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Indias renewable energy (RE) sector is transitioning from basic capacity addition toward firm and contracted electricity, according to an Anand Rathi research report. The shift comes as peak power demand is projected to climb from 245 GW to 459 GW by FY36, alongside an increase in non-fossil generation from 29 per cent to 48 per cent.
"Peak demand rises from 245GW to 459GW by FY36e and non-fossil generation from 29 to 48%. As demand diversifies, dispatchability, evacuation and offtake quality increasingly determine project economics," the report stated. Procurement patterns across state and central utilities reflect this structural change. Hybrid or round-the-clock (RTC), firm and dispatchable renewable energy (FDRE), and storage options represent 86 per cent of tenders in FY26, up from 44 per cent in FY24. The market has evolved past the single-buyer auction model, where the lowest tariff determined awards, to a setup where delivered cost and grid reliability dictate pricing. The report stated that "lowest tariff wins" has transitioned to "lowest delivered cost wins," while "generation is the product" has been replaced by "dispatchability is the product." "Storage is the common enabler across utility firming, C&I optimisation and merchant arbitrage," the report added. "Firm supply commands a premium: assured-peak FDRE tariffs are ~2x utility solar + Battery Energy Storage System (BESS)." Commercial and industrial consumers, data centres, and merchant trade have emerged as distinct off-takers alongside state distribution utilities. Renewable power required for data centres is projected to expand from 16.1 GW to 32.4 GW between CY26 and CY30, while conventional commercial and industrial demand is set to expand to 121 GW. Cumulative energy storage tendering has surged from 6.8 GW between 2018 and 2025 to 90.7 GW. "Utility auctions remain the anchor, but C&I, data centres and merchant markets create additional demand pools," the report said. "The common exposure is the same: India's growing need for firm renewable power." Execution, grid capacity, and contracting nevertheless present hurdles across project pipelines. The report mentioned that about 48 GW of the required 335 GW inter-state renewable transmission system is completed against the 2030 target. In addition, 45 GW of awarded utility capacity still lacks signed power purchase agreements, and the inter-state transmission system charge waiver steps down from 75 per cent in FY26 to nil by July 2028. (ANI)
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