Crisil Ratings in its latest report has said that India's renewable energy capacity under the commercial and industrial (C&I) segment is expected to increase from around 40 gigawatts (GW) anticipated by the end of FY26 to 57 GW by FY28. It highlighted a key driver behind this growth are favourable long-term power purchase agreement (PPA) compared with grid power prices, corporate net-zero targets, renewable purchase obligation (RPO) for corporates, as well as attractive returns and strong counterparty profiles for developers. However, it said a key bottleneck for capacity additions is the lack of transmission infrastructure to evacuate power owing to right-of-way issues.  As most C&I capacities rely on intra-state networks, delays have a direct impact on project execution.

According to the report, the C&I segment is the largest electricity-consuming block in India. It said open access C&I has gained prominence after the Green Energy Open Access (GEOA) rules, 2022 took effect and includes end users such as industrial units and commercial spaces, which are directly sourcing a part of their power requirement through solar and wind capacities using the existing transmission and distribution infrastructure.

The report further said strong demand from end-user industries, such as steel, cement and data centres to meet their internal net-zero targets and comply with RPO requirements will further support capacity additions. Moreover, it said attractive returns continue to draw developer interest in the C&I segment. It said C&I capacity additions will be mostly undertaken by developers backed by private equity players, spurred by better return on equity of C&I projects vis-a-vis utility-scale projects on account of higher tariffs. This will be underpinned by the presence of counterparties with strong credit profiles, ensuring stable cash flow generation.