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India’s annual wind power capacity addition is expected to more than double to 7.1 gigawatts (GW) on average over the next two financial years, compared to 3.4 GW during the 2023-2025 period. This growth is driven by government measures to accelerate project development, according to a report by Crisil Ratings. The projected increase will take the country’s total installed wind capacity to 63 GW by FY27.
During FY23-25, wind capacity additions remained slow, averaging between 6-7 GW annually. This was largely due to fewer successful auctions, low developer interest caused by unattractive tariffs, land acquisition challenges, and inadequate transmission infrastructure in high wind potential areas.
However, analysts believe that the government’s push for hybrid renewable energy projects, along with a favorable cost structure for wind power, will drive a surge in installations over the coming years.
In addition to standalone wind projects, hybrid renewable energy auctions have also gained momentum. Crisil estimates that around 30-50% of the capacity in such hybrid projects will be wind power, given its ability to generate electricity during peak load periods, unlike solar power, which primarily produces energy during daytime hours.
“We have over 30 GW of hybrid projects in the pipeline, which are expected to be commissioned within the next two to four years. These projects will contribute significantly to the expected increase in wind capacity additions,” said Ankit Hakhu, Director at Crisil Ratings. “Traction in signing power purchase agreements (PPAs) is also evident, with over 60% of projects auctioned till March 2024 securing PPAs by January 2025.”
Favorable trends in tariffs and project costs are expected to further support wind capacity expansion. Analysts note that prices of essential raw materials like steel and cement, which account for over two-thirds of wind project costs, have either remained stable or declined from the highs of FY22 and FY23. Meanwhile, tariffs have risen to over Rs 3 per unit, ensuring a reasonable internal rate of return of 10-15% for developers.
Despite this positive outlook, challenges remain. Delays in land acquisition and the availability of suitable sites for wind energy projects continue to pose obstacles, particularly in key states like Gujarat, Karnataka, and Tamil Nadu.
“The government’s initiative to develop more than 100 GW of additional transmission infrastructure for wind power by 2030, under various green energy corridor schemes, is gaining momentum. By December 2024, the capacity of such infrastructure had reached approximately 65 GW, surpassing the operational wind capacity in these corridors,” said Varun Marwaha, Associate Director at Crisil Ratings. “However, about 25 GW of transmission infrastructure in high-wind zones is still under development and is expected to be ready next fiscal. Delays in the timely availability of critical transmission equipment, such as transformers, switchgear, and high-voltage direct current components, could pose risks amid rising demand.”
With continued policy support, improved tariff structures, and steady project execution, India’s wind energy sector is poised for significant growth, contributing to the country’s ambitious renewable energy targets.
