India's Distributed RE Capacity Climbs to 31.5 GW, Rooftop Solar Drives Growth: IEEFA

India’s distributed renewable energy (DRE) sector has witnessed rapid expansion over the past eight years, with installed distributed solar capacity increasing from 1.8 GW in FY2018 to 31.5 GW in FY2026, supported by flagship government initiatives such as PM Surya Ghar Muft Bijli Yojana and PM KUSUM, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report, 'Role of Distributed Resources in Energy Transition: A Multi Country Perspective', highlights that rooftop solar has emerged as the largest contributor to distributed energy resource (DER) growth across India, Australia and Bangladesh. DERs include small scale electricity generation and storage technologies such as rooftop solar, solar irrigation pumps, batteries and biogas systems located close to where electricity is consumed.

According to the report, India possesses an estimated technical rooftop solar potential of 637 GW, while more than 29 million irrigation pumps across the country offer significant opportunities for solarisation. Government support through capital expenditure, renewable energy service company (RESCO), operating expenditure (OPEX) and utility led implementation models has helped expand rooftop solar deployment across both urban and rural markets.

The report notes that despite the strong increase in distributed solar installations, distributed renewable capacity continues to account for only around 21 to 22 percent of India's total renewable energy capacity. Utility scale solar projects have grown at an even faster pace, limiting the overall share of distributed generation within the country's renewable energy mix.

IEEFA's Lead Analyst for Sustainable Finance, Gaurav Upadhyay, said that PM Surya Ghar Muft Bijli Yojana and PM KUSUM have broadened market participation and accelerated distributed renewable deployment by supporting multiple financing and implementation models.

The report also compares India's progress with developments in Australia and Bangladesh. Australia has installed rooftop solar systems on around 40 percent of homes, with rooftop solar contributing more than 13 percent of electricity generation in the National Electricity Market between 2014 and 2025. The country is also witnessing rapid adoption of residential battery storage following federal battery rebate programmes.

In Bangladesh, rooftop solar installations have expanded rapidly in the industrial sector. While official figures report 418.1 MW of rooftop solar capacity, IEEFA estimates installed capacity has already reached approximately 667 MW across 239 industrial establishments and could approach 1,000 MW if smaller systems are included. The report also identifies significant opportunities for solar powered irrigation, which could add around 4,000 MW of solar capacity while reducing diesel imports.

Beyond deployment trends, the report recommends faster smart meter rollouts, expanded battery storage alongside rooftop solar programmes, simplified financing mechanisms and improved access for households, farmers and small businesses to accelerate distributed renewable energy adoption across emerging markets.