India’s renewable energy policies increasingly focused on improving project execution, grid stability, transmission connectivity, and reliable power delivery during the third quarter (Q3) of 2026, according to Mercom India’s Q3 2026 Renewable Energy Policy Impact Report.

The report analyzed more than 100 policy and regulatory developments affecting utility-scale renewable energy projects, battery energy storage systems (BESS), domestic manufacturing, open access, rooftop solar, and transmission infrastructure.

As renewable energy capacity expands, policymakers are placing greater emphasis on technical compliance, forecasting accuracy, infrastructure utilization, and storage integration.

These developments could create investment opportunities in transmission, storage, manufacturing, and distributed solar.

However, stricter technical standards, scheduling requirements, and compliance obligations could increase project costs and affect renewable energy tariff competitiveness.

“Renewable energy growth is putting more pressure on the grid, transmission networks, and project economics. The policy changes in Q3 reflect that reality. Developers will face higher technical, scheduling, and compliance requirements, while storage, transmission, grid technologies, and domestic manufacturing are creating new opportunities. The key will be making sure policy changes improve reliability without adding unnecessary costs or slowing project development,” said Raj Prabhu, CEO of Mercom Capital Group.

Stricter Grid Standards

The Central Electricity Authority (CEA) issued technical standards effective April 1, 2027, introducing stricter requirements for equipment, protection systems, monitoring, communications, and grid support.

While these requirements could improve grid reliability, they may increase engineering, procurement, and construction (EPC) and balance-of-system costs.

Revised deviation settlement regulations could also expose future wind and solar projects to higher costs from forecasting and scheduling errors.

Developers will consequently need to improve forecasting, real-time monitoring, scheduling, and contractual risk management. These additional requirements could affect project economics and tariff competitiveness, particularly for developers with limited technical capabilities.

Transmission Expansion

The ₹1.86 trillion (~$19.55 billion) Green Energy Corridor Phase III program aims to facilitate the integration of 135 GW of renewable energy capacity and 50 GWh of storage.

The program could create opportunities for transmission developers, substation equipment suppliers, grid automation companies, and storage infrastructure providers.

Regulators are also strengthening the link between transmission connectivity and project readiness. The revised framework provides limited flexibility for projects demonstrating development progress while seeking to release transmission capacity held by projects without sufficient commercial progress.

Measures addressing connectivity utilization and the reallocation of idle transmission capacity could improve network efficiency and align infrastructure expansion with project readiness.

Revised right-of-way compensation mechanisms may reduce land disputes and delays, although they could increase upfront development costs.

Battery Storage

Battery storage is increasingly being considered for applications beyond energy shifting and peak-demand management.

Growing regulatory attention toward grid-forming inverters, voltage and frequency support, automatic generation control, and black-start capabilities is likely to increase demand for advanced power conversion systems and monitoring technologies.

Regulatory flexibility allowing developers to extend storage duration without increasing approved megawatt connectivity could improve existing infrastructure utilization and support longer-duration storage projects.

Domestic battery manufacturing may benefit from expanded customs duty exemptions covering 85 categories of lithium-ion cell manufacturing equipment.

Expanded customs duty exemptions covering 85 categories of lithium-ion cell manufacturing equipment could reduce capital costs and encourage investment in domestic battery manufacturing.

The report also identifies the 5 GW floating solar program, requiring at least 10 GWh of storage, as an opportunity for integrated renewable energy development.

Solar Manufacturing

India’s Approved List of Models and Manufacturers (ALMM) listed solar module capacity reached approximately 225.5 GW during the quarter, while listed solar cell capacity increased to 38 GW.

The substantial gap highlights the need for greater domestic cell manufacturing capacity and upstream integration. Additional capacity may improve procurement flexibility and increase competition among domestic suppliers.

Higher efficiency requirements in international markets and expanding advanced cell technologies may encourage manufacturers to upgrade production lines and invest in automation.

Government support for pilot-scale perovskite manufacturing is likely to strengthen India’s research capabilities, although commercial deployment depends on improvements in scalability, durability, and production costs.

Trade investigations, import restrictions, and intellectual property disputes will also encourage export-oriented manufacturers to diversify markets, strengthen supply-chain traceability, and pursue international partnerships.

Changing Banking Rules

Changes to banking charges and energy settlement mechanisms continued to influence renewable energy procurement by commercial and industrial (C&I) consumers.

Gujarat reduced green energy banking charges to ₹1 (~$0.011)/kWh, providing near-term relief, although its subsequent cost-based methodology could make future charges more variable.

Madhya Pradesh introduced a rolling three-month banking arrangement, offering greater flexibility in managing renewable energy generation and consumption.

However, banking limits, in-kind charges, and the lapse of unused energy could reduce savings from surplus generation.

Renewable energy procurement mandates and incentives for data centers in Gujarat and Uttar Pradesh could create additional demand for open access, captive, hybrid, and storage-backed renewable power.

The report emphasizes the importance of aligning renewable energy procurement with actual electricity demand. Consumers may need to reassess project sizing, consumption patterns, and procurement arrangements to minimize banking losses.

Hybrid renewable procurement, battery storage, and energy management systems will become increasingly attractive for businesses seeking to improve self-consumption and manage electricity costs.

“Companies can no longer look at policy changes in isolation. Transmission availability, storage requirements, forecasting rules, open access charges, and equipment standards can all affect the same project. Developers and investors need to understand how these changes work together before they bid, procure equipment, or commit capital,” Prabhu said.

Residential Rooftop Solar

Residential rooftop solar received additional policy support through subsidies, simplified approvals, and utility-led programs.

Maharashtra approved installations for approximately 211,000 low-income households. Karnataka expanded net metering to 1 MW across consumer categories and removed a proposed storage mandate, while Andhra Pradesh increased rooftop capacity limits for eligible single-phase consumers to 5 kW.

These measures have the potential to boost opportunities for rooftop developers, EPC companies, and equipment suppliers.

However, digital consumer verification, domestic inverter data-hosting requirements, equipment compliance, and performance monitoring obligations may mean more operational costs.

The report indicates that installers with reliable equipment sourcing, efficient subsidy processing, strong installation networks, and dependable after-sales services will be better positioned to meet growing residential demand.

Digital Monitoring

Policies supporting indigenous supervisory control and data acquisition (SCADA) systems, secure data hosting, standardized monitoring, and improved load dispatch coordination are likely to create opportunities for software developers, automation providers, and grid technology companies.

For distribution companies and system operators, improved visibility into renewable generation and storage could strengthen forecasting, congestion management, distribution planning, and grid reliability.

The report indicates that project competitiveness will increasingly depend on technical compliance, execution certainty, lifecycle cost management, and reliable power delivery, alongside generation capacity and tariffs.

For the complete report, visit:https://www.mercomindia.com/product/q3-2026-renewable-energy-policy-impact