What made India’s net power capacity addition fall to its lowest in a year?

A weak monsoon and high power demand pushed thermal power plants to burn more coal to meet the country’s electricity needs, but new power capacity additions fell to 37%, the lowest in a year, during July-September this year, according to an analysis of Indian electricity sector data.

India added 10,038MW of net power generation capacity in 3Q 2026, a 37.5% decline YoY from 3Q 2025. Net capacity additions were at their lowest level in the past five quarters, falling 37.7% quarter-on-quarter (QoQ) from 16,119MW in 2Q 2026, says analysis by the Institute for Energy Economics and Financial Analysis (IEEFA).

Fossil fuel-based capacity additions also slowed, with coal additions falling while gas and diesel capacity declined due to retirements. Installed gas capacity of 978MW and 301MW of diesel capacity were retired in 3Q 2026.
India continues to wind down its gas-based power capacity because of high and volatile liquefied natural gas (LNG) prices, limited domestic gas allocation and competition from cheaper coal and renewables.

The West Asia crisis further highlighted the risks of dependence on imported fossil fuels. As a result, many gas plants have become economically unviable, underutilised, or inoperable. These reductions accounted for approximately 61% of the total 2,089MW retired during the quarter.

Renewables curtailment

Solar remained the largest contributor, adding 8,899MW, down 25.2% QoQ from 11,891MW in 2Q 2026. Wind additions rose 30.4% QoQ to 1,758MW, making it the only generation source to increase net capacity additions QoQ. Overall, the quarter saw a slowdown in net capacity expansion, driven by lower solar and coal additions and reductions in gas and diesel capacity.

Capacity additions slowed across most large states, with seven of the eight states recording a QoQ decline. Maharashtra saw the steepest fall with additions declining by 77% from 2Q 2026. Tamil Nadu’s additions also declined by 56% QoQ, with the slowdown coinciding with reports that the Tamil Nadu Green Energy Corporation Limited has not been inviting fresh applications for new solar and wind projects since March 2026, pending a policy for BESS. Karnataka was the only state to mark an increase in capacity additions this quarter, rising 48% QoQ.

Another constraint on states’ renewable energy increase is renewable energy curtailment. In September 2026, a total of approximately 378 million units (MUs) of renewable energy was curtailed (314MUs of solar and 64MUs of wind). Of this, Gujarat recorded the highest renewable energy curtailment at 187.76MUs, followed by Rajasthan at 110MUs.

Solar accounted for most curtailment in both states, and in Karnataka (21.07MUs). Tamil Nadu (12.93MUs), meanwhile, recorded more wind curtailment. These have been attributed to transmission constraints, limited BESS capacity, and insufficient grid flexibility.

However, the quarterly slowdown does not necessarily indicate a loss of momentum in states’ overall renewable energy deployment. Uttar Pradesh, for example, crossed 10GW of installed renewables capacity in 2026, and its quarterly additions rose 168% YoY, from 340MW in 3Q 2025 to 912MW in 3Q 2026.

Andhra Pradesh also recorded a nearly four-fold increase in annual renewable energy capacity additions, from 1,085MW in financial year (FY) 2024-2025 to 3,866MW in FY2025-2026. This growth was attributed to the state’s Integrated Clean Energy Policy, improved transmission connectivity, faster approvals.