Key Takeaways

• India’s renewable energy capacity reached 262 GW in 2025, achieving its 2030 climate goals five years early.
• The 2026 Budget must address financing, grid infrastructure, and policy clarity to sustain growth in the renewable sector.
• Industry experts advocate for increased fiscal support and faster execution of flagship schemes to realize India’s green energy potential.

Growing Renewable Capacity Amid Global Trends

The renewable energy landscape is undergoing significant changes globally, particularly with the United States shifting its focus away from clean power under the Trump administration. This includes pulling out of multiple international organizations related to energy and climate, leading to reduced investments in wind and solar energy by 18% in early 2025.

In contrast, India has taken a firm stand in favor of renewable energy. By 2025, the country achieved a key climate milestone, with over half of its installed electricity capacity from non-fossil sources—five years ahead of its original 2030 target under the Paris Agreement. India’s total power capacity is now approximately 510 GW, where non-fossil sources contribute about 262 GW, with renewables accounting for 254 GW.

In 2025 alone, India added nearly 50 GW of clean power, boosted by investments of around Rs 2 lakh crore. The government anticipates a similar rate of growth in 2026, although challenges like land acquisition, right-of-way clearances, and delays in power-purchase agreements could impede new projects. Between January and November 2025, India recorded its best growth yet, driven primarily by new solar capacity.

Financial Challenges and Investment Needs

Despite progress, financing remains a pressing challenge. The Indian Renewable Energy Development Agency (IREDA) estimates that Rs 30.54 lakh crore is needed by 2030 to meet the 500 GW non-fossil capacity target. Public sector lenders have already committed about Rs 10.79 lakh crore since 2014, suggesting a need for increased investment moving forward.

Industry experts highlight that the period leading up to Budget 2026 is critical. Vineet Bhatia of Grant Thornton Bharat emphasizes that stakeholders are looking for policy signals and support to define India’s green transition. While capacity has surged approximately 200% since March 2014, reaching 262 GW by the end of 2025, realizing the 500 GW target hinges on substantial budgetary backing and clearer policy guidelines.

Significantly, around 44 GW of renewable capacity remains stranded due to a lack of formal power purchase or sale agreements. Challenges with grid capacity are noted, marking a 5-10% curtailment of renewable energy during peak times. Additionally, the current battery storage capacity stands at just 0.8 GWh, far below the required 236 GWh.

Expectations from Budget 2026

Ahead of the 2026 Budget, calls for stronger fiscal support have intensified. Raaja Kanwar from Apollo International Group warns of persistent bottlenecks, including demand certainty and clearer financing frameworks. Stakeholders have expressed a desire for better incentives, especially for battery technology and renewable energy manufacturing.

Experts recommend measures such as lowering financing costs to unlock up to Rs 1.5 lakh crore more in private investment. Additionally, they advocate for reforms in flagship schemes and enhanced coordination between governmental levels to expedite project execution. A streamlined land-clearance process, expanded production-linked incentives, and efficient transmission networks are also deemed essential for faster commercial adoption of renewable projects.

The consensus is that the upcoming Union Budget must enhance fiscal mechanisms, improve project execution speed, and promote innovation through public-private partnerships, positioning India as a global leader in renewable energy innovation and driving significant decarbonization efforts across sectors.

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