India’s renewable energy policy wrap 2025

The year 2025 witnessed a concerted push from the Ministry of New and Renewable Energy (MNRE) and allied ministries to address long-standing bottlenecks in deployment, manufacturing, and grid integration, while simultaneously laying the groundwork for the next phase of growth of India’s renewable energy sector centered on quality, security, and market-based mechanisms.

The year began with clarifications and expansions to foundational schemes. In January, MNRE issued detailed operational guidelines for the PM Surya Ghar: Muft Bijli Yojana, setting the framework for its ambitious rooftop solar target. The guidelines established a structured approach for Central Financial Assistance (CFA), vendor registration, and disbursement through a national portal, while mandating Domestic Content Requirement (DCR) for subsidised installations. Concurrently, the Ministry of Power (MoP) released guidelines for battery swapping and charging stations, signaling an intent to create synergies between renewable energy and the electric mobility ecosystem.

India has substantially advanced its domestic production of solar modules. The nation’s annual manufacturing capacity for solar modules listed under the Approved List of Models and Manufacturers (ALMM) framework now stands at approximately 144 GW. This growth was significantly driven by the addition of roughly 81 GW in 2025 alone, marking a dramatic year-on-year surge of nearly 99% compared to the 41 GW added in 2024.

Furthermore, the scope of the ALMM has been expanded to include solar cells. On July 31, 2025, the MNRE introduced ALMM List-II specifically for solar cells, under which about 24 GW of manufacturing capacity is currently registered. MNRE released the first ALMM List-II enlisting 13 GW of capacity from six manufacturers. This was followed by a September revision adding major players like TP Solar and Tata Power Renewable Energy. The framework was further extended upstream, with a draft amendment in September proposing the inclusion of solar wafers under a planned ALMM List-III from June 2028, aiming to create a fully integrated and quality-assured domestic solar supply chain. For the wind sector, the existing Revised List of Models and Manufacturers (RLMM) was rebranded as ALMM (Wind) and significantly strengthened. New guidelines mandated the use of listed components—blades, towers, gearboxes, generators, and bearings—for all approved turbines, introduced a separate components list (ALMM-WTC), and enforced strict data localisation and cybersecurity norms, including a ban on transferring real-time operational data outside India.

Parallel to fortifying domestic manufacturing, the government introduced the Renewable Energy Equipment Import Monitoring System (REEIMS) in October. While key components remained under the “Free” import category, the system mandated prior registration for items like solar glass and cells, and wind towers and gears, to monitor end-use and gather critical supply chain data. This move reflected a balanced approach, ensuring oversight without disrupting project pipelines.

Financial innovation and de-risking mechanisms gained prominence. In February, MNRE proposed a Renewable Energy Financing Obligation (REEFO), modelled on Renewable Purchase Obligations, to mandate financial institutions to allocate a portion of their lending to renewable projects. This aimed to secure consistent and affordable capital for the sector. The Ministry of Power, in June, revised Standard Bidding Documents to permit Insurance Surety Bonds and Payment on Order Instruments (from IREDA, PFC, or REC) as alternatives to traditional bank guarantees for transmission project bids, easing liquidity constraints for developers. Later in the year, the Central Electricity Authority (CEA) proposed an Acquire, Operate, Maintain, and Transfer (AOMT) model to help states monetize existing intra-state transmission assets, unlocking capital for further grid expansion.

Grid integration and storage moved from the periphery to the core of policy discourse. The government mandated that new solar projects include co-located storage equivalent to 10% of their capacity for at least two hours, aiming to improve grid reliability. Legal amendments were enacted to allow Energy Storage Systems to operate as standalone assets or be integrated into the grid. To accelerate adoption, a Rs 5,400 crore Viability Gap Funding scheme was approved to support 30 GWh of battery storage. Regulatory frameworks also advanced with new draft procedures for connecting storage systems to the grid and proposed tariff norms for storage integrated with conventional power plants.

Market mechanisms witnessed substantial evolution to support renewable penetration. A key development was the CERC’s issuance of final guidelines for Virtual Power Purchase Agreements in December, draft launched first in May. This framework enabled large consumers to meet Renewable Consumption Obligations (RCO) financially, without taking physical delivery of power, by contracting with renewable generators and settling the difference between a fixed VPPA price and the market price. This was complemented by the launch of electricity futures contracts. The National Stock Exchange received SEBI approval and successfully launched monthly electricity futures in July, providing a new instrument for price risk management and complemented by the Multi Commodity Exchange’s earlier entry into this space.

The RCO framework itself was overhauled. Replacing the older Renewable Purchase Obligation (RPO) system, the MoP notified revised RCO rules, unifying compliance under the Energy Conservation Act. The framework set a rising trajectory for obligated entities (Discoms, open access, and captive consumers) from 29.91% in 2024-25 to 43.33% by 2029-30, with a separate, non-fungible component for Distributed Renewable Energy. CERC proposed a buyout price of Rs 245/MWh for 2024-25 as a last-resort compliance option. In a significant shift, the Ministry of Power in August withdrew the Uniform Renewable Energy Tariff mechanism, citing delays in project approvals. This move unlocked over 40 GW of pending solar and hybrid capacity, allowing Renewable Energy Implementing Agencies and states to negotiate tariffs based on market conditions, thereby injecting greater flexibility into procurement.

Policy support for emerging green technologies solidified. The National Green Hydrogen Mission saw multiple interventions. Beyond hydrogen, MNRE issued its first National Policy on Geothermal Energy in September, outlining a roadmap for exploration and development, and released draft guidelines for solar-powered cold storage systems with thermal energy backup, targeting post-harvest losses.

The year also focused on streamlining existing schemes and addressing sectoral challenges. MNRE issued revised guidelines for Small Hydro Power projects, Waste-to-Energy programmes, and the Biomass Programme, simplifying documentation, easing performance testing norms, and clarifying CFA disbursement triggers. To tackle the bottleneck of unsigned Power Purchase Agreements, the MoP directed REIAs to resolve the backlog of nearly 42 GW on a case-by-case basis, aiming to free up blocked transmission capacity. In the wind sector, MNRE revised guidelines for prototype turbine testing to support innovation while ensuring grid safety and later eased the mandatory in-country prototype testing rule, providing a two-year transition window for manufacturers.

Consumer-centric initiatives and decentralised renewable energy received continued attention. The PM Surya Ghar scheme saw multiple operational tweaks throughout the year, including stricter payment release procedures for the Utility-Led Aggregation model, clarification on subsidy integration with state schemes, and the launch of draft guidelines for inverter communication systems to ensure data security and prevent unauthorized access. MNRE also relaxed efficiency norms for low-wattage solar modules used in off-grid applications like lamps and street lights, supporting the decentralised renewable energy segment.

As the year concluded, the forward-looking agenda was clear. MNRE released a draft proposal to significantly raise the minimum efficiency requirements for ALMM-listed solar modules from 2027 and 2028 onwards, pushing the industry towards higher-efficiency products. CERC initiated consultations on tackling connectivity hoarding by projects without PPAs and proposed a phased tightening of deviation settlement norms for wind and solar generators to improve grid discipline. The government also circulated the Draft Electricity (Amendment) Bill, 2025, proposing sweeping reforms to enforce cost-reflective tariffs and strengthen the financial viability of the distribution sector, which is critical for sustaining renewable energy offtake.

In summary, 2025 was a year of consolidation and strategic deepening for India’s renewable energy sector. The policy focus decisively shifted from mere capacity addition to building a resilient ecosystem characterized by robust domestic manufacturing, integrated grid infrastructure, innovative financial and market instruments, and a clear regulatory pathway for emerging technologies. The layers of policy intervention collectively aimed at transforming India’s renewable energy ambitions into a sustainable, reliable, and economically viable pillar of its long-term energy security and net-zero aspirations. The foundation laid in 2025 sets the stage for a more complex, integrated, and market-driven phase of the energy transition in the years to come.

The featured photograph is for representation only.