After delivering one of its strongest clean-energy years on record, India’s renewable power sector is entering a more complex phase—one where the challenge is no longer how fast capacity can be added, but how reliably it can be absorbed by the grid.
In 2025, India added close to 50 GW of renewable energy capacity and awarded a record 45 inter-state transmission projects under the tariff-based competitive bidding (TBCB) framework, involving investments of over ₹1.5 lakh crore. The scale of additions has reinforced India’s position among the fastest-growing clean-energy markets globally. But it has also brought sharper focus on the limits of the existing system—particularly in transmission, distribution and energy storage.
As the Union Budget 2026 approaches, industry leaders say policy priorities must now shift decisively from headline megawatt numbers to the harder work of grid integration, operational resilience and manufacturing depth. The next phase of growth, they argue, will be determined less by how much renewable capacity is bid out and more by whether the power system can handle rising variability without congestion, curtailment or financial stress.
“India added close to 50 GW of renewable energy capacity, reinforcing its position as one of the fastest-growing clean-energy markets globally. On the transmission side, it was a record year, with around 45 interstate transmission projects awarded under the Tariff-Based Competitive Bidding framework, representing investments of over ₹1.5 lakh crore—the highest ever in a single year,” said Pratik Agarwal, Chairman of Resonia and Serentica Renewables and Managing Director of Sterlite Electric.
He said the momentum reflects both the scale of renewable additions entering the system and the growing recognition that transmission must expand in parallel to avoid congestion and curtailment. With renewables increasingly dominating new capacity additions, grid infrastructure is emerging as the binding constraint.
From capacity addition to system integration
Industry leaders argue that Budget 2026 must pivot from an expansion-first approach to one centred on system integration. Agarwal said the emphasis should increasingly move from adding megawatts to reliably integrating renewable power into the grid.
He flagged distribution reforms as a critical missing link. In several states, discoms continue to operate as monopolies with high aggregate technical and commercial (AT&C) losses, weak billing systems and limited accountability. Agarwal said all central financial assistance should be clearly linked to distribution privatisation to enforce competition, professional management and financial discipline.
Energy storage, he added, will play a defining role in the next phase of growth. Operationally, batteries must be treated as grid assets to manage sudden and large-area deviations caused by cloud cover or wind variability. VGF-based support for storage assets under Grid India’s control could unlock the next phase of growth by enabling stable evening load management and long-term energy security.
Grid infrastructure, however, has not kept pace with the scale and speed of renewable additions. Agarwal said sustained budgetary support is required for deploying advanced grid technologies, including STATCOMs, grid-forming inverters, dynamic line rating, grid-forming batteries and advanced control systems to manage variability and maintain system resilience.
Manufacturing depth and policy continuity
Srivatsan Iyer, Global CEO of Hero Future Energies, said the government has laid a strong foundation for the renewable sector through consistent policy support and sustained capacity addition. He said Budget 2026 must now announce measures aligned with India’s climate commitments and global competitiveness.
“Priority should be given to incentivising investments in green hydrogen, grid-scale energy storage, modernisation of transmission infrastructure, and introducing targeted PLIs or tax incentives to enhance energy security and build alternative material ecosystems,” Iyer said.
According to Neerav Nanavaty, CEO of BluPine Energy, India’s renewable sector delivered a step-up in 2025, with accelerated wind and solar additions taking total installed renewable capacity beyond 247 GW. He said this progress reflects sharper execution across land acquisition, right-of-way, permitting and grid-linked infrastructure, supported by improving Centre–state coordination.
As capacity continues to scale, Nanavaty said focused investments in transmission and evacuation infrastructure will be key to maintaining momentum. Strategic grid expansion, hybrid project configurations and increasing deployment of battery energy storage systems are already enhancing reliability and dispatchability.
Solar manufacturing bottlenecks
While deployment has scaled rapidly, Prashant Mathur, CEO of Saatvik Green Energy, said manufacturing faces structural bottlenecks that could constrain the next phase of growth. High capital intensity, elevated input costs, dependence on imported upstream materials and limited access to affordable finance continue to challenge domestic manufacturers.
Despite progress under the Approved List of Models and Manufacturers (ALMM), Mathur said India remains heavily reliant on imports for polysilicon, ingots, wafers and several critical ancillaries. He said Budget 2026 should introduce a second-generation policy push focused on upstream components, accelerated depreciation for solar manufacturing equipment, GST rationalisation and preferential lending through institutions such as IREDA.
Storage, grid stability and finance
Ankush Malik, CEO of Juniper Green Energy, said as India works towards Viksit Bharat by 2047, the focus must shift from capacity addition to building a reliable system supported by domestic manufacturing, a strong grid and scalable energy storage.
He said grid-scale battery storage operated as grid assets can support frequency control, manage ramping needs and meet evening peak demand. Malik called for stronger PLI schemes, lower GST on solar components, affordable financing for integrated hubs and a dedicated fund for battery pack manufacturing to reduce import dependence.
From the perspective of corporate decarbonisation, Manish Dabkara, CMD of EKI Energy Services and President of the Carbon Markets Association of India, said climate action has entered a more demanding phase where execution, capital and infrastructure matter more than pledges.
He said access to long-term affordable finance remains a key constraint, while weak transmission networks, limited storage and supply-chain bottlenecks continue to slow the pace of clean energy substitution. Dabkara said predictable and coherent regulation, backed by multi-year policy roadmaps, is critical for unlocking private investment at scale.
Taken together, industry leaders see Budget 2026 as a turning point—one that must move India’s clean energy transition from rapid expansion to durable, infrastructure-backed execution.