Budget 2026: Renewable energy sector seeks support for manufacturing, storage and green hydrogen

The PM Surya Ghar programme, whose second anniversary coincides with the budget, has achieved nearly 27% of its 10-million-household target, so far.

• India added 44.5 GW renewable energy in 2025, led by solar and rooftop adoption.
• Industry requests Budget 2026 aid for manufacturing, storage, and green hydrogen.
• Record low solar-storage tariffs underscore storage's energy transition role

Did our AI summary help?

India’s renewable energy sector is pushing for a policy reset in Budget 2026 that moves beyond headline capacity addition to building scale across manufacturing, storage and emerging clean-energy technologies such as green hydrogen.

The backdrop is a strong year for clean energy. India added close to 50 GW of power generation capacity in 2025, largely driven by renewable energy (44.5 GW), compared with 28 GW in the previous year, according to industry estimates.

Rooftop solar adoption under the PM Surya Ghar Muft Bijli Yojana also picked up pace — more than 27 lakh households have installed systems, so far.

Cost economics has further strengthened the case for renewables, with solar power bundled with four-hour battery storage discovering a record low tariff of Rs 2.7 a unit, reinforcing the role of storage-backed clean power in India’s energy transition.

Big Trends

• Manufacturing-led scale-up: With more than 100 GW of annual domestic solar module manufacturing capacity now in place under the government’s production-linked incentive (PLI) scheme, industry expects Budget 2026 to reinforce localisation across the renewable value chain, including ingots, wafers, batteries and energy management systems, to support sustained capacity addition.
• Storage becomes indispensable: As renewable penetration rises, energy storage is emerging as a core enabler, with industry seeking expanded and more flexible viability frameworks to support large-scale battery deployment alongside solar and hybrid projects.
• Green hydrogen moves up the agenda: Green hydrogen is increasingly seen as a strategic pillar of the clean energy transition, particularly for hard-to-abate sectors, with industry bodies calling for demand-side policy signals to unlock investments and manufacturing scale.
• Rooftop solar shifts to execution mode: With early adoption under PM Surya Ghar gaining traction, the focus is now on accelerating implementation at scale by addressing funding, supply-chain and system-level constraints.

Major Challenges

• Limited viability support for utility-scale energy storage
• Need for deeper domestic value addition across solar, battery and electrolyser supply chains
• Domestic Content Requirement (DCR) bottlenecks affecting rooftop solar deployment
• Lack of demand certainty slowing green hydrogen project development

What industry want from Union Budget 2026

Industry leaders see Budget 2026 as a decisive moment to anchor India’s renewable energy growth in manufacturing strength and system-level capability.

“The Union Budget 2026 is a critical opportunity to move India decisively into the next phase of its clean energy transition, where energy storage becomes as central as generation,” Waaree Energies executive director Sunil Rathi told Moneycontrol.

Rathi said policy must strengthen three core pillars: deeper support for vertically integrated manufacturing spanning solar, batteries and energy management systems; a more flexible viability framework for large-scale storage, particularly when integrated with solar and hybrid projects; and a sharper focus on domestic value addition to drive skilled employment and long-term competitiveness.

“When solar and storage scale together, India’s clean energy journey moves from capacity creation to system leadership,” he said.

Industry body the Confederation of Indian Industry (CII) has also highlighted green hydrogen as a key budget priority.

CII director general Chandrajit Banerjee said Budget 2026 must send clear demand-side signals to accelerate the hydrogen ecosystem. “To accelerate the green hydrogen ecosystem, there is a need for clear demand-side signals, including appropriate mandates, along with continued fiscal and policy support,” Banerjee said. “Such measures are critical to improve project viability, crowd in private investment and enable large-scale domestic manufacturing of electrolysers and related clean energy equipment.”

Experts also stressed the importance of material security in sustaining the clean energy transition.

“Rising material demand amid geopolitical challenges makes a circular economy a strategic imperative for national security and economic growth,” said Dr Akanksha Tyagi, Programme Lead, Council on Energy, Environment and Water (CEEW).

She said CEEW estimates circularity across seven sectors could unlock a Rs 11.5 lakh crore annual market by 2047, create 8.4 million jobs and attract Rs 10.8 lakh crore in investments, adding the Budget should announce a National Mission on Circular Economy.

With the Budget coinciding with the second anniversary of PM Surya Ghar, rooftop solar implementation is also under scrutiny. Bhawna Tyagi, Programme Lead, CEEW, said while the scheme has already achieved nearly 27 percent of its 10-million-household target, India has a realistic residential rooftop solar potential of 118 GW, based on current consumption levels. "To unlock this potential, the budget must prioritise additional fund allocations, strengthen system readiness and resolve DCR-related supply bottlenecks,” she said.

According to Anujesh Dwivedi, Partner, Deloitte India, record capacity additions, falling solar-plus-storage tariffs and expanding rooftop adoption underline the need for policies that support decentralised renewables, manufacturing localisation and storage-led integration, ensuring the sector’s growth remains sustainable over the medium term.