India’s Renewable Energy Growth: March 2026 Market Update
⚡ Quick Read
- What happened: India reached 119 GW of solar module manufacturing capacity and 7.8 GW of annual solar open access installations in 2025, while BESS capacity hit 1,082 MWh.
- Why it matters: Rapid manufacturing growth and record open access adoption provide EPCs and developers with a robust pipeline, though rising import costs and thermal management challenges in BESS remain critical.
- Watch: The impact of geopolitical supply chain disruptions and the long-term operational performance of BESS in high-temperature regions like Rajasthan and Gujarat.
Background and Context
The India renewable energy sector witnessed a transformative year in 2025, characterized by aggressive manufacturing expansion and record-breaking capacity additions. According to the latest data from Mercom India, the industry is scaling rapidly to meet domestic demand driven by the PM Surya Ghar program and the Approved List of Models and Manufacturers (ALMM) mandate. This growth trajectory is occurring against a backdrop of evolving market dynamics, including fluctuating import costs and the integration of battery energy storage systems (BESS) into the national grid.
Key Details
India’s solar manufacturing landscape saw significant gains, with module capacity reaching 119 GW and cell capacity exceeding 9 GW by the end of 2025. The solar open access market also hit a milestone, recording 7.8 GW of new capacity in 2025, the highest annual addition to date. Despite this, commercial and industrial (C&I) consumers faced margin pressure as savings narrowed due to rising power purchase agreement (PPA) tariffs.
The BESS sector is also gaining momentum, with cumulative installed capacity reaching 1,082 MWh by December 2025, reflecting a 547 MWh addition during the year. However, the sector faces technical hurdles; as projects scale in high-temperature regions like Rajasthan and Gujarat, developers are grappling with battery degradation caused by ambient temperatures often exceeding 40°C. Furthermore, India’s reliance on imports remains high, with solar cell and module imports surging 55.6% year-over-year to $1.12 billion (~₹100.2 billion) in Q4 2025.
What This Means for EPCs and Developers
For EPC contractors and developers, the data highlights a dual reality. While the manufacturing boom provides a more stable supply chain for modules, the rising cost of imports necessitates tighter procurement planning. The relaxation of group captive project rules by the Ministry of Power—allowing collective consumption requirements—offers a significant opportunity for developers to expand their C&I portfolios. However, project design must now account for extreme thermal conditions for BESS, as standard models may not suffice in the Indian climate.
What Happens Next
The industry is now bracing for potential logistics and supply chain volatility linked to global geopolitical tensions. As the India renewable energy sector continues to mature, the focus will likely shift from mere capacity installation to operational efficiency and long-term asset management. Developers who prioritize thermal resilience in storage projects and navigate the evolving regulatory landscape for open access will likely secure a competitive advantage in the coming quarters.
