What's Driving India's Historic Renewable Energy Expansion?

India added a record 22 gigawatts (GW) of renewable energy capacity in the first half of 2025 – a 57% jump from the 14.2 GW installed during the same period last year. The new capacity includes 18.4 GW of solar, 3.5 GW of wind and 250 megawatts (MW) of bioenergy, which is generated from plant and animal waste. This marks the country’s highest-ever addition in any six-month period. The surge was largely driven by developers moving quickly to take advantage of the government’s Interstate Transmission System charge waiver, which begins at 25% and increases annually until full implementation by June 2028, significantly lowering project costs and incentivizing developers to act now.

India is now inching closer to its goal of sourcing 50% of its installed power capacity from clean energy sources, with a total of 234 GW in place, including large hydropower projects. While this growth is positive from a strict emissions reduction perspective, fossil fuels continue to dominate actual energy consumption in the country, accounting for around 75% of electricity generated in the first half of the year from coal, oil and gas-fired plants.

Additionally, nuclear power is beginning to play a larger role, with the commissioning of Unit 7 of the Rajasthan Atomic Power Project – a 700-MW unit connected to the northern grid – and government approval for the country’s first small modular reactor (SMR) planned in the northern state of Bihar. However, reliance on coal remains a significant challenge and the role of nuclear energy continues to be debated due to concerns over costs, safety and waste management.

India installed 22 GW of renewable energy capacity in the first half of 2025, a new record. However, the country is still banking heavily on coal to meet growing power demand, with plans to install an additional 80 GW of new thermal projects. India is not yet undergoing a true energy transition; instead, it is focusing on building up installed capacity from both conventional and renewable energy sources to ensure energy security. Without urgent action to improve affordability and sustainability, particularly through grid upgrades and energy storage, coal will remain central to electrification efforts, jeopardizing progress toward India’s net-zero goals

Sushma Jaganath, Vice President, Renewables & Power Research, Rystad Energy

While India’s renewable energy capacity more than doubled in the first half of the year, battery energy storage systems (BESS) also saw a significant uptick, with 5.4 GW of collocated solar-BESS and 2.2 GW of standalone BESS awarded to developers, marking the country’s highest BESS allocation to date. The strong participation across auctions reflects a growing emphasis on grid stability and renewable integration, with Rystad Energy projecting accelerated growth in the sector over the coming years. Average quoted tariffs stood at around INR 4,000 ($48.02) per megawatt-hour (MWh) for standalone BESS and INR 3,208 ($38.50) per MWh for collocated solar-BESS projects – a downward trend in pricing that could encourage more developers to pursue integrated installations over standalone solar.

Among the top developers, Jindal Group secured 990 MW of collocated solar and BESS capacity, while NTPC and ReNew each won 900 MW in the same category. In the standalone BESS segment, JSW Energy was allocated 625 MW and Reliance Power won 525 MW of collocated capacity. Adani Green also participated, securing a 510 MW collocated solar and BESS project, indicating a shift from its previous focus on standalone solar and wind.

India’s western states remain at the forefront of the country’s renewable energy rollout. Rajasthan leads with 37.4 GW of installed capacity, driven by 32 GW of solar and 5.2 GW of onshore wind, supported by high solar irradiance and vast desert terrain. Gujarat follows with 35.5 GW, including 21.5 GW of solar and 13.8 GW of wind. Tamil Nadu ranks third, with 11.8 GW of wind and 10.6 GW of solar and is also a top performer in bioenergy, contributing 1 GW of the national total of 11.6 GW. Onshore wind also features prominently in several other states, including Karnataka (7.7 GW), Maharashtra (5.3 GW), Andhra Pradesh (4.4 GW) and Madhya Pradesh (3.2 GW).

By Rystad Energy