Mumbai: Amid excess capacity and rising competition, renewable energy firms in India are looking to diversify beyond their core businesses to capture a larger share of the value chain, improve margins through integration and enhance valuations, industry experts said.
India’s solar module manufacturing capacity surged from 11.1 gigawatts in March 2022 to 109.5 gigawatts by September 2025, data from Icra shows. This surge has even prompted lenders to go cautious on lending to the sector, Mint reported on 19 March.
Pure play companies in businesses such as solar module manufacturing and renewable power production are looking to enter adjacencies to not only capture a larger share of the renewable energy value chain, but also to achieve better costs, and thus margins, through backward integration, they said. This also helps them attract customers by offering turnkey solutions, eliminating the need for the client to engage with multiple vendors.
Investors have also pushed companies to diversify to achieve better valuations over their pure-play peers that focus on one business, experts said.
Major players expanding
Companies such as , Vikram Solar, Premier Energies, ACME Group, and Suzlon Energy are some of the players who have diversified after scaling their core business. This is different from top conglomerates like the Adani Group, Tata Power and Reliance Industries Ltd, who planned a presence across the value chain since conceptualization.
“Diversification is one of the top themes in the renewable energy space right now,” said Harshraj Aggarwal, executive vice-president-institutional equity research at Yes Securities.
Backward and forward integration in the supply chain gives companies better control over the products and improves margins, he said. Backward integration is about manufacturing an input material that goes into your business, such as a solar module firm gradually starting to make cells, ingots, wafers and eventually polysilicon. Forward integration is using one’s products to further add value, like a solar module maker using its products to set up a renewable energy plant.
In a push for its energy transition goals, the government promotes localization of solar modules, its components and wind turbines through a host of policy measures.
Getting into adjacencies allows companies to bundle products to give better service to their customers, setting them apart from competition, Aggarwal said. Consider a solar module company also making batteries for energy storage systems, providing a power producer with the most critical equipment under one brand.
Waaree Energies, India’s largest manufacturer of solar modules and arguably one of the biggest winners of the renewable energy transition over the past decade, has also been the most aggressive of the lot in diversifying. Over the past year, the company directly or through its subsidiaries acquired a majority stake in transformer manufacturer Kotsons Pvt Ltd, transmission towers maker Associated Power Structures Ltd, smart meter maker Racemosa Energy (India) Pvt Ltd and power producer Enel Green Power India.
Additionally, Waree invested $30 million to acquire a strategic stake in an Oman-based maker of polysilicon via its subsidiary in the US to ensure traceable supply for its American customers. These acquisitions cost the company upwards of ₹2,700 crore, as per Mint’s calculation.
The company did not respond to request for a comment.
Its rival Premier Energies Ltd has gone on a similar track to acquire majority stakes in inverters maker Ksolare Energy Pvt Ltd and transformer maker Transcon Industries Ltd in recent months, cumulatively spending just under ₹600 crore. This month, it also set up a joint venture company to handle engineering, procurement and construction (EPC) work in the renewable energy space. The company is also organically expanding into battery container manufacturing for storage systems with an investment of ₹600 crore.
“So the idea is really by entering into these segments, we are growing our capture of the entire solar sector manufacturing opportunity,” Vinay Rustagi, chief business officer at Premier Energies told Mint in a recent interview.
Vikram Solar Ltd, another solar module maker, and ACME Solar Holdings Ltd, a clean power producer, have also diversified into battery energy storage systems (BESS) as the needs of the customers change from plain solar energy to firm and dispatchable renewable energy (FDRE). For FDRE, renewable power plants need battery storage to smoothen out the variations in solar and wind power generation.
“As renewable penetration increases, the focus is gradually shifting from standalone products to integrated energy solutions. Markets globally have shown that companies that expand into storage, energy management, and system-level solutions are better positioned to create long-term value,” said Arun Mittal, chief executive officer of VSL PowerHive, a BESS company set up by Vikram Solar. The company aims to build 5 gigawatt-hour of BESS manufacturing capacity by FY27 and 7.5 gigawatt-hour of battery cell manufacturing capacity by FY29, he said.
Nikhil Dhingra, the CEO of ACME Solar, said renewables firms diversify if they think they can have a strategic advantage like securing better pricing for their core business. “They may also diversify to stabilize their growth rate, revenue or profitability because there could be ups and downs in terms of demand for power or solar modules, et cetera,” he said.
Wind turbine maker Ltd had in February said it plans to diversify into project development, including identifying areas for future renewable energy development, purchasing land, securing regulatory approvals and grid connectivity, and finally engineering and construction of the project. The company is yet to announce a firm plan in this space but has reshuffled its leadership to free long-time CEO J.P. Chalasani to lead this diversification push.
The company did not respond to Mint’s request for a comment.