India's Commercial and Industrial Renewable Energy Segment Set for Major Expansion
India's commercial and industrial (C&I) renewable energy sector is on the brink of a significant transformation, with installed capacity projected to soar to approximately 57 gigawatts (GW) by the fiscal year 2028. This marks a substantial increase from the nearly 40 GW expected by the end of FY2026, according to a comprehensive report by CRISIL Ratings.
Drivers of Growth in the C&I Renewable Energy Market
The anticipated expansion is underpinned by several key factors that are reshaping the energy landscape. Competitive long-term power purchase agreement (PPA) tariffs, which are increasingly favorable compared to traditional grid power prices, are a primary catalyst. Additionally, the rising tide of net-zero commitments from industries, stringent compliance with renewable purchase obligations (RPOs), and the allure of attractive returns for project developers are collectively fueling this growth trajectory.
Gautam Shahi, Director at CRISIL Ratings, emphasized the impact of recent regulatory changes: "The implementation of the Green Energy Open Access (GEOA) Rules in 2022 has been a game-changer, enabling industrial and commercial consumers to procure renewable power directly through existing transmission networks. This has accelerated adoption and investment in the sector."
Policy Incentives and State-Level Support
Following the GEOA rules, major industrial states across India have rolled out policies to fast-track renewable energy adoption and attract capital. These initiatives include rebates on cross-subsidy, wheeling, and state transmission utility charges for power sourced intra-state. Such incentives are instrumental in reducing the landed cost of power by an estimated 25–30% compared to on-grid tariffs, thereby driving capacity additions in the C&I segment.
The C&I segment, which represents the largest electricity-consuming category in the country, has gained considerable momentum as a result. Private equity-backed developers are at the forefront of this expansion, drawn by higher returns relative to utility-scale projects. Their investments are further bolstered by financially robust corporate counterparties that ensure stable cash flows, enhancing the sector's viability.
Challenges and Bottlenecks in Capacity Addition
Despite the optimistic outlook, the path to expansion is not without obstacles. A significant bottleneck is the inadequate transmission infrastructure for power evacuation, largely due to right-of-way issues. Since most C&I capacities depend on intra-state networks, any delays in infrastructure development directly impact project execution timelines.
Moreover, there is a potential risk of states rolling back open-access incentives, driven by concerns over revenue losses for distribution utilities. Such a move could moderate investment momentum and slow down the pace of capacity additions, highlighting the need for balanced policy frameworks.
Strategic Importance for India's Energy Goals
The continued growth of the C&I renewable energy segment is poised to play a pivotal role in supporting India's ambitious target of achieving 500 GW of non-fossil fuel capacity by 2030. As industries increasingly pivot towards sustainable energy sources, this segment is expected to contribute significantly to the nation's energy security and environmental objectives.
In summary, the C&I renewable energy market in India is at a critical juncture, with robust growth prospects driven by policy support, economic incentives, and corporate commitments. Addressing infrastructure challenges and maintaining favorable policies will be essential to realizing its full potential and advancing India's renewable energy agenda.
