Jefferies Predicts India’s Renewable Energy Capacity Will Hit 359 GW by FY25-30

Key Takeaways

Jefferies projects India’s renewable energy capacity to hit 359 GW by FY25-30 amid rising energy security concerns.
Power demand is expected to grow by six percent in FY27, influenced by industrial recovery and weather patterns.
The government is expanding thermal capacity while promoting domestic solar manufacturing through various initiatives and mandates.

Renewable Energy Growth in India

Jefferies has revised its estimates for India’s renewable energy (RE) capacity, projecting it will reach 359 gigawatts (GW) by FY25-30. This forecast is driven by increasing geopolitical focus on energy security, alongside expectations for a rebound in power demand following a period of muted growth. The report anticipates a six percent growth rate in power demand by FY27, attributed to both the normalization of industrial activities and specific climatic conditions.

A significant factor in this trend is the upcoming 2026 monsoon season, which carries a 60 percent probability of an El Nino event from June to September. Such patterns typically lead to increased energy demands, particularly in domestic and agricultural sectors, which together account for 40-45 percent of India’s overall power consumption. As the Jefferies report indicates, a lack of rainfall generally leads to higher energy requirements, with households utilizing more cooling products and agriculture requiring increased irrigation and pumping power.

While the shift towards green energy remains critical, the Indian government is simultaneously enhancing thermal capacity to ensure a balanced energy mix. Plans are underway to add 97 GW of thermal capacity by 2034-35, marking a considerable expansion from the 247 GW recorded by the end of FY25.

The initiative to establish a robust domestic solar manufacturing base is gaining momentum, supported by government policies and decentralized subsidy schemes. The PM Suryaghar rooftop solar initiative has resulted in approximately 9 GW of installations in FY26, while the PM Kusum agri-pump scheme has contributed an additional 7.5 GW. Collectively, these programs, which utilize Domestic Content Requirement (DCR) cells, now account for nearly 30 percent of India’s annual solar installations. Jefferies notes that the government’s emphasis on DCR schemes is driving demand for photovoltaic (PV) technology and ensuring backward integration through mandates on domestic ingots and wafers.

Effective from June 2028, a new policy requires the use of domestic ingots and wafers, promoting a long-term transition to complete backward integration in the solar supply chain. This policy change is expected to favor companies with solid financial foundations capable of handling the capital-intensive aspects of these projects. Currently, a shortage of domestic cells allows early entrants in the solar manufacturing sector to benefit from strong profitability.

This multi-faceted approach combining renewable energy expansion, thermal capacity enhancement, and domestic manufacturing initiatives reflects India’s evolving energy landscape in response to both domestic demands and international energy security challenges. With these strategies in place, India aims to carve a more sustainable and resilient energy future.

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