Renewable energy is expected to account for 26% of India’s total electricity generation by the end of FY2026, even as demand conditions remain relatively subdued, according to a report by Infomerics Ratings cited by PV Magazine on February 18.

The rating agency noted that renewable energy capacity additions reached a record 49 GW during the first nine months of FY2026, keeping India aligned with its national objective of achieving 500 GW of non-fossil capacity by FY2030. Renewables accounted for nearly 64% of incremental electricity generation growth during the period, reinforcing their expanding role in the country’s energy mix.

On this trajectory, the share of renewables in overall electricity generation is projected to rise by four percentage points year-on-year to 26% in FY2026.

Looking ahead, Infomerics expects renewable sources, led primarily by solar power, to constitute 59% of India’s total installed capacity by FY2032. However, meeting the estimated peak demand of 458 GW projected for that year, particularly during non-solar hours, will require substantial scaling up of energy storage infrastructure, PV Magazine added.

The agency underlined the importance of battery energy storage systems and pumped storage projects in balancing supply and demand as renewable penetration deepens. Of the planned 236 GWh of battery energy storage system capacity targeted by FY2032, only 0.2% was operational as of June 2025. A further 9.6%, equivalent to 22.6 GWh, is currently at various stages of development.

In parallel, India operates 5 GW of pumped storage capacity. More than 12 GW is under construction, while approximately 69 GW remains under development. These long-gestation projects are seen as essential to supporting grid stability as variable renewable generation increases.

The agency observed that battery storage systems typically require 18 to 24 months for implementation, whereas pumped storage projects involve significantly longer construction timelines of four to six years. A key challenge in the run-up to FY2032 is the delay in signing power purchase deeds for renewable projects integrated with battery storage, as distribution utilities await further declines in battery costs.

Elevated battery prices continue to keep tariffs for storage-linked renewable projects relatively high. As a result, the ability of independent power producers to secure long-term power purchase deeds at remunerative tariffs remains critical from a credit perspective.

Despite these challenges, a substantial portion of renewable capacity currently under construction is expected to be contracted under the Renewable Purchase Obligation framework. Under this mandate, distribution utilities are required to source more than 43% of their total power procurement from renewable sources by FY2030.

Operational renewable projects that are already grid-connected and backed by tied-up power purchase deeds remain largely insulated from offtake risk. This is due to their ‘must-run’ status, under which distribution utilities are required to prioritise procurement from renewable energy producers.