PM Surya Ghar and PM-KUSUM drive India’s distributed solar capacity to 31.5 GW, but vast untapped potential remains
India’s distributed renewable energy (DRE) sector is witnessing rapid growth, with rooftop solar emerging as the biggest driver of clean energy adoption, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).
Backed by flagship government initiatives such as PM Surya Ghar Muft Bijli Yojana and PM-KUSUM, the country’s distributed solar capacity has expanded from 1.8 GW in FY2018 to 31.5 GW in FY2026, highlighting the growing role of decentralised energy systems in India’s clean energy transition.
The briefing note, titled “Role of Distributed Resources in Energy Transition: A Multi-Country Perspective,” compares the progress of distributed energy resources (DERs) across India, Australia and Bangladesh. It concludes that rooftop solar has become the single largest contributor to distributed renewable energy growth, offering affordable, reliable and low-carbon electricity close to where it is consumed.
India has massive untapped rooftop solar potential
The report notes that India possesses one of the world’s largest opportunities for distributed solar deployment. Government assessments estimate a technical rooftop solar potential of 637 GW, while more than 29 million agricultural irrigation pumps present another significant opportunity for solarisation.
According to IEEFA, flagship schemes including PM Surya Ghar and PM-KUSUM have accelerated rooftop solar adoption through subsidies, concessional financing and multiple implementation models such as CAPEX, RESCO/OPEX and utility-led approaches. These programmes have expanded market participation across both urban households and rural farming communities.
Despite the rapid expansion, distributed solar’s share within India’s overall renewable energy capacity has remained relatively stable at around 21-22%, primarily because utility-scale solar installations have grown at an even faster pace during the same period.
Gaurav Upadhyay, Lead Analyst – Sustainable Finance at IEEFA South Asia and co-author of the report, said the government’s policy support has created diverse business models that have significantly accelerated distributed renewable energy deployment across the country.
Australia leads global rooftop solar adoption
The report identifies Australia as a global leader in distributed energy adoption, with solar panels now installed on nearly 40% of households. Rooftop solar’s contribution to electricity generation in Australia’s National Electricity Market increased from almost zero to more than 13% between 2014 and 2025, while coal’s share declined from 75% to 52% during the same period.
The widespread deployment of rooftop solar has also driven wholesale electricity prices close to zero or even negative during daytime hours in several regions. Australia is now witnessing rapid growth in residential battery storage following the launch of federal battery incentives in 2025.
Bangladesh’s industrial rooftop solar gains momentum
Bangladesh is also experiencing strong momentum in distributed solar, led primarily by industrial rooftop installations. While official figures place rooftop solar capacity at 418.1 MW, IEEFA estimates actual installed capacity has already reached 667 MW across 239 industrial establishments, with the potential to approach 1 GW when smaller installations are included.
The report suggests that this growth has already contributed to reducing daytime electricity demand. Bangladesh also has substantial opportunities to replace diesel-powered irrigation systems with solar-powered alternatives, potentially adding 4 GW of solar capacity while significantly reducing diesel imports.
Policy reforms needed to unlock DER potential
Beyond country-specific findings, the report highlights several policy priorities that could accelerate distributed renewable energy adoption worldwide. These include expanding battery storage alongside rooftop solar programmes, faster deployment of smart meters, simplified approval processes and improved access to affordable financing for households, farmers and small businesses.
The authors conclude that distributed energy resources will play an increasingly important role in strengthening energy security, reducing electricity costs and supporting national decarbonisation goals. For India, unlocking its vast rooftop solar potential could become a critical pillar in achieving its long-term renewable energy ambitions while empowering consumers to actively participate in the country’s energy transition.