Over the past year, India’s renewable energy sector has seen strong growth across segments. As of June 2025, India’s total installed renewable energy capacity (excluding hydro) stood at 184 GW, up from 143 GW in March 2024. This 28 per cent increase was primarily led by 34 GW of new solar installations and 5.7 GW of wind additions. This upward trend reflects the government’s continued commitment to the clean energy transition, supported by increased budgetary allocations and targeted policy interventions.
Indian Infrastructure takes a look at the key policy highlights over the past year…
Policy initiatives
The government’s commitment to renewable energy is reflected in the higher budget allocations for 2025-26. The Ministry of Power (MoP) has been allocated Rs 218.47 billion, up from Rs 205.02 billion in 2024-25, while the Ministry of New and Renewable Energy (MNRE) has received a significant budget increase to Rs 265.49 billion from Rs 191 billion.
Energy storage has become a mainstream requirement, driven by policy mandates and grid stability needs. The Central Electricity Authority has advised co-locating energy storage with solar projects to enhance stability and cost efficiency. The battery energy storage system (BESS) viability gap funding (VGF) scheme, launched in March 2024 for 4,000 MWh of capacity, has been expanded to cover over 40 GWh. To further encourage adoption, the government has announced a complete waiver of interstate transmission charges for pumped storage and BESS projects commissioned before June 30, 2028, subject to certain conditions.
The MoP has issued comprehensive guidelines for procuring pumped storage capacity, covering transmission connectivity and tariff adoption procedures. Two procurement modes have been defined: development on government-identified sites and development on bidder-selected or existing sites. Minimum capacity requirements have been set at 50 MW for interstate projects and 10 MW for intra-state projects, with standardised bidding parameters covering storage charges and composite tariffs.
The hydropower sector has gained renewed momentum, with the central government announcing Rs 41 billion in equity support for the north-eastern states, for the addition of 15 GW of capacity between 2024-25 and 2031-32. Further, a Rs 125 billion budgetary support scheme has been approved for projects totalling 31,350 MW of hydropower and 15,000 MW of pumped storage capacity. Policy reforms have also broadened the scope of infrastructure expenditure that is eligible for support, to now cover transmission lines, ropeways, railway sidings and communication facilities.
To boost domestic manufacturing, the MNRE has introduced the Approved List of Models and Manufacturers List-II for solar photovoltaic cells, effective June 1, 2026, mandating that all solar projects, including those under government schemes, net metering and open access, source cells from approved manufacturers. Under the PM Surya Ghar: Muft Bijli Yojana, guidelines have been issued for components such as “Innovative Projects” (Rs 5 billion allocation), “Model Solar Village” and discom incentives, while vendors from neighbouring states have been allowed to work in UTs. The ministry has also notified the Solar Systems, Devices and Components Goods Order, 2025 to ensure quality control and standardisation in the solar segment.
Green hydrogen has emerged as a priority area, owing to the versatility of its use in decarbonising hard-to-abate sectors. The government has launched the Green Hydrogen Certification Scheme of India to verify and certify emissions from renewable-based hydrogen production. The MNRE has also introduced a Rs 2 billion programme (till 2025-26) to promote innovation in production and use, and has issued revised guidelines to establish four hydrogen valley innovation clusters with a total allocation of Rs 1.72 billion.
To advance offshore wind development, the MNRE has released guidelines for implementing a VGF scheme with a budget of Rs 74.53 billion. This includes Rs 68.53 billion for 1,000 MW of offshore wind capacity and Rs 6 billion for port infrastructure, targeting projects along the Gujarat and Tamil Nadu coasts. The scheme will remain in force until 2031-32.
In the bioenergy segment, the National Biofuels Coordination Committee has approved a phased blending of compressed biogas with compressed natural gas and piped natural gas in the city gas distribution network, targeting 1 per cent in 2025-26, 3 per cent in 2026-27, 4 per cent in 2027-28 and 5 per cent by 2028-29. The MNRE has also issued revised biomass guidelines to boost bioenergy.
Growth prospects and outlook
Between August 2024 and July 2025, the stand-alone utility-scale renewable energy sector witnessed 15 major auctions across segments. Solar dominated with nine auctions, achieving an average L1 tariff of Rs 2.40 per kWh, while there were six wind auctions that recorded an average L1 tariff of Rs 3.50 per kWh. There has also been a notable rise in hybrid and firm and despatchable renewable energy (FDRE) solutions. During this period, there have been seven solar-wind hybrid auctions and seven FDRE or round-the-clock auctions, signalling a market shift towards more grid-friendly renewable energy projects. Consequently, there has been an increase in demand for energy storage as well, with 2025 alone witnessing 13 stand-alone battery energy storage auctions.
Meanwhile, green hydrogen tenders are also gaining traction. Recently, an auction for the procurement of green ammonia discovered the lowest tariff to date, indicating growing industry confidence in India’s emerging green ammonia market.
Going forward, the sector is poised for continued expansion with a strong policy push, attractive cost economics and rising interest from various stakeholders.