India To Add 25 GW Of Solar Capacity By FY25 End: Ind-Ra

India To Add 25 GW Of Solar Capacity By FY25 End: Ind-Ra

India Ratings and Research (Ind-Ra), a research organization in its latest report maintains a stable rating outlook for energy infrastructure projects for FY26. Four major factors drive this outlook: India’s economic growth, a sustained energy transition with renewables gaining a higher share in installed capacity and generation, a strong pipeline of capacity additions (both renewable and thermal), and a sustained improvement in the receivables profile of generators, leading to comfortable liquidity.

Stable Outlook for Solar & Wind Power Projects: 

The Stable rating outlook reflects a robust historical generation profile (factoring in volatility), regular payments from counterparties, and comfortable internal liquidity. Solar and wind power performance at the all-India level fell 5% YoY and 8% YoY in 2024, respectively. However, overall solar generation increased during the year, supported by a strong capacity addition of 24.55GW (2023: 10GW). Ind-Ra expects solar additions to reach 22-25 GW by the end of FY25 and remain strong in FY26, supported by a large under-construction pipeline. Additionally, Ind-Ra expects sustained traction in renewable tenders, with hybrid, storage, and round-the-clock tenders gaining more share.

Ind-Ra Prediction

Ind-Ra expects sustained traction in renewable tenders, with hybrid, storage, and round-the-clock tenders gaining more share to offset risks from the uncertainty and intermittency of renewable energy projects. Furthermore, thermal energy will maintain a dominant share in power generation in the medium to long term to meet energy demand.

“It expects strong power generation capacity additions (largely renewable) in the near future, supported by a healthy pipeline of projects. However, a commensurate addition of transmission capacity along with the ramping up of storage-linked capacity additions is critical to ensure an uninterrupted power supply in the medium term. Policy continuity is expected to ensure energy sufficiency and transition, along with a focus on improving operational efficiencies,” said Vishal Kotecha, Director, Ind-Ra.

“Ind-Ra expects stable energy demand growth and a sustained energy transition in the medium term. Thermal will continue to have a dominant share in the generation mix in the medium to long term, given the new capacity additions in the pipeline. Renewable energy continues to lead capacity additions and has witnessed steady growth in terms of auctions during 9MFY25, with a greater shift towards storage-linked and hybrid tenders. Execution of these projects remains key amid the challenges in connectivity and implementation,” said Bharath Kumar Reddy, Associate Director, Ind-Ra.

Stable Outlook for Energy Infrastructure:  

Ind-Ra expects India’s energy requirement growth to be 5%-5.5% year-over-year (YoY) in FY25. The all-India peak demand has reached an all-time high of around 250GW, and the supply position has been strong during the year, owing to better coal supply and various government measures. The agency expects power generation capacity to reach 30-32GW during FY25, with renewables leading the additions. Ind-Ra further expects strong renewable capacity additions in FY26, supported by a healthy pipeline of projects. Furthermore, thermal capacity additions are expected to pick up pace in FY26, with large capacities in the final stages of completion. Ind-Ra expects thermal power to remain critical for base load management in the medium term, even as renewable capacity additions remain strong. Land acquisition, connectivity, and adequate evacuation/transmission infrastructure remain key monitorables for the sector.

Smart Metering Projects Outlook: 

The installation of consumer smart meters has commenced in 10 Indian states, but the pace of installation has been slow, with most projects awarded in the past 12 months. The Stable rating outlook for smart metering projects for FY26 follows the achievement of go-live status for most of Ind-Ra’s rated projects, enabling them to bill the counterparties.

Ind-Ra expects an improvement in meter installation and the presence of automated payment mechanisms, such as direct debit facilities, which eliminate counterparty risks. Government support and the availability of domestic manufacturing capabilities are also positive factors. Debtor days are comfortable for Ind-Ra-rated entities. From a regulatory perspective, discoms in various states are claiming OPEX payments in their tariff filings to the regulatory commissions, though the admission of smart metering OPEX costs has been mixed across commissions, which want to evaluate the OPEX cost incurred at the time of true-up. The ratings will be driven by construction progress and timely receipt of payments from counterparties.