India’s renewable energy sector entered the second half of 2025 with 185 GW of installed capacity, bolstered by a 22 GW addition in H1—a 60% year-on-year increase.
This growth surge was partly driven by developers racing to commission projects before the June 30 expiry of a full inter-state transmission system (ISTS) charge waiver for solar and wind. From July, new projects face a 25% ISTS charge, rising incrementally to 100% by mid-2028, with exemptions extended only to pumped hydro and renewables paired with collocated storage. The policy shift is already reshaping the project pipeline, amplifying demand for hybrid and storage-linked tenders over standalone solar or wind.
While India’s target remains 50 GW of renewable tenders annually to reach 500 GW by FY 2032—alongside 74 GW of planned storage—the first half of 2025 saw just 25 GW of capacity requested and 13 GW awarded. Tender activity slowed sharply in Q2, with requested capacity down 40% year-on-year to 12 GW and awarded projects down 30% to 5 GW. The market pivot is clear: half of all capacity requested and awarded in H1 included an energy storage component, split evenly between hybrid renewables with storage and standalone storage projects. Demand for longer-duration storage is emerging, with recent NHPC and Bihar tenders specifying 125 MW/500 MWh systems with four-hour duration—double the typical two-hour requirement—at correspondingly higher capacity charges.
Tariff patterns reflect the complexity of dispatchable renewable supply. In Q2, onshore wind bids averaged $44–47/MWh, higher than the $31/MWh achieved in renewable-plus-storage tenders, highlighting how optimized sizing of renewable and storage components can undercut conventional wind costs. Yet, stringent availability requirements are pushing some projects well above these levels.
SECI’s 1.2 GW round-the-clock tender in May, demanding four-hour storage, 80% annual availability, and 90% peak-hour fulfillment, closed 65% undersubscribed and yielded tariffs near $61/MWh—around 50% higher than hybrid-with-storage norms. Federal agencies drove over 60% of H1 awards, with Uttar Pradesh, Rajasthan, and Gujarat leading state-level allocations. However, persistent supply chain constraints, especially in domestic solar cell and module availability, coupled with higher capital costs, are expected to keep tender activity muted through the remainder of 2025.
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