New Delhi: India could face an annual renewable energy financing shortfall of nearly $35 billion as it works towards its 500 GW non-fossil fuel capacity target by 2030, creating significant scope for Infrastructure Investment Trusts (InvITs) to recycle capital from operational renewable assets into new projects, according to Knight Frank India, ANI reported.
The country’s non-fossil fuel capacity has increased fivefold from 59 GW in 2016 to 300 GW as of July 2026, the real estate consultancy said in its latest research report. India now needs to add nearly 200 GW over the next four years, requiring annual capacity additions of about 50 GW.
Meeting this requirement would need annual investments of $48-54 billion, compared with the current annual investment of $13-18 billion, the report said.
With private developers accounting for more than 90% of India’s renewable energy capacity, recycling capital from existing projects is becoming increasingly important. InvITs can allow developers to monetise operational assets, free up funds and invest the capital in new renewable generation, storage and transmission projects.
However, the potential remains largely unused. Less than 2% of India’s operational renewable energy capacity has so far been monetised through InvIT structures, according to Knight Frank, ANI stated.
The financing challenge is further heightened by the cost of capital. Renewable energy projects in India remain nearly 80% more expensive to finance than similar projects in mature international markets, strengthening the case for alternative funding mechanisms.
“India’s renewable energy journey has now reached an inflection point where financing innovation will be as important as capacity addition,” said Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India.
He said InvITs could unlock capital tied up in operational renewable assets, gradually lower financing costs and speed up investment in new renewable energy, storage and transmission infrastructure.
Solar assets offer major opportunity
Operational renewable assets could also provide an attractive income opportunity for institutional investors. Renewable InvIT platforms backed by long-term power purchase agreements and predictable cash flows have delivered cash distribution yields of around 10-10.5%, the report said.
Solar power represents a particularly large opportunity. India has about 165 GW of installed solar capacity, but only 3 GW, or 2.3% of operational utility-scale solar assets, has been monetised through InvIT structures.
Knight Frank estimates that operational utility-scale solar assets worth around ₹3.1 lakh crore could potentially qualify for InvIT structures.
A deeper renewable InvIT market could reduce the sector’s dependence on traditional bank lending and bring more pension funds, insurers and global infrastructure investors into renewable energy financing.
It would also allow developers to recycle capital from existing projects into fresh capacity, while supporting India’s longer-term energy transition.
