Data trends
Rapid generation expansion faces constraints in transmission networks and batteries
July 8 2026
India has emerged as the world’s most competitive solar market by generation costs, but the country now faces bottlenecks in building grids and storage to capture and deliver clean electricity to customers.
In 2025, utility-scale solar projects commissioned in India had a weighted-average levelised cost of electricity (LCOE) of just $35 per megawatt hour, an 8 per cent decline on 2024, according to new data from the International Renewable Energy Agency (Irena). India’s solar LCOE was just below the world’s largest solar market, China ($36 per MWh), Brazil ($37 per MWh) and far lower than advanced economies like the US ($62 per MWh).
“Generation cost is only part of the investment picture,” Irena tells fDi via email. “The ability to deliver that power reliably to demand has become the more decisive factor.”
More than 50GW of renewable energy capacity in India was stranded as of June 2025 due to insufficient power transmission networks, according to research by JMK Research and Institute for Energy Economics and Financial Analysis.
India has experienced rapid solar growth, with 37.9GW of capacity added in 2025, according to Ember data. This was second only to China, which added 378GW of solar assets, equivalent to 58 per cent of global additions.
Neshwin Rodrigues, electricity policy analyst for India at energy think-tank Ember, tells fDi that the lower cost of solar generation relative to coal — the predominant fuel for electricity generation in India — has been a major driver of investment.
“Initially, a lot of policies were in favour of solar,” he adds, noting central government waivers on interstate transmission system charges launched in 2016. Solar park policies have also enabled faster development times in Rajasthan and Gujarat, the largest solar states with 35.9GW and 24GW of capacity, respectively, at the end of 2025, according to Ember.
Most of the solar growth has been driven by domestic players. India’s largest operating solar farms by nameplate capacity are Adani Group’s 2GW Khavda IV project in Gujarat, ReNew’s 1.3GW Bhinajpura solar farm and SJVN’s 1GW project both in Rajasthan, shows Global Energy Monitor data as of February 2026.
India is now experiencing a similar pattern to other fast-growing solar markets. Generation asset expansion is being constrained by grid integration challenges, curtailment and falling capture rates (revenue generated compared to the average wholesale electricity prices).
“You need to evacuate power from places like Rajasthan — where you have a lot of solar being built — to other places [with electricity demand],” says Rodrigues, noting that India’s lower solar costs do not matter without grids and batteries to distribute and store the power generated.
New transmission line commissions by length across India in the 2025 fiscal year were 42 per cent lower than planned, according to JMK Research and the Institute for Energy Economics and Financial Analysis. Rajasthan, where 8GW of renewable energy capacity is currently stranded, is the most impacted state.
More developers are now seeking to co-locate batteries with their solar developments to overcome grid access constraints and to capture surplus power during peak solar hours. In 2025, energy storage system project tenders rose to more than 100GWh with 60GWh for batteries — more than double the previous years, according to the IEA.
“Solar is already the cheapest source of new electricity India can build,” says Irena. “The next wave of investment will be unlocked less by cheaper panels than by the infrastructure and market design that let that low-cost power reach demand reliably.”
In 2025, India’s investment into solar power generation rose to $20bn, representing annual growth of about 25 per cent in the past five years, according to the International Energy Agency. Solar PV investment helped India reach 50 per cent of its power generation capacity from non-fossil-fuel sources in 2025, five years earlier than its 2030 target.
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