How India is paving the way for a sustainable energy future

With progress in renewable energy, green hydrogen, and energy storage, the country is set to meet its clean energy goals.

In brief

• India must take immediate action through policy changes, technological advancements, and structural reforms to achieve net-zero emissions by 2070.
• India faces a crucial juncture in balancing rising energy demands with global climate commitments on its path to a low-carbon economy.

India is poised at a critical juncture, navigating the path toward a sustainable and inclusive energy future. As the world’s most populous country and a fast-growing economy, achieving net-zero emissions by 2070 requires urgent action across policies, technologies, and reforms. With an installed capacity of 462 GW (as of December 2024), 45% from renewables, India’s energy transition is key to strengthening energy security, mitigating climate risks, and driving economic growth, positioning the country as a global leader in clean energy.

Transforming India’s energy mix

• Coal remains crucial to India’s energy strategy, ensuring grid stability and fuel security amid rising demand. With significant contributions to employment, government revenues, and transportation, coal’s role persists even as renewables grow. Record coal production in FY 2023-24 highlights its continued importance in maintaining energy resilience and meeting base-load needs.
• India aims for net-zero emissions by 2070, with key targets of 500 GW renewable energy in India by 2030 and a 45% reduction in GHG emissions intensity.
• India’s renewable energy capacity grew from 78 GW in FY 2014-15 to 199 GW in FY 2023-24, with solar accounting for 80% of new capacity. To meet its 500 GW target by 2030, 90 GW is under construction and 44 GW in development. The government plans to tender 50 GW annually until FY 2027-28. 

Driving India’s renewable energy expansion

India is accelerating its renewable energy (RE) expansion across solar, wind, hydropower, and green hydrogen, demonstrating its commitment to a sustainable energy future.

Solar energy in India, growing at 36.5% CAGR, is driven by initiatives like PM KUSUM and PM Surya Ghar-Muft Bijli Yojana, targeting 30 GW of residential solar. Wind energy, with 46.42 GW installed, is advancing through offshore projects, turbine repowering, and hybrids, supported by INR7,453 crore funding. Hydropower is set to grow over 50% to 67 GW by 2031-32, but untapped potential and project delays in the North-Eastern and Northern regions remain challenges.

India’s commercial and industrial sector is contributing significantly, adding 2,011 MW of renewable capacity in Q3 2024, driven by corporate PPAs and rooftop solar. The Renewable Purchase Obligation (RPO) continues to ensure consistent RE adoption, with ambitious targets set for 2024-25 and 2029-30.

The green hydrogen sector is ready for exponential growth, with the National Green Hydrogen Mission targeting 5 MMT production by 2030. Supported by INR19,744 crore in investments and export opportunities to global markets, green hydrogen is emerging as a cornerstone of India’s RE expansion strategy.

Unlocking energy storage potential in India

India’s energy storage sector is set for robust growth, driven by the rising demand for storage solutions to support the country’s expanding renewable energy capacity. The government is actively fostering the adoption of BESSs and PSPs through financial incentives, regulatory measures like ESO, and dedicated policy initiatives. Landmark projects, such as the 40 MW BESS project in Chhattisgarh, demonstrate significant progress in integrating energy storage with the grid. With projections for BESS capacity reaching 47.23 GW by 2031-32, India’s energy storage infrastructure is evolving through diverse tenders aimed at enhancing grid stability, scalability, and the seamless integration of renewable energy.

Driving India’s energy transition in transport through EVs

India’s transport sector, contributing 18% to GHG emissions, faces challenges, with road transport—mainly trucks—being the largest emitter. Electric vehicles (EVs) offer a solution, potentially cutting CO₂ emissions by 18% and saving US$14 billion in oil imports by 2030. Achieving 30% EV sales requires major charging infrastructure upgrades, as the current ratio of one station per 135 EVs lags behind global standards. In FY2023, US$3.6 billion was invested, supported by government schemes like FAME, PM E-Drive, and PLI, along with state policies and reduced GST on lithium-ion batteries.

Driving India’s green energy financing

India’s green transition demands US$150-200 billion annually, however, despite raising US$44 billion in 2019-20, barriers like high capital needs, long payback periods, and technological risks persist. To address this, the government has introduced sovereign green bonds, green deposit guidelines, and SEBI’s BRSR framework. Investments are surging in solar, wind, EVs, green hydrogen, and energy storage, with climate tech funding quadrupling since 2019. Blended finance, public-private partnerships, and development finance institutions are crucial to mitigating risks and mobilizing private capital.

Building a resilient energy ecosystem

India’s growing electricity demand accentuates coal's vital role in energy security, even as RE sources account for 45% of installed capacity. 

• Flexibilization of coal plants: Flexible operations are crucial for balancing RE intermittency. Coal plants must lower minimum loads to 40%, ramp up at 3% per minute, and adopt two-shift operations using advanced technologies like predictive analytics and flexible boilers. Regulatory frameworks are needed to manage costs, auxiliary consumption, and CAPEX, ensuring smooth RE integration and grid stability.
• Renovation and modernization (R&M): R&M enhances plant life, efficiency, and environmental compliance. The CEA plans phased upgrades for 148 aging units (38,150 MW) from 2024 to 2033, focusing on high-capacity plants. Streamlined guidelines, sustainability measures, and private sector participation are key to optimizing the energy mix.

Strengthening transmission infrastructure for RE expansion

India’s transmission planning aligns national and state strategies to support RE growth under the National Electricity Plan. Policy reforms like PoC charges and GNA enhance market efficiency and grid reliability. Strengthening intrastate transmission is crucial for managing RE variability, balancing power imports, and reducing energy curtailment.

Empowering the distribution sector for future challenges

Privatization in India's electricity distribution has improved efficiency in urban areas like Delhi, Odisha, and Bhiwandi, reducing AT&C losses. However, scaling this to rural regions faces challenges, including job loss concerns, the welfare of state-run discoms, and resistance from state governments. The National Electricity Plan 2022-32 supports privatization to improve power quality and reliability, using two models: the Distribution Franchisee Model (private operations without asset ownership) and the Distribution Licensee Model (private entities managing both assets and operations). A phased, region-specific approach is crucial to overcome challenges and attract private investment.