The targets look magnificent on paper—renewables generating over thirty-five per cent of India’s electricity by fiscal year 2030, a transformation from climate laggard to clean energy exemplar within a single decade. Yet beneath the soaring capacity projections and ministerial announcements lies a more prosaic reality: thousands of megawatts of awarded renewable projects languish unsigned, awaiting power purchase agreements that never materialise; solar farms in Rajasthan curtail generation during peak hours because transmission lines cannot evacuate the electricity; and distribution companies, drowning in debt, delay commitments that would unlock project financing.
India’s renewable ambition is genuine, the policy support robust, and the commercial appetite undeniable—yet execution bottlenecks threaten to transform bold targets into missed opportunities. The country stands at a crossroads where adding 200 gigawatts of renewable capacity between FY25 and FY30 is entirely feasible technically, but requires solving unglamorous problems: signing contracts, building transmission corridors, deploying battery storage at scale, and ensuring that the grid infrastructure keeping pace with generation capacity doesn’t become the forgotten constraint that strangles India’s green transition before it truly begins. strangles India’s green transition before it truly begins.
The Pipeline Paradox: Capacity Awarded But Progress Stalled
ICRA‘s analysis reveals an impressive project awarding spree over recent years—47.3 gigawatts in FY24 and 40.6 gigawatts in FY25—demonstrating robust market appetite for renewable energy driven by competitive tariffs and rising commercial and industrial demand. Solar and wind projects constitute the bulk of this capacity, propelled by policy incentives and declining technology costs that have made renewables economically competitive with coal-fired generation in many contexts.
Yet the momentum collapsed dramatically in FY26, with merely 5.8 gigawatts awarded during the first eight months—a deceleration so sharp it raises fundamental questions about pipeline sustainability. More troubling still, between forty and forty-five gigawatts of renewable capacity awarded in previous rounds remain unsigned through power purchase agreements, leaving projects in contractual limbo unable to secure financing or commence construction. This unsigned capacity represents nearly a quarter of the incremental 200 gigawatts targeted for addition by FY30, a substantial overhang that threatens timeline credibility.
The bottlenecks are structural rather than temporary. Land acquisition delays plague solar parks and wind farms, particularly in states where ownership disputes and agricultural land conversion restrictions complicate site preparation. Transmission connectivity constraints leave renewable-rich regions like Rajasthan and Gujarat unable to evacuate generated power to demand centres, forcing grid operators to curtail output during peak solar hours—a perverse outcome where clean electricity is deliberately wasted because infrastructure cannot deliver it to paying customers. Power purchase agreement finalisation drags on for months as financially stressed distribution companies balk at long-term commitments, fearful of locking in tariffs that may prove uncompetitive or unaffordable given their precarious balance sheets.
Rising equipment costs, driven by global supply chain disruptions and tariff barriers on imported solar modules, further complicate project economics, forcing developers to renegotiate terms or absorb margin compression. Girishkumar Kadam, Senior Vice President and Group Head of Corporate Ratings at ICRA, emphasises that the slowdown in new project bids and delays in signing PPAs for large renewable capacity reflect ongoing concerns around available transmission connectivity, with grid curtailments highlighting the urgent need for strengthening infrastructure and storage capacity.
Battery Storage Emerges as the Grid Stability Imperative
Renewable generation’s inherent variability—solar farms produce nothing at night, wind output fluctuates unpredictably—necessitates energy storage to maintain grid stability and ensure round-the-clock power availability. Battery Energy Storage Systems have emerged as the transformative technology enabling renewables to transition from intermittent supplements to reliable baseload alternatives, storing excess generation during peak production hours and discharging when supply tightens.
India’s government recognises this imperative, introducing viability gap funding and extended transmission charge waivers for BESS projects through 2028 to accelerate deployment. Since April 2024, over twenty gigawatt-hours of standalone battery storage projects have been awarded, with round-the-clock, firm, and dispatchable renewable energy, and solar-plus-storage configurations constituting approximately ninety per cent of renewable capacity awarded in FY26‘s first eight months—a striking pivot towards firmed renewable power rather than variable generation.
Battery costs have declined sharply, falling from roughly eight to nine rupees per unit in 2022 to four to seven rupees per unit for two-to-four-hour storage systems today, narrowing the cost gap with pumped storage hydropower whilst offering advantages in faster project execution and shorter gestation periods. ICRA notes that despite shorter operational lifespans and periodic replacement requirements, continued battery price reductions are expected to boost adoption dramatically. Key performance metrics including round-trip efficiency, degradation rates, and system availability will prove critical as deployment scales from pilot projects to grid-scale installations measured in gigawatt-hours.
The integration challenge extends beyond technology to market design. Regulatory frameworks must evolve to value storage appropriately—compensating not merely for energy delivered but for ancillary services like frequency regulation, voltage support, and grid stabilisation that batteries provide but current tariff structures inadequately remunerate. Without proper valuation mechanisms, storage deployment will lag behind renewable generation additions, perpetuating curtailment and grid instability.
Credit Quality Improves Amidst Sector Optimism, But Risks Linger
India’s renewable energy sector enjoys stable credit outlooks backed by strong government policies steering the country towards cleaner energy futures. Competitive tariffs and burgeoning commercial and industrial demand bolster investor confidence, reflected in ICRA‘s sectoral ratings showing twenty-nine upgrades compared to six downgrades in FY25, with this trend strengthening in the first half of FY26 displaying forty-nine upgrades versus thirteen downgrades.
Positive rating actions derive from successful project commissioning, solid generation performance exceeding projections, and improved credit profiles of parent companies as financial discipline tightens and operational expertise deepens. Downgrades primarily reflect generation shortfalls where actual output disappoints forecasts due to lower-than-expected wind speeds or solar irradiation, commissioning delays stemming from equipment procurement problems or regulatory hurdles, and increased leverage where aggressive expansion strains balance sheets beyond sustainable levels.
Yet sector optimism must be tempered by structural vulnerabilities. Distribution company finances remain precarious, with accumulated losses and subsidy arrears constraining their ability to honour long-term power purchase commitments. Module anti-dumping duties and import restrictions, whilst intended to nurture domestic manufacturing, raise project costs and complicate supply chains. Policy uncertainty around tariff revisions, net metering regulations, and cross-subsidy surcharges injects unpredictability that sophisticated investors price into their return requirements, raising capital costs for developers.
India’s renewable energy sector stands poised for landmark transformation, with renewables generating over thirty-five per cent of the country’s electricity by FY30—a remarkable achievement for a nation whose power system remains heavily coal-dependent today. This transition promises substantial economic, environmental, and energy security dividends, reducing import dependence on fossil fuels whilst positioning India as a clean energy manufacturing and deployment leader. However, realising this potential demands diligent execution of the current project pipeline, timely power purchase agreement signings, enhanced transmission infrastructure connecting generation to demand, and widespread battery storage adoption smoothing supply variability. Sustained government commitment, competitive market dynamics, and evolving storage technologies must converge to build a resilient, reliable, and clean energy grid capable of powering India’s growth for decades. As Girishkumar Kadam aptly observes, India’s journey towards a cleaner power mix is advancing but requires urgent focus on strengthening grid and storage infrastructure to support the rising renewable share—a reminder that ambitious targets mean nothing without the unglamorous work of building the systems that deliver them.