RE Installations to Remain Strong in FY27, Growth May Moderate in FY28: JM Financial

India's renewable energy sector is expected to maintain a healthy pace of capacity additions during FY2026-27, driven by projects already under construction. However, the momentum could slow in FY2027-28 unless fresh project auctions pick up and delayed power purchase agreements (PPAs) are signed, according to a report by JM Financial.

The brokerage expects India to add 40-45 GW of solar capacity, 7-8 GW of wind capacity and around 24 GWh of battery energy storage systems (BESS) in FY27. The projected additions include utility scale projects as well as commercial and industrial (C&I) and distributed renewable energy installations, reflecting a strong execution pipeline built over the past two years.

The report noted that India's renewable energy sector has witnessed a sharp rise in annual capacity additions in recent years. Installations increased from 18.5 GW in FY24 to 28.7 GW in FY25, before jumping to 51 GW in FY26, supported by aggressive competitive bidding, improved project execution and expanding state level renewable energy programmes.

Despite the robust installation outlook for FY27, JM Financial cautioned that the sector is witnessing a slowdown in fresh project awards. Renewable energy tenders declined to 30 GW in FY26 from 56 GW in FY25, raising concerns over the availability of projects for commissioning beyond the current execution cycle.

The trend has continued into the current fiscal year. During the first quarter of FY27, only 9.34 GW of renewable energy tenders were floated across 36 auctions, significantly lower than previous years. The brokerage warned that if bidding activity does not recover, the impact will become visible from FY28 because renewable energy projects typically require 18 to 24 months from award to commissioning.

As a result, JM Financial estimates that renewable energy installations could moderate in FY28, with solar additions falling to 25-30 GW and wind installations easing to 5-6 GW.

The report also highlighted that a sizeable pipeline of awarded renewable energy projects is yet to secure PPAs. Delays in signing these agreements have slowed project execution and created uncertainty for developers. Accelerating PPA execution, along with increasing the pace of competitive bidding, will be essential to sustain India's renewable energy expansion and remain on track towards its long-term clean energy targets.

According to JM Financial, the near-term outlook for FY27 remains positive due to the strong execution pipeline. However, maintaining growth beyond that period will require a steady flow of new tenders and faster conversion of awarded projects into operational assets.