Power capacity addition grows this fiscal led by new renewable projects

Latest data from the Central Electricity Authority (CEA) shows that renewable energy projects—solar, wind, small hydro—added 14.9 GW in April-November, nearly double the 7.53 GW green capacity added in the year-ago period.

What pushed developers to commission their projects quickly was the approaching deadline of 30 June 2025 for the waiver of inter-state transmission system (ISTS) charges for renewable energy projects. ISTS charges are meant to be paid by power generators to the transmission company for supplying power to states other than where it is generated.

Currently, ISTS charges are waived for 25 years for green projects—solar, wind, hybrid, battery energy, and pump storage projects—that are commissioned before 30 June 2025. To be sure, several industry participants have been seeking an extension of the waiver. In July, Mint reported that the National Solar Energy Federation of India (NSEFI) has requested that the government extend the waiver.

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Jatin Arya, associate director at credit ratings agency CareEdge, pointed to more reasons for the uptick in renewable capacity. “First, there is a large pipeline of projects—currently, 80-90 GW of projects are under implementation,” he said, adding that the ISTS waiver is prodding several developers to prepone their projects.

“Another major factor is the buoyancy in the market, as there is huge investor and lender interest in the renewable energy space,” Arya said.

Overall capacity addition

Overall, compared to 10.29 GW in April-November FY24, the comparable period this fiscal saw net addition of 14.72 GW of new power generation capacity, showed data from the CEA.

Thermal power, including coal- and gas-based plants, saw a decline of 190 MW due to retiring of old projects in the April-November 2024 period. And large hydro projects witnessed a marginal 40 MW increase in capacity. The number was 30 MW in April-November of 2023.

The slowdown in thermal capacity addition happened even though the Centre announced a plan in November 2023 to add 80 GW of new coal-based capacity by 2032. Last fiscal, the country had added 2.02 GW of thermal capacity.

The renewable surge

Arya of CareEdge said that low module prices and revival of financial condition of wind turbine generator (WTG) manufacturers have also helped in faster implementation of the projects. To be sure, wind power equipment manufacturers witnessed a downturn during 2019-2022 amid low tariffs due to reverse auctions, low investments and rising debt. These companies are now witnessing a revival and reporting improved financial results.

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According to CareEdge, the country is expected to add about 27 GW renewable energy capacity in this fiscal (April-March), compared to 18.48 GW in FY24.

The growth momentum is expected to continue as the second half of the fiscal usually witnesses better implementation of projects with the end of the monsoon season.

India’s overall power generation capacity currently is 456.75 GW, out which 243.05 GW is thermal. Of the remaining 213.7 GW, renewable energy capacity is 158.55 GW and the rest comprises nuclear power and large hydro projects.

The faster implementation of projects compared to the previous year has helped India cross the 200 GW mark, achieving more than 40% of its targeted 500GW of non-fossil power generation capacity by 2030.

Vikram V., vice president and co-group head for corporate ratings at ratings agency Icra noted that by March 2026, the installed renewable capacity would stand around 250 GW.

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“The large project pipeline and favourable solar PV module prices are expected to lead to an increase in installed renewable energy capacity in India to about 250 GW by March 2026 from the level of 201 GW as of September 2024,” said Vikram. “However, challenges remain on the execution front with respect to land acquisition and transmission connectivity. Also, delay in signing of PPAs (power purchase agreements) and PSAs (power supply agreements) post award of projects remains a major concern for the sector.”

Preparing for tomorrow

As the ambitious deadline of 2030 for achieving 500 GW non-fossil capacity nears, the government is also looking at ways to accelerate project implementation.

At a two-day conclave of the Union ministry of new and renewable ministry, where all stakeholders in the RE space were present along with representatives from state governments, union minister Pralhad Joshi announced that a dedicated task force with all stakeholders would be set up by the ministry in collaboration with the power ministry to achieve the goal of 500 GW.

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The minister also emphasized on the need to install 288 GW of renewable energy capacity over the next six years, requiring a substantial investment of ₹42 trillion, including transmission infrastructure.

On 13 December, Mint reported that the ministry, at its two-day conclave in Odisha, also suggested that state transmission companies raise funds through asset monetization or initial public offerings (IPOs) in a bid to set up the required infrastructure needed to carry the 500 GW of clean energy by the end of this decade.