India’s storage-backed renewable energy (RE) capacity is projected to surge from near-zero levels to over 25–30 GW by fiscal 2028, driven by the central government’s strong policy push and increasing demand for firm, dispatchable green power, according to CRISIL Ratings.
This massive addition — accounting for more than 20% of the total RE capacity expected to be added over the next three years — is aimed at addressing the intermittent nature of traditional renewable generation. By integrating energy storage, these hybrid systems are expected to provide reliable, on-demand power, especially during peak hours and when grid stability is crucial.
Storage-linked RE projects are gaining traction, evident in their share of ~25% (11 GW) in central agency auctions in 2024, compared to just ~11% (2.5 GW) in 2023. These projects, requiring an average oversizing of ~2.5x the contracted capacity, have created a cumulative pipeline of approximately 34 GW.
While most of this capacity is still in development or early construction phases, CRISIL sees low to moderate commissioning risks, citing proactive land and connectivity planning by developers.
Ankit Hakhu, Director, CRISIL Ratings, said: “Offtake risk is low for nearly half of the upcoming capacity as these have secured long-term (~25 years) power purchase agreements (PPAs) at a fixed tariff, which also provides revenue visibility. For the remaining half, the risk is elevated as their tariffs are ~55% higher compared with vanilla RE projects, which could delay signing of PPAs. However, there are at least three reasons to believe these projects, too, will tie up PPAs in the near term—first, the government’s push for a higher share of green power in overall energy generation; second, increased ability of these projects to meet higher energy requirements (akin to thermal plants) at comparable tariffs; and third, increasing renewable purchase obligations (RPO) of discoms.”
CRISIL notes that funding constraints are unlikely, thanks to the long-term revenue visibility from 25-year PPAs and strong sponsor profiles. The firm expects lender confidence to remain high given the robust post-commissioning cash flows and the track record of the developers involved.
Ankush Tyagi, Associate Director, CRISIL Ratings, added: “Finally, execution risks related to construction appear low to moderate. Basis our understanding from developers, nearly ~70% of the awarded capacities in calendar year 2024 have either identified or secured the critical resources required — mainly land and grid connectivity — prior to bid participation. This will stand them in good stead. For the remaining capacity, the risk is slightly elevated and there could be some delays. Overall, we are factoring nearly 80% of the capacities awarded during calendar years 2023 and 2024 to have a high likelihood of getting commissioned in the next three fiscals. Further, some capacities will also pan out from those awarded in calendar year 2025, resulting in a cumulative capacity additions of more than 25 GW by fiscal 2028.”
The government’s ongoing efforts to upgrade transmission infrastructure further reduce implementation risks by ensuring grid readiness for upcoming RE projects.
However, CRISIL cautions that delays in land acquisition, evacuation readiness, or PPA closures could still impact timelines. These developments, it notes, will require close monitoring as the country marches towards a more resilient and sustainable energy mix.
