India’s Power Sector Witnesses Non-Utility Solar Boom, Says SBI CAPS Report

India’s power sector is undergoing a significant transformation, with non-utility solar emerging as a critical driver in the country’s renewable energy expansion. This was revealed in a report by SBI Capital Markets (SBI CAPS), titled 'Utility Beyond Utilities: Harnessing Non-Utility Solar'.

The report highlights the trends and milestones achieved in 2024, showcasing the growing prominence of rooftop and off-grid solar installations. According to the report, energy supply grew by approximately 6 percent year-on-year in 2024, with the first half witnessing a robust 10 percent growth due to an intense summer. However, the second half saw a slowdown to 2 percent, attributed to an above-normal monsoon.

However, the regional disparities were evident, with the northern region, known for extreme weather conditions, leading growth at 10 percent year-on-year, while industrial regions in the South and West exhibited moderate demand increases influenced more by weather than industrial activity.

In 2024, India’s renewable energy sector achieved a significant milestone by surpassing 200 GW of installed capacity. This growth was fueled by an impressive 24.5 GW addition in solar energy, double the capacity added in 2023, and 3.2 GW in wind energy. Solar energy continues to show strong momentum, with 50 GW of new capacity projected between FY25 and FY26. Notably, nonutility solar played a key role, contributing 25 percent of the total solar capacity added during the year.

The report noted that rooftop solar installations surged by 53 percent year-on-year, contributing 4.6 GW, while off-grid solar witnessed an extraordinary 197 percent growth. This remarkable performance is attributed to supportive government policies, reduced costs of solar solutions, and the increasing economic appeal of decentralised energy systems.

The commercial and industrial (C&I) sector continues to dominate India’s rooftop solar capacity, contributing three-fourths of the installations. This growth is driven by significant cost savings achieved through decentralised power solutions, with states such as Gujarat, Karnataka, Rajasthan, and Tamil Nadu offering cost advantages of up to 20 percent for open access renewable power. Additionally, captive solar power arrangements exempt businesses from surcharges and cross-subsidy levies, further enhancing their viability. The residential segment also gained momentum in 2024, supported by the Pradhan Mantri Solar Ghar Mein Bijli Yojana (PM-SGMBY), which targets 30 GW of rooftop solar capacity. Subsidies under this scheme have significantly reduced payback periods, creating a Rs. 1.2 trillion opportunity for manufacturers, project developers, and EPC players.

The report further predicts that annual non-utility solar additions could reach 20 GW by FY27, reflecting a sustained growth trajectory fuelled by policy support, declining costs, and increased affordability. SBI Caps emphasises the importance of a balanced energy mix, combining utility-scale and decentralised sources, to achieve energy security and sustainability. With non-utility solar playing an increasingly central role, India is well-positioned to meet its ambitious renewable energy targets and lead the transition toward a greener future.