YES Securities report says that power sector in India is seeing more demand and a strong shift to renewable led by solar installations.
However, solar manufacturing companies may have trouble making money in the short term because of rising costs and competition.
The report said that India’s energy mix is slowly making a shift to renewable led by solar of new capacity. As per the report, “The power sector in India continues to move towards a renewable-led capacity mix, with solar driving additions, which are supported due to a strong policy push and, of course, rising C&I adoption under the Green Open Access, whereas coal remains pretty crucial when it comes to baseload stability.”
At the same time, the brokerage went on to note that solar manufacturing companies might have to deal with lower usage and margins in the near future because of weaker exports, more competition, and higher input costs. The report further added that our coverage companies are expected to face marginal near-term pressure on utilization and margins, driven by weaker exports, rising competition, capacity ramp-up, and elevated input costs.
The report says that government policies that support solar energy and growing demand from businesses and homes are helping to speed up the use of solar energy across the country. Capacity additions continue to be strongly led by renewables, with solar emerging as the major growth driver, supported by large utility-scale projects and gradually enhancing the traction in rooftop installations, aided by better economics as well as policy support.
Government programs are also helping to increase the demand for solar energy, especially by way of rooftop installations and uses in farming. The report said, “Government initiatives continue to offer strong visibility, with schemes like PM Surya Ghar driving rooftop adoption via subsidies and rising residential participation.”
The report also said that India still needs to import some parts of the solar value chain, especially from China.
But the ability to make things in India is slowly growing, especially in states like Gujarat and Tamil Nadu.
As per the report, solar capacity additions are still the biggest part of India’s overall power capacity growth. India added about 35 GW of solar capacity in FY26 YTD, which is most of the 45 GW total capacity additions across all sources. This shows how important solar is to capacity expansion.
India’s total installed power capacity was about 521 GW as of January 2026. This indicates that the country has a diverse energy mix, with a large share coming from renewable sources.
The report has gone on to identify that wind at 55 GW, hydro at 51 GW, and other renewables at 17 GW are a part of the energy mix. Gas-based capacity at 21 GW and nuclear at 9 GW make up a smaller part of the mix, and lignite makes up almost nothing.