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India’s wind capacity is set to witness a significant boost, with an expected increase of approximately 2.5 times to nearly 25 GW between fiscals 2025 and 2028, compared to around 9 GW between fiscals 2021 and 2024 as per Crisil Ratings. This expansion entails a substantial capital expenditure of Rs 1.8–2 lakh crore.
This growth highlights the growing importance of wind energy in India’s renewable energy mix, especially for grid balancing and providing renewable power throughout the day. Unlike solar energy, which is primarily generated during the day, wind energy can offer a more consistent power supply.
The acceleration in wind capacity additions is supported by several factors, including a ramp-up in auctions of wind and hybrid projects (including those linked with storage), improved transmission infrastructure to wind sites, better financial health of wind original equipment manufacturers (OEMs), and more viable tariff bids in recent times.
Historically, India added wind capacity at an average of 3.0 GW per year between fiscals 2014 and 2018. However, this pace slowed to 1.7 GW between fiscals 2018 and 2023 due to a lack of connected sites with high wind potential and diminished returns for developers following aggressive bidding.
To revitalize the wind sector, the Indian government has introduced several policies and initiatives. Notably, it has set a target to auction 50 GW of renewable projects annually, including 10 GW of standalone wind projects. This initiative has already led to the auctioning of around 5 GW of standalone wind projects since the beginning of fiscal 2023, compared to approximately 3 GW auctioned in fiscal 2021 and 2022.
Additionally, auctions of hybrid and storage-linked projects have seen a significant rise, increasing from 4 GW in fiscals 2021 and 2022 to nearly 18 GW in fiscals 2023 and 2024. These projects, which combine wind with solar and storage capacities, are crucial for providing renewable power throughout the day, especially during peak demand periods in the evening and night.
Ankit Hakhu, Director at CRISIL Ratings, stated, “Hybrid and storage-linked projects will drive higher wind additions. Nearly 30-50% of the capacity of these projects will comprise wind power as they require developers to provide renewable power throughout the day.”
On the supply side, improvements in transmission connectivity and the financial health of wind OEMs are easing constraints. The government is developing transmission infrastructure to enhance connectivity to high wind potential sites, aiming to increase connected capacity from approximately 50 GW as of December 2022 to around 75 GW by March 2025 and 100 GW by December 2027.
OEMs have also improved their credit profiles through prudent project bidding and raising equity, reflected in better financial metrics. For example, two leading manufacturers that implemented around 40% of the 3.3 GW capacity in fiscal 2024 saw their interest coverage ratio improve from less than 1 time in fiscal 2020 to an estimated 2.7 times in fiscal 2024.
Varun Marwaha, Associate Director at CRISIL Ratings, added, “Average tariffs have stabilized around Rs 3.2 per unit in fiscals 2023 and 2024 and are expected to continue in fiscal 2025, compared to Rs 2.8 per unit over fiscals 2020-2022. These tariffs are expected to be viable and remunerative for developers at the expected project costs over the medium term.”
However, these projections are contingent on the timely construction of transmission infrastructure and stable prices of steel and cement, which could impact project costs and tariff viability.
