At India Infrastructure Forum 2025, sessions on electricity, renewable energy, and emerging clean energy technologies brought together key stakeholders to deliberate on the future of India’s power sector. The discussion focused on defining sectoral targets for 2030, devising effective strategies to achieve them, identifying emerging opportunities and addressing critical challenges that could impact the sector’s growth and transformation. Edited excerpts…
State of the sector
India’s power demand continues its upward trajectory. In 2024, the country successfully met a peak demand of 250 GW. The projections indicate a substantial increase, with peak demand expected to reach 335 GW during daytime hours by 2030, and approximately 325 GW during non-solar hours. The primary goal is to meet this peak demand in a reliable manner. The peak demand has grown by 10-15 GW every year. Going forward, the sector anticipates a 15-20 GW increase in demand every year.
Over the past decade, the power sector has seen remarkable progress, with installed capacity nearly doubling from 249 GW to 475 GW. Looking ahead, plans are in place to expand this capacity further to 777 GW. As the country’s power demand grows, there is a focus on meeting this demand from non-fossil energy sources. Currently, renewable energy constitutes 48 per cent of the total installed capacity, with a target of reaching 64 per cent by 2030, broadly outlining the sector’s strategic direction.
Transmission lines are becoming increasingly critical as renewable energy penetration increases. Recognising this, India has significantly strengthened its national grid over the past decade, adding almost 200,000 ckt km. Currently, the grid stands at 492,000 ckt km, with plans to add another 130,000 ckt km over the next five years. A strategic approach is to distribute renewable energy generation across states to minimise the length of new lines and, where feasible, expand state grids.
Plans for evacuating over 200 GW of capacity at the interstate transmission system (ISTS) level have already been approved. To address right-of-way challenges, the central government has increased compensation for landowners by linking it to the market value of land. This move is expected to facilitate the laying of transmission lines, especially in peri-urban and urban areas.
Tariff-based competitive bidding has proven successful in accelerating the expansion of transmission capacity. The growing private sector participation in ISTS, with approximately 15 per cent privately owned and operated (higher in new projects), is a strong indicator of this trend. Over the past one to two years, private investors have accounted for about 50 per cent of the ISTS, with the remaining share held by Powergrid, a positive sign for the sector’s future.
In the distribution segment, aggregate technical and commercial losses have declined from around 23 per cent to 16 per cent over the past decade. The target is to further reduce these losses to 10-12 per cent to attract investment and ensure assured returns, actively supported by the government through policy initiatives aimed at improving sector viability.
With regard to rural electrification, the Electricity Act, 2003 was introduced to address two major challenges: access to electricity and financial viability. Since then, significant progress has been made on the access front – all villages and willing households are now connected to the electricity grid. Transmission and distribution (T&D) networks have expanded significantly, extending to remote areas through various government initiatives. The issue of inadequate generation capacity, where demand exceeded supply, has largely been resolved with private investment. While the government continues to focus on improving financial viability, this remains a key challenge. Although power generation has been liberalised, T&D networks remain natural monopolies, whether publicly or privately owned.
Renewable energy integration
The primary challenges associated with renewable energy pertain to intermittency and variability. These factors directly impact the grid and power despatch. India’s robust national grid, connecting various generation sources, serves this purpose effectively, providing support in case of renewable energy variability. To manage the uncertainty associated with despatchable power from renewables, renewable energy management centres (REMCs) have been established for forecasting. Based on the accuracy of these forecasts, the grid’s uncertainty can be kept under control. Currently, there are 13 REMCs, with plans to augment and upgrade their technology to incorporate more artificial intelligence (AI) and machine learning for highly accurate forecasting.
A key challenge with renewable energy, unlike conventional power plants, is that generation locations are predetermined by resource availability, such as solar irradiance and wind speeds. This necessitates the installation of solar and wind capacities in these resource-rich areas, requiring extensive transmission lines to deliver electricity to consumption centres. Given the low gestation period (typically 12-18 months) of renewable energy projects compared to transmission infrastructure, planners are now undertaking renewable energy potential-based planning. This involves the construction of transmission corridors in line with future renewable energy capacity.
There is a growing focus on the adoption of controllable transmission resources, including various high voltage direct current (HVDC) systems and static synchronous compensators, to manage variability, resulting in more flexible grids. These high-capacity HVDC links, requiring 48-54 months for construction, are being built to accommodate future potential, and connectivity is granted based on their ongoing progress.
The panellists highlighted that while solar energy appears cost-competitive with traditional power sources, this is largely due to subsidies, particularly from interstate transmission charges waivers. When true costs are factored in, including necessary battery storage systems needed to address renewable energy variability, experts estimate an additional tariff cost of Re 1-Rs 2 per unit. Furthermore, as renewable capacity increases in the energy mix, concerns about curtailment are rising given the intermittent nature of renewables. Thus, it was noted that round-the-clock (RTC) renewable energy solutions, though 40-50 per cent more expensive than stand-alone solar, are becoming increasingly important for ensuring reliability.
The discussion also covered international dynamics, including how US tariffs on Chinese solar products may create export opportunities for Indian manufacturers, provided domestic manufacturing capacity scales up. Regulatory uncertainties were highlighted, particularly regarding the implementation of the Approved List of Models and Manufacturers (ALMM) for solar cells (now applicable from June 2026) and the impact of anti-dumping duties on components such as glass, which impact overall project costs.
The panel also addressed the varied financial health of discoms, noting that investors strongly prefer renewable energy projects where central PSUs are offtakers or intermediaries, rather than ones for which tenders are floated by state agencies with financially weaker state discoms.
Key issues reiterated by the panellists included grid integration and evacuation issues as commissioning timelines of transmission projects are much longer than those of renewable energy projects; lack of regulatory clarity around energy storage; land acquisition; and policy uncertainties related to domestic manufacturing requirements such as the ALMM.
Despite these challenges, the investment landscape remains robust, with a new class of investors, including oil and gas companies, entering the renewables space to meet their climate targets. Investors are particularly focused on projects with strong execution capabilities, experienced teams, and secured access to land and equipment. Commercial and industrial customers represent significant growth opportunities, and are demanding RTC renewable energy solutions. Additionally, offshore wind projects and repowering of old wind projects were identified as potential growth areas.
New and emerging areas in clean energy and the way forward
The panel discussions highlighted that there is no single solution for achieving decarbonisation goals. Experts emphasised that the clean energy transition entails a dramatic shift – replacing fossil fuels developed over centuries within a short time frame. India’s unique position was highlighted, given its high dependence on fossil fuel imports, making strategic technology
selection crucial.
With global temperatures already exceeding the 1.5 °C threshold despite seasonal variations, the panel emphasised the need for strategic sector-specific technology applications rather than universal solutions. For instance, while green hydrogen may not be ideal for mobility, where electric vehicles are succeeding, it is the only viable solution for decarbonising steel production. India’s draft climate finance taxonomy was appreciated as a critical step towards bridging the climate finance gap.
The National Green Hydrogen Mission targets 5 million metric tonnes of annual green hydrogen production by 2030 (1.5 million for domestic consumption and 3.5 million for exports), but currently only about 0.7 per cent of this target is either operational, or being commissioned or is in the final investment decision stage. A major bottleneck is the substantial cost gap between green hydrogen and grey hydrogen. To bridge this gap and stimulate demand, hydrogen purchase obligations are being advocated, proposing gradual mandates that begin at 1-2 per cent and scale up to 10 per cent by 2030. The strategy emphasises that even modest initial conversions from grey to green hydrogen can catalyse market formation, leveraging existing infrastructure while delivering co-benefits such as reduced ammonia imports and improved energy security. Furthermore, drawing parallels with India’s successful scale-up of solar and electric mobility, both of which benefited from early-stage government mandates, the discussion stressed that regulatory support can overcome initial economic hurdles and drive long-term market transformation.
In the compressed biogas segment, several positive factors were highlighted: supportive government policy under the SATAT scheme, mandates for national oil companies to enter into joint ventures in this space, the expansion of city gas distribution networks, and opportunities for blending with compressed natural gas. However, the sector faces significant hurdles including small project scales, technology uncertainties, feedstock reliability concerns and regulatory complications, particularly for foreign investors that cannot directly acquire agricultural land for growing feedstock under India’s foreign investment rules. Additionally, underdeveloped carbon credit markets for biogas projects limit an important revenue stream for improving project viability.
The discussion also highlighted corporate sustainability initiatives as various Indian companies have their own net zero and renewable energy adoption targets. This approach is now driving company-wide transformations, including increased investments in clean energy, the phasing out of thermal power plants, acceleration of electric vehicle development, and exploration of green steel production despite significant economic challenges. Carbon capture was discussed as a necessary technology for industries such as steel production, where blast furnaces designed for coal will continue to operate. However, current implementations remain small scale with limited use cases for captured carbon.
The co-location of generation sources is particularly important for optimising the use of existing transmission infrastructure. The Central Electricity Regulatory Commission recently released a draft proposal aimed at maximising the utilisation of transmission lines originally designed to evacuate solar power. They often remain underutilised during night-time hours. The proposal encourages setting up additional capacity at the same site, supported by battery storage, to enable power evacuation during non-solar hours. This approach is critical for meeting demand beyond daylight hours.
While battery energy storage system projects are quite complex to install, they benefit from relatively low operational expenditure. To promote their adoption, the government has launched a viability gap funding scheme that provides financial support for 13 GWh of battery storage capacity. The broader goal, as per Central Electricity Authority (CEA) estimates, is to achieve 40 GWh of battery storage by 2030-32.
The CEA has taken initiatives to accelerate the development of pumped storage plant projects as well. It has reduced the time required for project facilitation and detailed project report approvals. Additionally, budgetary allocation has increased, with financial assistance of up to Rs 7.5 million per MW now permitted. The CEA plans to achieve 30-40 GW of pumped storage capacity.
For nuclear energy, the government is planning policy and regulatory relaxations to attract private sector participation. For hydropower, there are plans to install new capacity in the north-eastern states, with central PSUs actively engaged in these developments.
In line with the vision of Viksit Bharat 2047, achieving energy independence will require the domestic manufacturing of critical equipment and technologies. However, to achieve this goal, several challenges must be addressed. These include supply chain disruptions due to geopolitical factors and limitations in local manufacturing capacity. The development of longer transmission lines capable of carrying high power across vast distances, particularly through HVDC systems, is essential and must be supported through domestic production. Additionally, the key areas for strengthening include the domestic manufacturing of gas-insulated substations and aluminium-based equipment.
To conclude, India’s power sector is at a pivotal moment of transformation. With well-defined targets for capacity expansion, renewable energy integration and decarbonisation, the future road map is both ambitious and firmly rooted in progressive policies. Going forward, the strategic selection of priority sectors where specific clean technologies can make the greatest impact, along with regulatory certainty, technological innovation, robust transmission infrastructure, financial health of discoms and stronger domestic manufacturing, will be critical to achieving the sector’s vision for 2030 and beyond.
Based on remarks by Rimali Batra, Partner, DSK Legal; Ajay Dua, Director, NTPC Limited; Dr Srikant Nagulapalli, Additional Secretary, Ministry of Power; Dr Puneet Tyagi, CGM (Engg. HVDC), Power Grid Corporation of India; Pallavi Bedi, Partner, Phoenix Legal; Sangeeta Kaushik, Director, NTPC Green Energy Limited; Mukul Modi, Executive Vice President, SBI Capital Markets; Sourabh Mukherjee, Executive Vice President, Clean Energy and Sustainability, Tata Projects; Nayantara Nag, Partner, Trilegal; Prasanto K. Roy, India Hydrogen Alliance & MD, FTI Consulting, at India Infrastructure Forum 2025
