India Renewable Energy Market, By Type (Hydroelectric Power, Wind Power, Bioenergy, Solar Energy, Others), By End Use (Residential, Commercial, Industrial, Others) By Region, Competition, Forecast & Opportunities, 2021-2031F

Market Overview

India Renewable Energy Market was valued at USD 19 Billion in 2025 and is expected to reach USD 31 Billion by 2031 with a CAGR of 8.82% during the forecast period.

Renewable energy refers to power derived from natural resources that are replenished constantly and sustainably. Unlike fossil fuels, which are finite and emit harmful greenhouse gases, renewable energy sources are environmentally friendly and help reduce carbon emissions. Common types include solar energy from the sun, wind energy from air movement, hydropower from flowing water, geothermal energy from the Earth’s internal heat, and biomass from organic materials. These sources are considered clean because they do not deplete natural resources or cause significant harm to the environment. Renewable energy plays a vital role in combating climate change, improving air quality, and enhancing energy security. As technology advances, the efficiency and affordability of renewable energy systems continue to improve, making them a practical alternative to conventional energy. Promoting and investing in renewable energy is essential for creating a sustainable future and ensuring that energy needs are met without compromising the well-being of future generations.

Key Market Drivers

Government Policies and Supportive Regulatory Framework

One of the primary drivers of the renewable energy market in India is the strong backing from the government in the form of progressive policies and regulatory incentives. The Indian government has recognized the urgency of addressing climate change and energy security, prompting the launch of ambitious initiatives to encourage the adoption of renewable energy. The National Solar Mission, for instance, aims to make India a global leader in solar energy by increasing capacity and reducing costs through scale and innovation.

Various central and state-level schemes provide financial incentives, such as subsidies, feed-in tariffs, viability gap funding, and tax benefits for renewable energy developers. Additionally, the implementation of Renewable Purchase Obligations (RPOs) requires power distribution companies and large consumers to procure a specific percentage of their electricity from renewable sources, thereby ensuring demand.

The creation of institutions like the Solar Energy Corporation of India (SECI) and the Indian Renewable Energy Development Agency (IREDA) has streamlined the development and financing of projects. Transparent bidding processes for large-scale solar and wind projects have led to highly competitive tariffs, attracting both domestic and foreign investment. Moreover, the government has simplified land acquisition procedures, improved grid infrastructure, and introduced green energy corridors to ensure better integration of renewable energy into the national grid. These efforts collectively create a favorable environment for growth, making India an attractive destination for renewable energy investments. India aims to achieve 500 GW of non-fossil fuel renewable energy capacity by 2030, as announced in its updated Nationally Determined Contributions (NDCs) under the Paris Agreement.

Rising Energy Demand and Urbanization

India’s rapidly growing population, expanding middle class, and urbanization have led to a significant surge in energy demand. The country is expected to become one of the largest energy consumers in the world, necessitating the diversification of its energy mix to ensure long-term sustainability and reliability. Traditional power sources such as coal and natural gas are increasingly insufficient and environmentally unsustainable to meet this growing demand.

Renewable energy offers a scalable and cleaner alternative to bridge the demand-supply gap. The decentralized nature of solar and wind power, in particular, allows energy to be produced close to consumption centers, minimizing transmission losses and reducing dependence on fossil fuels. This is especially beneficial in rural and remote areas where grid connectivity remains limited. Furthermore, the demand for uninterrupted and affordable electricity has fueled innovation and investment in hybrid systems, battery storage, and smart grid technologies. These developments make renewable energy not only more accessible but also more reliable.

As urban centers grow and industrial activities increase, the pressure on conventional energy resources continues to intensify. Renewable energy becomes a strategic choice not just for environmental sustainability but also for economic growth. By addressing peak load demands and reducing import dependence, renewables can support India's long-term energy security and development goals. As of 2023, approximately 35% of India’s population lives in urban areas, with this figure expected to rise to nearly 40% by 2030, intensifying energy demand in cities.

Declining Costs of Renewable Energy Technologies

Another major driver propelling India’s renewable energy market is the dramatic decline in the cost of renewable energy technologies, especially solar photovoltaic (PV) and wind turbines. Over the past decade, technological advancements, economies of scale, and competitive bidding have driven prices to record lows, making renewable energy more affordable than many conventional sources.

In India, the cost of solar power has dropped by over 80% in the last ten years, making it one of the cheapest sources of electricity in the country. Similarly, the cost of wind energy has become increasingly competitive due to improved turbine designs, higher capacity factors, and better site selection. This affordability has led to greater adoption by both government entities and private players. Moreover, domestic manufacturing of solar panels and wind components has improved, supported by initiatives like “Make in India” and the Production Linked Incentive (PLI) scheme. This not only reduces costs but also ensures a more resilient supply chain. Innovations in inverter technology, mounting structures, and energy storage systems have further improved performance and cost efficiency.

Financing costs have also come down due to growing investor confidence, availability of green bonds, and support from multilateral institutions like the World Bank and the Asian Development Bank. With lower capital expenditures and operational costs, the return on investment in renewable projects has become more attractive.

As technology continues to advance, the cost trajectory is expected to decline further, making renewables the default choice for new power capacity additions. This economic advantage will play a crucial role in India’s transition to a cleaner and more sustainable energy future. Although still relatively high, battery storage costs in India have declined by approximately 20-25% annually, making hybrid renewable-plus-storage projects more economically feasible.

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Key Market Challenges

Grid Infrastructure and Integration Challenges

A major challenge facing the renewable energy sector in India is the limitation of existing grid infrastructure and the difficulty of integrating variable renewable sources like solar and wind into the national grid. Unlike conventional power, which provides a consistent output, renewable energy is intermittent and weather-dependent. Solar power peaks during the day and drops to zero at night, while wind energy is seasonal and varies by location. This variability poses a serious challenge for grid operators who must balance supply and demand in real time.

India’s electricity transmission and distribution system, much of which is outdated, is not fully equipped to handle large-scale, decentralized power injection from renewable sources. In many regions, the grid experiences congestion, technical losses, and poor voltage control, especially during peak production hours from solar and wind farms. Without adequate grid upgrades, curtailment becomes common, where renewable power is available but cannot be evacuated due to grid limitations. Moreover, renewable-rich states like Rajasthan, Gujarat, and Tamil Nadu often generate more power than they can consume locally, requiring efficient long-distance transmission to demand centers. Although initiatives like the Green Energy Corridor are under development to address this, progress has been slower than required.

The lack of adequate energy storage infrastructure is another concern. Battery storage and other balancing technologies are still expensive and not widely deployed in India. Without effective storage systems, excess renewable power generated during peak periods cannot be stored for use during low production times, leading to inefficiencies.

Policy and regulatory bottlenecks add to the problem. Coordination between state and central authorities, unpredictable scheduling, and delayed payments to renewable energy producers discourage investment in grid infrastructure and smart technologies.

Solving these issues will require significant public and private investment in grid modernization, storage solutions, and advanced forecasting systems. Until then, grid integration will remain a major bottleneck in scaling up renewable energy in India.

Financing and Investment Barriers

While India’s renewable energy sector has attracted considerable attention, it continues to face serious financing and investment challenges that hamper its full potential. Building large-scale solar parks, wind farms, and hybrid renewable systems requires significant upfront capital. Despite declining costs, renewable projects remain capital-intensive, and securing financing, particularly for smaller developers, is not always easy.

One of the major issues is the high cost of capital in India. Interest rates for infrastructure loans are relatively high compared to developed countries, increasing the overall cost of renewable energy projects. Moreover, financial institutions often view renewable projects as riskier due to uncertainties in revenue generation, land acquisition delays, and lack of long-term power purchase agreements (PPAs).

Payment delays by state-owned distribution companies (DISCOMs) further discourage investment. Many DISCOMs face chronic financial difficulties, leading to late payments or defaults on their obligations to renewable energy producers. This weakens investor confidence and affects the financial viability of projects, especially for independent power producers that rely on steady cash flows.

Inconsistent policy implementation also poses risks. While the central government is largely supportive of renewables, state-level policies can be unpredictable or vary in commitment, leading to regulatory uncertainty. Sudden changes in tariff structures, cancellation of bids, or delays in contract enforcement create an unstable environment for investors.

Access to foreign capital is also constrained by regulatory hurdles, currency exchange risks, and complex approval procedures. Although India has launched green bonds and partnered with international development banks, these initiatives have yet to fully bridge the investment gap. Small-scale and off-grid renewable projects, in particular, struggle to attract funding due to limited creditworthiness and lack of financial innovation.

To overcome these challenges, India must focus on financial reforms and risk mitigation strategies. Strengthening the financial health of DISCOMs, standardizing contracts, encouraging blended finance, and expanding credit guarantees will be crucial. Promoting innovative financing models, such as community-based funding, leasing, and pay-as-you-go systems, can also help make renewable energy more accessible and financially viable.

Without resolving these financing hurdles, India risks falling short of its ambitious renewable energy targets, despite having the technological capacity and policy support to achieve them.

Key Market Trends

Growth of Solar Rooftop Installations

A significant trend in India's renewable energy market is the increasing adoption of solar rooftop systems. While large-scale solar parks have dominated capacity additions in recent years, the rooftop segment is gaining momentum, especially in urban residential, commercial, and industrial areas. This growth is driven by factors such as rising electricity tariffs, falling solar panel prices, and government incentives.

The Indian government has set a target of installing 40 GW of rooftop solar capacity as part of its broader renewable energy goals. To encourage adoption, both central and state governments have introduced subsidies, net metering policies, and simplified approval procedures. Net metering allows consumers to sell excess electricity generated from their rooftop systems back to the grid, significantly lowering their energy bills.

The commercial and industrial (C&I) sectors are particularly active in this space. Many companies are adopting rooftop solar to meet sustainability goals, reduce operational costs, and hedge against future energy price volatility. With available roof space and high daytime electricity demand, the C&I segment finds solar rooftop installations both cost-effective and efficient.

In the residential sector, awareness is gradually increasing, supported by government campaigns and innovative business models such as solar leasing and zero-upfront-cost financing. These models lower entry barriers for homeowners by eliminating the need for high initial investment.

Technological advancements, such as smart inverters, battery storage integration, and mobile app-based system monitoring, are also enhancing the appeal of rooftop solar. Installation companies now offer end-to-end services, making it easier for consumers to adopt and maintain their systems.

Despite challenges such as inconsistent policy implementation across states and grid integration concerns, the rooftop solar market in India is expected to grow significantly. As more consumers recognize the economic and environmental benefits, solar rooftops are likely to become a mainstream energy solution, contributing meaningfully to India’s renewable energy targets.

Emergence of Hybrid Renewable Projects

The Indian renewable energy market is witnessing a strong push towards hybrid energy systems that combine two or more renewable sources, typically solar and wind, and increasingly, energy storage. These hybrid projects are emerging as a strategic solution to address the variability and intermittency of renewable energy, offering a more balanced and reliable power output.

Solar and wind have complementary generation patterns in many parts of India. While solar energy is available during the day, wind energy often peaks during the evening and night, particularly in coastal and arid regions. By combining these two sources, hybrid systems can deliver power more consistently throughout the day and year, reducing the need for backup from fossil fuel-based plants.

The Indian government has recognized the potential of hybrid projects and introduced policies to promote their development. For instance, the Ministry of New and Renewable Energy (MNRE) released a National Wind-Solar Hybrid Policy that provides guidelines for setting up hybrid power plants and repowering existing wind or solar installations. These policies include provisions for land use optimization, improved grid utilization, and financial incentives.

Battery storage is increasingly being integrated into hybrid projects to store excess energy during peak production and release it when demand rises or generation dips. Although still relatively expensive, the cost of battery storage is falling, making such integrated systems more viable over time.

Hybrid energy projects are attracting attention from both Indian and international developers and investors due to their improved capacity utilization and grid stability. They also offer better returns by reducing curtailment risk and optimizing transmission infrastructure.

Pilot projects in states like Gujarat, Andhra Pradesh, and Tamil Nadu have demonstrated promising results, encouraging further investment. With land availability becoming a constraint in many regions, hybrid models also make better use of space by combining technologies at a single site.

This trend is expected to accelerate, especially as storage technologies mature and policy frameworks become more supportive. Hybrid renewable systems represent a major step toward a more resilient, efficient, and sustainable energy future in India.

Segmental Insights

Type Insights

The Solar Energy held the largest market share in 2025.  Solar energy has emerged as the most dominant source in India’s renewable energy sector due to a combination of natural, economic, and policy-driven factors. One of the primary reasons is India’s geographical advantage. The country receives abundant sunlight for most of the year, with over 300 sunny days annually in many regions. This makes solar energy a highly viable and consistent source of power across diverse climatic zones.

Economically, the cost of solar photovoltaic (PV) technology has dropped significantly over the past decade. India has benefited from global price declines and domestic manufacturing initiatives, making solar power more cost-effective than many conventional energy sources. Competitive bidding and reverse auction mechanisms have led to record-low tariffs, further accelerating adoption.

On the policy front, the Indian government has shown strong commitment through initiatives like the National Solar Mission, which targets 280 GW of solar capacity by 2030. Incentives such as capital subsidies, tax benefits, and viability gap funding, along with simplified regulations for land acquisition and project approvals, have encouraged large-scale solar development. Additionally, solar energy is scalable and flexible. It can be deployed in large utility-scale projects, as well as rooftop installations for residential, commercial, and industrial users. This decentralization helps reduce transmission losses and brings power to remote or off-grid areas.

The growth of corporate procurement, green financing, and technological innovations in energy storage and smart grids further enhance solar energy's appeal. As India focuses on reducing carbon emissions and increasing energy security, solar power offers a clean, reliable, and increasingly affordable solution.

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Regional Insights

South India held the largest market share in 2025. South India has emerged as a dominant region in India’s renewable energy market due to a combination of favorable geographical, climatic, infrastructural, and policy factors.

The region benefits from abundant natural resources suitable for renewable energy generation. States like Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana have high wind speeds, especially along the coastal areas and hill ranges, making them ideal for wind power projects. Tamil Nadu, in particular, is one of the leading states in wind energy capacity in India. Additionally, South India enjoys high solar radiation levels, supporting large-scale solar installations and rooftop solar adoption. The consistent sunlight throughout the year ensures reliable solar energy generation.

The region’s relatively advanced power infrastructure and grid connectivity have facilitated better integration of renewable energy into the electricity network. South India’s established transmission corridors allow for efficient evacuation of power generated from remote wind and solar farms to demand centers. This reduces curtailment and technical losses, making investments more attractive.

Proactive state governments in South India have introduced robust policies and incentives to encourage renewable energy development. Tamil Nadu, Karnataka, and Andhra Pradesh have implemented favorable tariffs, streamlined approval processes, and renewable purchase obligations (RPOs), fostering a supportive environment for project developers. These policies have attracted both domestic and international investors. Moreover, South India’s industrial and urban growth has driven demand for clean energy, encouraging commercial and industrial consumers to adopt renewable solutions such as rooftop solar and captive power generation. Corporate sustainability initiatives in this region also play a role in accelerating renewable energy procurement.

The presence of established renewable energy developers and service providers, along with skilled manpower, has created a thriving ecosystem for project development, financing, and technology innovation in South India.

Recent Developments

• The Rajasthan government signed an MoU with NTPC Green Energy for 28,500 MW of renewable energy-based projects, as part of the total 31,825 MW of power generation projects worth INR 1.6 lakh crore (USD 19.18 billion).​
• The Pradhan Mantri Jaiv Indhan - Vatavaran Anukool Fasal Awashesh Nivaran (PM JI-VAN) Yojana, amended in 2024, aims to provide financial support for advanced bioethanol projects using renewable feedstocks. Over INR. 908 crore (USD 106.7 million) has been approved for 2G bioethanol projects, including commercial-scale initiatives in Panipat, Haryana.
• According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), the non-conventional energy space in India has become highly attractive for investors and received an FDI inflow of USD 15.36 billion between April 2000-September 2023. BPCL plans USD 1.19 billion (INR. 10,029 crore) for green energy, targeting 2 GW by 2025, 10 GW by 2035, and 7,000 EV chargers in five years.

Key Market Players

• NextEra Energy, Inc.
• Iberdrola, S.A.
• Enel S.p.A.
• Orsted A/S
• Siemens S.A.
• Vestas Wind Systems A/S
• Canadian Solar Inc.
• First Solar, Inc.

Report Scope:

In this report, the India Renewable Energy Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• India Renewable Energy Market, By Type:

o   Hydroelectric Power

o   Wind Power

o   Bioenergy

o   Solar Energy

o   Others

• India Renewable Energy Market, By End Use:

o   Residential

o   Commercial

o   Industrial

o   Others

• India Renewable Energy Market, By Region:

o   South India

o   North India

o   West India

o   East India

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the India Renewable Energy Market.

Available Customizations:

India Renewable Energy Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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