India’s commercial and industrial (C&I) renewable energy capacity is set to rise sharply to 57 gigawatts (GW) by FY28, up from about 40 GW expected by the end of FY26, marking a 17 GW addition in just two years as corporate decarbonisation and tariff arbitrage drive demand.
According to Crisil Ratings, the expansion will be anchored by favourable long-term power purchase agreement (PPA) tariffs vis-à-vis grid tariffs, corporate net-zero commitments, renewable purchase obligations (RPOs), attractive developer returns and strong counterparty credit profiles.
The C&I segment remains the country’s largest electricity-consuming block. Its rapid evolution has been aided by the Green Energy Open Access (GEOA) Rules, 2022, which enabled industrial units and commercial establishments to source renewable power directly using existing transmission and distribution infrastructure.
“Following the GEOA rules, major industrial states have announced policies for open access to fast-track renewable adoption and attract investments,” said Gautam Shahi, Director, Crisil Ratings. “States are offering rebates on cross-subsidy, wheeling and state transmission utility charges if power is sourced intra-state. Such incentives lower the landed cost of power by 25-30% compared with on-grid tariff, driving capacity addition.”
Energy-intensive sectors such as steel, cement and data centres are leading the shift as they align with internal net-zero targets and RPO compliance requirements.
Private equity-backed developers are expected to dominate incremental additions, given higher return on equity in C&I projects compared with utility-scale projects, supported by better tariffs and counterparties with robust credit profiles.
“The credit profile of our C&I portfolio is strong, with attractive tariffs and an average PPA tenure of around 15 years, providing stable revenue visibility,” said Dushyant Chauhan, Associate Director, Crisil Ratings. “About 65% of rated capacity is tied to counterparties with High Safety credit profiles, and weighted average debt service coverage ratio stands at 1.4 times over the next two fiscals.”
However, infrastructure and policy continuity remain key risks. Limited intra-state transmission capacity and right-of-way issues have emerged as bottlenecks, directly affecting project timelines. Additionally, states face a balancing act as open access incentives may reduce distribution utilities’ revenues from high-paying C&I users.
Any recalibration of incentives could raise landed power costs, though tariffs are expected to remain competitive versus grid supply.
With India targeting 500 GW of non-fossil capacity by 2030, the C&I segment is emerging as a central pillar in meeting clean energy goals while offering stable returns to developers and cost savings to corporates.