Renewables tender in India: Contracting hurdles and the rising demand for energy storage

India's renewable installed capacity reached 172 GW at the end of fiscal year 2024-25 in March. The majority of this capacity is from solar photovoltaic (106 GW) and onshore wind (50 GW), while the rest is from biomass (11 GW) and small hydro (5 GW).

India added about 10 GW of new renewable capacity this year from January to March.

Capacity additions are driven by long-term renewable targets, regular competitive tenders for utility contracts and emerging demand from corporate as well as distributed segments.

The total pipeline of renewable projects now stands at about 160 GW, including 60 GW of solar PV, 70 GW of hybrid renewables with or without storage, 12 GW onshore wind, 13 GW pumped storage and more than 4 GW of standalone battery storage.

India has set a target of reaching more than 500 GW of renewables with about 74 GW of planned energy storage capacity by fiscal year 2032. To reach this target, India plans to tender about 50 GW of renewable capacity annually through a competitive bidding mechanism. In 2024, India overachieved this target by awarding more than 60 GW renewable projects.

Tender volumes see dip in capacity

Tender volumes fell by 70% in the January-March quarter this year compared to the same period in 2024. About 13 GW of tenders were recorded as opened in the first quarter of 2025 compared to more than 48 GW in Q1 2024. Furthermore, about 8.8 GW of renewable projects were awarded in Q1, which fell by a third year over the year.

While 2024 was a record year for both the renewable capacity requested (112 GW) and awarded (65 GW) in competitive tenders, 2025 started on a slower note. The reasons for the slowdown include:

• Large inventory of awarded projects looking for buyers. More than half of the capacity awarded by federal renewable energy implementation agencies from 2023 onward is currently without power sale agreements. The capacity is equal to roughly 30 GW of projects and includes solar, hybrid wind-solar and renewables with storage projects. Federal REIAs constitute about 60% of the total capacity awarded in India and require signing back-to-back power purchase and power sale agreements with generators and distribution companies. The rest of the capacity was for direct PPAs with state-level renewable energy agencies and distribution companies, chiefly from Gujarat and Maharashtra, Rajasthan and Uttar Pradesh.

• Dip in requested capacity as tariffs move upward. The minimum Solar PV tariffs in the projects awarded in Q1 increased by about 20% quarter on quarter due to the impact of impending tightening of the domestic content requirement for solar cells. While the average solar tariffs remain in the range of $30-31/MWh, there is volatility in the market driven by factors including policy, off-taker, and supply chain risks. Onshore wind and hybrid wind-solar tariffs have also increased by 5% each in Q1. The average tariffs for onshore wind have been consistently growing in the last two years, with about $36/MWh average tariffs in Q1 2023 increasing to $ 46/MWh in Q1 2025.

• Unallocated capacity in tenders sees an increase. Of the 12 GW capacity equivalent of tenders closed during January-March, about 28% of the capacity remained unallocated. This is higher compared to the average unallocated capacity of 19% during 2024 and 10% during 2023 due to a lack of participation by developers particularly for onshore wind and renewables with storage tenders. This was complemented by higher tariff quotes in these tenders. For example, Solar Energy Corporation of India's (SECI) Tranche VI tender for firm and dispatchable renewable energy for 2000 MW/ 8000 MWh peak power was underbid at only 820 MW with bids ranging from Rs 8.5 to 9.85/kWh ($ 102-118/MWh). As a result, only the lowest bidder at $102/MWh was awarded the quoted capacity of 200 MW.

Hybrid wind-solar projects take the lead

While solar PV projects continue to be in demand with about 2.4 GW constituting 27% of the capacity awarded in the January-March quarter, it was surpassed by hybrid wind and solar projects with 3.1 GW (35%) of capacity.

Renewable projects with storage to supply dispatchable renewables have gained a share in the total capacity awarded from about 17% in 2023 to about 21% during Q1 2025.

Energy storage demand to grow

Standalone energy storage tenders have grown in demand, with 10% of total capacity awarded in Q1 compared to a 2%- 4% share in 2023 and 2024.

The share of tenders with storage is expected to continue to rise sustainably, driven by the need to address the intermittency issue of solar and wind. This is also complemented by the government advisory to incorporate energy storage of 10% of the requested capacity in future solar tenders.