India added a solar capacity of 26.6 GW in the first nine months (9M) of 2025, an increase of 53.7% year-over-year (YoY) from 17.3 GW, according to the newly released Q3 2025 India Solar Market Update Report by Mercom India Research. Large-scale solar accounted for 81.5% of the capacity commissioned in 9M 2025, while rooftop solar contributed 18.5%. Within large-scale additions, solar open access projects accounted for 28.3% of the total during the period.

Solar power accounted for 25.1% of India’s total installed power capacity and 51% of the total installed renewable capacity as of September 2025. The solar capacity installed increased by 7.5% quarter-over-quarter and 37.5% year-over-year. India’s renewable energy capacity, including large hydroelectric projects, made up 49.1% of the country’s cumulative power capacity, with 245.1 GW installed at the end of the third quarter of 2025, according to data from the Central Electricity Authority, the Ministry of New and Renewable Energy, and Mercom’s India Solar Project Tracker.

India added 4.9 GW of rooftop solar capacity in 9M 2025, compared to 1.9 GW in the previous year, a 161% YoY increase, according to Mercom India’s newly released Q3 2025 India Rooftop Solar Market Report. During Q3, the country added 2.1 GW of rooftop solar capacity, a 29% increase quarter-over-quarter from 1.6 GW and a 164% YoY rise from 791 MW. Rooftop solar accounted for 24.1% of the country’s total solar additions during the quarter.

The recent Central Electricity Regulatory Commission’s (CERC) proposal to tighten deviation limits for the scheduling and dispatch of power has raised concerns about higher project costs for renewable developers and potential increases in consumer tariffs. As part of its broader effort to reduce grid instability, CERC has proposed narrowing the tolerance band for the deviation settlement mechanism (DSM) for wind and solar projects starting in 2026.

India generated over 38.3 billion units (BU) of solar power in the third quarter (Q3) of 2025, representing a 20.4% year-over-year increase. Solar generation decreased by 11% quarter-over-quarter (QoQ) from 43 BU. Rajasthan, Tamil Nadu, and Gujarat led the solar power generation during the quarter. Rajasthan topped the list with 14.3 BU, from 15.9 BU in Q2 2025. Tamil Nadu was second at 4.9 BU, increasing from 4.7 BU in the previous quarter. Gujarat ranked third with 4.8 BU compared to 5.9 BU in Q2 2025. Solar generation in Rajasthan and Gujarat dropped by 9.7% and 18.5% QoQ, respectively, due to prolonged monsoons. In Tamil Nadu, however, solar generation increased by 4.7% QoQ.

The average system cost of large-scale solar projects remained low in the third quarter of 2025, with cost reductions seen across all module technologies. Projects using Indian TOPCon modules were the premium option in terms of cost, whereas projects using Chinese mono PERC modules remained the most economical. Costs fell across module technologies during the quarter. Projects using Indian mono PERC and TOPCon modules recorded the steepest QoQ drop of 1.4%. On a year-over-year basis, these projects also saw declines of 0.7% and 0.3% in costs. In a QoQ comparison, projects using domestic content requirement-compliant modules saw a relatively modest decline.

The Ministry of New and Renewable Energy (MNRE) clarified that there will be no blanket cancellation of projects awarded by renewable energy implementing agencies (REIAs) where power sale agreements (PSAs) remain unsigned. Instead, the Ministry will adopt a case-by-case approach, emphasizing grid readiness, transmission capacity, and market reforms to ensure sustainable expansion. MNRE stated that it is conducting detailed due diligence on all unsigned PSAs. REIAs have been directed to categorize projects based on their likelihood of securing PSAs with end procurers, considering factors such as configuration of renewable supply, discovered tariffs, and connectivity timelines.

The government has directed renewable energy implementing agencies (REIAs) to close all legacy bids and cancel the letters of award for all renewable energy projects for which power purchase and power sale agreements (PPAS/PSAs) are not feasible by November 30, 2025. The four REIAs – THE Solar Energy Corporation of India (SECI), NTPC, NHPC, and SJVN – together have unsigned PPAs/PSAs for 42 GW of projects. The agencies have been asked to explore the option of signing PPAs without waiting for PSAs. Of the total 93 GW of renewable energy capacity tendered by these agencies since 2023-24, PPAs and PSAs have been signed only for 23 GW so far.

Transmission sector stakeholders have decided to adopt new measures to lower the high failure rate of electricity distribution transformers, achieve uniformity in specifications across utilities and manufacturers, and reduce replacement delays. At a recent meeting of the standardization cell convened by the Central Electricity Authority, stakeholders flagged moisture ingress, poor sealing, and non-uniform components as major reasons for transformer breakdowns. It was announced in the meeting that the national distribution transformer failure rate averages around 10% or nearly 1.3 million failures annually.

The Union Cabinet has approved a program to promote the manufacturing of sintered rare earth permanent magnets (REPM) used in electric vehicles and renewable energy, with a financial outlay of ₹72.8 billion (~$815.73 million). The program aims to set up 6,000 metric tons per annum of integrated REPM manufacturing in India. The total financial outlay of the program comprises sales-linked incentives of ₹64.5 billion (~$722.73 million) on REPM sales for five years and a capital subsidy of ₹7.5 billion (~$84.03 million). The program envisions allocating the total capacity to five beneficiaries through a global competitive bidding process.

A new staff paper by CERC suggested that grid connectivity for renewable energy projects be given only if they have signed power purchase agreements. As another option, it has been recommended that an auction regime be introduced for all connectivity allocations. These suggestions have been made in the context of 31.8 GW of renewable energy projects that have secured tentative grid connectivity in the absence of power purchase agreements as of June 2025.

The Odisha Electricity Regulatory Commission amended its net metering and bi-directional metering framework for rooftop solar systems, aligning the state regulations with recent Ministry of New and Renewable Energy guidelines. According to the Commission, the amendments were necessary to reflect advancements in rooftop solar technology, the rising adoption of solar-plus-storage systems, and updated national monitoring protocols. The amendment introduces multiple changes, most notably the formal inclusion of hybrid inverters, a category of bi-directional inverters capable of operating with both solar modules and energy storage systems.

The Telangana Cabinet has given the go-ahead to create a third electricity distribution company (DISCOM). The new DISCOM will be responsible for the supply of power to farmers, lift-irrigation programs, beneficiaries of Mission Bhagiratha, street lighting, rural and urban public utilities, and various welfare programs. Telangana now has two DISCOMs—Northern Power Distribution Company and Southern Power Distribution Company. Modelled on Bengaluru’s system, Hyderabad will shift to a full underground electricity cable system at an estimated cost is ₹147.25 billion (~$1.65 billion).

CERC issued a suo motu order directing that monthly tariffs or charges must be adjusted or refunded from the date the Goods and Services Tax reduction event occurs, affirming that renewable energy generators must pass on the benefit of lower tax rates to procurers. To enable this, generating stations must furnish invoices and auditor-certified statements demonstrating a clear one-to-one correlation between project expenditure and the invoices raised.

The Rajasthan Electricity Regulatory Commission approved the levy of Parallel Operation Charges (POC) on co-located captive power projects (CPPs). The Commission has set the charges at ₹27.23 (~$0.30)/kVA/month of installed capacity for conventional CPPs and ₹11.90 (~$0.13)/kVA/month for renewable energy CPPs. For hybrid plants, the charges will be applied proportionally based on the share of conventional and renewable components. RERC first introduced POC in 2020, at a uniform rate of ₹20 (~$0.22)/kVA/month for all CPP consumers.

The Rajasthan Renewable Energy Corporation issued a comprehensive Standard Operating Procedure to streamline the development, approval, and commissioning of renewable energy projects developed under captive and third-party sale modes. The SOP covers key processes, including project registration, power evacuation planning, captive status verification, installation of battery energy storage systems, and various compliance requirements mandated under Rajasthan’s energy regulations. The procedure aims to enhance regulatory transparency and ensure smooth integration of renewable projects with the state’s transmission and distribution network.