The renewable energy bidding activity slumped to 14.7 gigawatt (GW) of capacity awarded in 2025-26 from 40.6 GW in 2024-25, amid challenges in the signing of power purchase agreements (PPAs) and power sale agreements (PSAs), and lagging transmission infrastructure, rating agency ICRA said on Wednesday. The slowdown in bidding activity continued in the current year, with 4.7 GW awarded till August 10, 2026, it added.
Due to the lag in transmission infrastructure, significant solar capacity has been curtailed, especially for projects running on temporary general network access (T-GNA). Around 37 per cent of the capacity at the impacted substations in the North, West and South operates under T-GNA and faces curtailment of 30-50 per cent during solar hours, the study mentioned. ICRA estimated total renewable energy capacity expansion to slow to 45 GW in FY27 from 50.9 GW in the last fiscal.
The study also mentioned that in recent months, bids for vanilla solar and wind projects have declined, and there has been an increased focus on FDRE and RTC power. “The latest SECI tender stands out, as it follows the trend of thermal power to deliver a demand-based supply. The discovered tariff of Rs 5.25 per unit for this tender is lower than most of the new thermal plants,” said Girishkumar Kadam, senior vice-president and group head — corporate ratings, ICRA.
The report also stated that the total BESS capacity awarded, including under-construction and operational capacity, stood at around 90 gigawatt-hours (GWh) as of June 2026, with a significant increase in project awards in the last 12-18 months. Based on prevailing battery costs, ICRA estimates that the levelised cost of storage using BESS for 2-4 hours of storage is in the range of Rs 4-7 per unit, compared with Rs 5 per unit for pumped storage hydropower (PSP) projects. However, the execution risks and gestation period for BESS projects are relatively lower.
“The viability of the BESS projects remains critically linked to their capital cost. Based on the average battery cost of $70-75 per unit seen in the recent past, along with associated taxes/duties and cost of the balance of plant, the capital cost is estimated in the range of $110-130 per unit,” Kadam said.
However, expectations of a further decline in battery prices have led to aggressive bidding in standalone storage tenders, he added. “Nevertheless, the reversal in price trends coupled with rupee depreciation against the dollar impacted the economics of some of these projects. At prevailing capital costs and interest rates, the cumulative debt service coverage ratio (DSCR) for some of the previously bid standalone BESS projects appears to be under pressure, with values in the range of 0.80-1.20 times,” he said.
The rating agency also estimated the share of generation from renewable energy capacity, including large hydro, to cross 35 per cent by 2029-30 from 22 per cent in 2024-25. It also added that an investment of Rs 5-6 trillion is required in the transmission segment over FY27 to FY32 to scale up transmission lines and substation capacity
