India is set to surpass annual renewable energy (RE) capacity additions of 35 GW over the next two years, driven by a robust project pipeline exceeding 100 GW, according to CareEdge Ratings. In FY24, the country added 18.5 GW of RE capacity, marking a 21% year-on-year growth.

Solar energy continues to dominate India’s RE landscape, accounting for 59% of the sector’s capacity mix as of September 2024, up from 15% in March 2016. India's solar module manufacturing capacity stands at 70 GW, while cell manufacturing capacity is at 8 GW as of March 2024. Annual solar capacity additions averaged 21 GW on a Direct Current (DC) basis over the past two years. Over the next two to three years, rooftop, hybrid, and off-grid solar projects are expected to contribute 20 GW to capacity growth. Additionally, 4-5 GW of solar open access projects are anticipated, spurred by corporate ESG goals and the economic viability of commercial and industrial (C&I) ventures.

The solar equipment sector is poised for transformative growth, with projected capital expenditures of nearly Rs 1 trillion over the next three to five years. This includes Rs 700 billion in debt funding. Significant manufacturing expansions are planned, with upcoming capacities of 50 GW for solar cells and 80 GW for modules requiring Rs 320 billion and Rs 120 billion, respectively. An additional Rs 550 billion is allocated for 40 GW of wafer and 25 GW of polysilicon production under the Production Linked Incentive (PLI) scheme. Jatin Arya, Director, CareEdge Ratings, highlighted the sector's potential, stating, "India's solar market is on the cusp of transformative growth, driven by strong policies and sustainability goals that will enhance domestic capacity and position the country as a global leader in solar manufacturing."

Despite this progress, challenges such as reliance on Chinese imports, supply chain disruptions, competitive pressures, and delays in project execution could pose hurdles. Mayuresh Karavade, Assistant Director at CareEdge Ratings, emphasised that the sector’s expansion is vital for India's energy security and environmental goals.

India’s renewable energy ambitions are supported by an annual tendering target of 50 GW through implementing agencies, with solar expected to take a leading role. Growth is attributed to corporate ESG focus, increased investments, proactive policy frameworks, and better financing opportunities. As the country accelerates its renewable energy transition, addressing systemic challenges and expanding domestic manufacturing will be critical to achieving its energy and sustainability targets. (ET)