India is on track to significantly increase its wind energy capacity, with a projected addition of nearly 25 gigawatts (GW) between fiscal years 2025 and 2028, compared to about 9 GW added between 2021 and 2024, according to Crisil Ratings. This ambitious expansion is expected to involve a capital expenditure ranging from ?1.8 lakh crore to ?2 lakh crore.

The push for increased wind power capacity is largely driven by the need for renewable energy sources that can provide continuous power supply and grid balancing, unlike solar power which is restricted to daylight hours. "Hybrid and storage-linked projects would push higher wind additions. Nearly 30-50% of the capacity of these projects will comprise wind power as these require developers to provide renewable power throughout the day, especially during evening and night hours," stated Ankit Hakhu, Director at Crisil Ratings.

India's wind energy sector had previously experienced a slowdown, with annual capacity additions dropping to 1.7 GW from 2018 to 2023, a significant decline from approximately 3.0 GW annually between 2014 and 2018. This decline was attributed to a scarcity of connected sites with high wind potential and reduced returns for developers following aggressive bidding.

In response, the Indian government has introduced several policies to reinvigorate the sector, including setting a target to auction 50 GW of renewable projects annually, with 10 GW specifically for standalone wind projects. Since fiscal 2023, about 5 GW of standalone wind projects have been auctioned, an increase from around 3 GW in fiscal years 2021 and 2022. Additionally, auctions of hybrid and storage-linked projects have surged, from 4 GW in fiscal years 2021 and 2022 to nearly 18 GW in fiscal years 2023 and 2024.

"Average tariffs have stabilized around ?3.2 per unit in fiscals 2023 and 2024 and are expected to continue in fiscal 2025, compared to ?2.8 per unit over fiscals 2020-2022. These tariffs are expected to be viable and remunerative to developers at the expected project costs over the medium term," added Varun Marwaha, Associate Director at Crisil Ratings.

This projected expansion underscores India's commitment to enhancing its renewable energy infrastructure to meet growing energy demands sustainably.