Slow bidding for renewable energy projects threatens climate goals

India’s contribution to mitigating global warming may stutter unless the recent slowdown in the auction of renewable projects reverses. 

The world’s third-biggest polluter has slashed conducting auctions for awarding renewables capacity at utility level in 2025-26 (FY26), the lowest since FY21, after several high-profile awards failed to find purchasers for electricity to be produced by these projects. The capacity bid by federal agencies has declined over 15 Gw in April-September from the first half of FY25, industry sources said.  

A capacity of around 40.2 Gw was auctioned in FY25, following a record 47.3 Gw in FY24, according to Icra Research, based on government data. 

 

Renewable installations will exceed 35 Gw this financial year, a record, supported by aggressive auctions in the last two financial years, according to Icra. (“Auctioned” means when an auction has been completed and winners decided, but power-purchase agreements, or PPAs, may be pending. Installations typically happen once utilities sign the PPAs.) 

“There has been a slowdown in bidding over the past few months with only 3.4 Gw auctioned in the first half of FY26 (compared to  19 Gw in H1FY25). This comes amid concern over delays in signing power sales agreements (PSAs) by bidding agencies with state distribution utilities, in turn delaying the signing of PPAs with winning developers,” Girishkumar Kadam, senior vice-president and group head, Icra, told Business Standard. 

Reduced auction means solar and wind installations will start declining from 2027, just three years away from India’s plans to achieve 500 Gw of non-fossil fuel capacity by 2030, industry officials said. 

The slowdown in tendering also comes as India prepares its new Nationally Determined Contributions (NDC), or climate actions, to the United Nations. They are to be presented by November and will detail clean-energy targets for 2035, and are likely to be more ambitious than the ongoing NDC, an official from the environment ministry said. 

Other industry officials are more positive, with a top executive in a leading solar manufacturer expecting around 20 Gw to be auctioned this financial year, still half last financial year’s levels.   

Renewables addition 

In the last two financial years, India pumped up tendering for renewables to make up for slow growth in capacity. 

This enabled India to add 20.1 Gw in April-August FY26, compared to 9 Gw added in H1FY25 because of favourable prices of solar photovoltaic (PV) cells and modules, , Icra said. 

Renewable-energy installations will exceed 35 Gw this financial year on top of 28.7 Gw added in 2024-25, according to the latest status report from the Central Electricity Authority. 

Demand for electricity has not grown as expected, with the peak load this summer trailing last year’s record levels. 

But a 7 percentage point cut in the goods and services tax rate is expected to lower the capital cost for solar and wind power projects by about 5 per cent and reduce the cost of generation by 10 paise per kilowatt hour for solar power and by 15-17 paise per Kwh for wind power, Icra said, making it more palatable for utilities to sign PPAs.