

projects and targets 236 GWh of capacity by 2032 (Ministry of

Power, 2025). Signiꢀcant private investment includes the

Adani Group's announced 1,126 MW/3,530 MWh facility

planned for commissioning by March 2026 and NTPC's

award of a long-duration CO₂ battery technology project at

Renewable capacity is heavily concentrated in a small number

of states, reꢁecting both resource endowment and policy

eꢂectiveness. As of January 2026, the top ꢀve states —

Rajasthan, Gujarat, Maharashtra, Tamil Nadu and Karnataka

— collectively accounted for 65.9% of national renewable

installed capacity (MNRE & CEA, 2026), as Figure 6 and

Table5 document.

Source: MNRE & CEA (2026). Combined share: 65.9% of national total.

project and its legacy as the ꢀrst Indian state to enact wind

policy (1993), continuing through the Gujarat Integrated

RenewableEnergy Policy 2025.

—

Rajasthan

Gujarat

Maharashtra

Tamil Nadu

Karnataka

All India

45,541

42,958

31,712

27,238

26,081

2,63,189

45.5

43.0

31.7

27.2

26.1

263.2

17.3%

16.3%

12.1%

10.4%

9.9%

Despite exceptional headline capacity growth, four structural

constraints continue to shape the pace and quality of India's

renewable transition. First, transmission bottlenecks remain

acute: approximately 50 GW of renewable capacity faces

evacuation constraints and solar curtailment reached an

estimated 2.3 TWh in 2025 due to inꢁexible coal dispatch and

forecasting gaps (CEA, 2025). Second, distribution company

ꢀnances remain fragile — cross-subsidy structures erode

DISCOM viability and without sustained RDSS-driven

improvement, large-volume renewable oꢂ-take commitments

face payment risk. Third, manufacturing scale-up execution

risk is real: PLI awards create intent and pipeline, but timely

commissioning, polysilicon supply security, technology

competitiveness and stable trade policy all aꢂect delivery.

Fourth, the ꢁexibility imperative is emerging as the binding

system constraint: only 16.5 GW of PSH additions are targeted

100.0%

Source: MNRE & CEA (2026).

Rajasthan's leadership (45.5 GW; 17.3% national share) reꢁects

a combination of exceptional solar irradiation (5.5–6.5

kWh/m²/day), vast arid land availability enabling mega-parks

such as Bhadla (2.25 GW), state-level policy support under the

Rajasthan Solar Energy Policy 2019 (including 100% stamp

duty exemptions and SGST subsidies) and infrastructure

investments that have attracted over ₹2 lakh crore in cumu-

lative investment (Government of Rajasthan, 2024). Gujarat

ranks second (42.96 GW; 16.3%) through a combination of

strong coastal wind corridors, the Khavda 30 GW hybrid mega-

Indian Journal of Socio-Economic Studies

by 2030 against a system need of 50+ GW by 2032 per NEP

estimates and BESS at 758 MWh remains negligible relative to

the 236 GWh target for 2032. Investment in the sector must

double from approximately USD 15–18 billion per year to

USD 30–40 billion annually to meet 2030 targets (IRENA,

2023).

MNRE

NDC

NEP

PLI

Ministry of New and Renewable Energy

Megawatt

Nationally DeterminedContribution

National ElectricityPolicy

Production LinkedIncentive

PowerPurchase Agreement

PowerSaleAgreement

PPA

Between FY2016 and January 2026, India's renewable

electricity sector underwent a structural transformation from

peripheral add-on to dominant source of new capacity. Solar

power led this rise — expanding 20-fold to 140.6 GW —

supported by competitive bidding, SECI's market-making

role, PLI-backed domestic manufacturing and explicit national

targets that converted policy intent into investable demand.

The renewable share of installed capacity reached 50.6% by

January 2026, with the 50% NDC milestone achieved ꢀve years

ahead of schedule. Investment data conꢀrm this structural

shift: renewable projects attracted ₹11.76 lakh crore in

announced investment in FY2025 alone and thermal's share of

electricity-sector investment fell from 35.3% to 11.4% over the

decade.

PSA

PSH

RDSS

Pumped Storage Hydropower

RevampedDistribution Sector Scheme

RenewableEnergy

SECI

T&D

VGF

Solar Energy Corporation of India

Transmission and Distribution

Viability Gap Funding

REFERENCES

Central Electricity Authority (CEA). (2025). National electricity

plan 2023–2032. Ministryof Power, Government of India.

Central Electricity Authority (CEA). (2026, January). Roadmap

to 100 GW of pumped storage projects. Government of India.

Central Electricity Regulatory Commission (CERC). (2023).

Annual reporton renewable energytariꢃs. CERC.

Government of Rajasthan. (2024). Rajasthan solar energy policy

2019: Progress report. Department of Energy, Government of

Rajasthan.

International Renewable Energy Agency (IRENA). (2023).

Renewable power generation costs in 2022. IRENA.

https://www.irena.org/publications

Ministry of Finance, Government of India. (2026). Union Budget

2026–27: Budget speech and annexures. Government of

India.

The next phase of India's energy transition depends less on

headline capacity additions and more on system integration

depth: transmission build-out to unlock stranded generation,

DISCOM ꢀnancial rehabilitation to sustain oꢃ-take quality,

rapid scaling of PSH and BESS to provide the ꢁexibility that

variable renewables require and manufacturing ecosystem

development to reduce supply-chain vulnerability. The CEA's

100 GW PSH Roadmap, the enhanced RDSS and BESS duty

exemptions in Budget FY2026-27 signal institutional

awareness of these second-order requirements. Whether these

signals translate into the USD 30–40 billion annual investment

needed will determine the pace at which renewable electricity

becomes thereliablebackbone ofIndia's growth trajectory.

Ministry of New and Renewable Energy (MNRE). (2025).

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of India.

ProjectsToday.com. (2025). Fresh project investment database:

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Solar Energy Corporation of India (SECI). (2024). Annual report

2023–24. SECI / MNRE.

ALMM

BESS

Approved List of Models and Manufacturers

Battery Energy Storage System

Compound Annual Growth Rate

CentralElectricity Authority

CAGR

CEA

CERC

CPSU

DISCOM

FDRE

CentralElectricity Regulatory Commission

CentralPublicSectorUndertaking

Distribution Company

Firmand Dispatchable RenewableEnergy

Financial Year (April–March)

Uttarakhand Horticulture Department. (2022). Horticultural

production statistics 2021–22. Government of Uttarakhand.

[Note: cited in context of RE co-beneꢀts for agriculture

sector; MNRE data used for capacityꢀgures.]

Gigawatt (1,000 MW)

ISTS

Inter-State Transmission System

contd....