Advantage India
Growing
Demand
*India emerged as the world’s third-largest producer of wind and solar energy electricity in 2025, behind US and China, according to the sixth edition of Ember’s Global Electricity Review. The report highlighted that wind and solar accounted for 17% of global electricity generation in 2025, with India’s share at 14%.
*India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 513.79 GW as of December 2025.
*In December 2025, India’s electricity demand reached a record 2,41,213 Megawatt (MW), with 2,41,201 Megawatt (MW) supplied, up from earlier peaks in October and November, reflecting rising consumption amid economic growth, per the National Load Despatch Centre (NLDC).
Attractive
Opportunities
*Launched in 2023 under the National Green Hydrogen Mission, this scheme focuses on promoting the domestic production of green hydrogen and electrolyzers. With a budget allocation of INR 174.9 billion (US$2 billion) as part of the larger INR 197.44 billion (US$2.25 billion) mission, this scheme aims to produce 5 million metric tonnes (MMT) of green hydrogen annually by 2030.
*According to a report by Motilal Oswal, the Indian power sector presents an investment opportunity worth Rs. 40,00,000 crore (US$ 461.95 billion) over the next decade, driven by rising demand, infrastructure upgrades, and the transition to clean energy.
*India's wind energy sector is making significant strides towards achieving the ambitious target of 100 GW of production by 2030, according to the Indian Wind Turbine Manufacturers Association (IWTMA).
Policy
Support
*India has unveiled a comprehensive plan worth Rs. 9.15 lakh crore (US$ 109.50 billion) to enhance its power infrastructure and meet a projected demand of 458 GW by 2032. This initiative, led by the Ministry of Power under Prime Minister Narendra Modi, aims to strengthen the national power grid and boost energy security.
*100% FDI allowed in the power sector has boosted FDI inflow in this sector.
*Under the New Solar Power Scheme, works valued at Rs. 50 crore (US$ 5.66 million) have been sanctioned for the off-grid solar-based electrification of 9,961 households, as of 30 June 2025.
Higher
Investments
*India’s power sector is expected to attract investment worth Rs. 17 lakh crore (US$ 205.31 billion) in next five to seven years.
*Over the next decade, India plans to invest Rs. 42,00,000 crore (US$ 488.37 billion) to upgrade its power sector, modernizing renewable energy, battery storage, and transmission networks to meet rising demand.
*Following the enactment of the landmark Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act in December 2025, India has unlocked the world's largest untapped nuclear market, targeting over US$ 214 billion in investments to achieve a 100 GW capacity by 2047.
*India’s thermal power sector is set to attract Rs. 2,30,000 crore (US$ 26.71 billion) in investments by 2027-28, with private players contributing around one-third, supporting the addition of 80 GW capacity by 2031-32.
Introduction
Power is one of the most critical components of infrastructure, playing a central role in economic growth and social development. For India, building and maintaining adequate power infrastructure has been vital to sustaining high growth and improving quality of life. Guided by the principle of universal access to affordable and sustainable electricity, the Ministry of Power has transformed the sector in recent years by creating a single national grid, strengthening distribution networks, and achieving near-universal household electrification.
India’s power sector is among the most diversified in the world, drawing from conventional sources such as coal, lignite, natural gas, oil, hydro, and nuclear power, as well as non-conventional sources including wind, solar, and biomass.
Rapidly rising electricity demand continues to drive capacity expansion, making large-scale additions to generation capacity essential for the future. India emerged as the world’s third-largest producer of wind and solar energy electricity in 2025, behind US and China, according to the sixth edition of Ember’s Global Electricity Review.
The report highlighted that wind and solar accounted for 17% of global electricity generation in 2025, with India’s share at 14% in 2025. It is also the only G20 nation on track to meet its Paris Agreement targets. The country’s wind energy sector, in particular, is advancing steadily toward the ambitious goal of 100 GW by 2030, according to the Indian Wind Turbine Manufacturers Association (IWTMA).
Electricity demand has been rising sharply. In FY25, India consumed 1,622.97 billion units of electricity, an increase of 32% over FY21, translating into a 5-year CAGR of 7.17%. Peak power demand is expected to reach 277 GW in FY26, and overall energy demand is projected to grow at 6-6.5% annually over the next five years, underscoring the scale of opportunities and challenges for the sector.
Market Size
India is the third-largest producer and consumer of electricity in the world, with an installed capacity of 523.79 GW as of December 2025. In FY25, the country generated 1,829.70 BU of power, a 5.21% YoY increase over FY24.
In December 2025, India’s electricity demand reached a record 2,41,213 Megawatt (MW), with 2,41,201 Megawatt (MW) supplied, up from earlier peaks in October and November, reflecting rising consumption amid economic growth, per the National Load Despatch Centre (NLDC).
The sector continues to see rapid growth in renewable energy. India added a record 37.91 GW renewable capacity in 2025 (April-December), surpassing fossil fuels in total clean energy capacity for the first time and advancing towards its 500 GW non-fossil fuel target by 2030.
By the end of December 2025, solar energy contributed 135.81 GW, wind 54.51 GW, biomass 10.76 GW, small hydropower 5.16 GW, waste-to-energy 0.86 GW, and hydropower 50.91 GW. Nuclear power capacity stood at 8.78 GW.
India recorded its highest renewable energy share as renewables met 51.5% of the country’s 203 GW electricity demand in July 2025, up from 6% in FY15. India’s Nuclear Energy Mission sets a target of achieving 100 GW of nuclear power capacity by 2047. Renewable growth has been matched by record investments.
In June 2025, capacity surged 420% YoY, led by solar at 117 GW and wind at 51.7 GW, supported by Rs. 84,309 crore (US$ 9.8 billion) of investments in Q1 2025. Financing support is also expanding, with bank loans to renewable energy under Priority Sector Lending (PSL) reaching Rs. 7,558 crore (US$ 874.1 million) in April 2024-January 2025, prompting proposals for a dedicated sub-target for green projects.
Thermal power continues to play a dominant role. India had 219.61 GW of installed coal capacity as of December 2025, supported by record coal production of 1,047.68 MT. Power shortages fell sharply to 0.1% in FY25 from 4.2% in FY14, underscoring improved supply reliability. Thermal plant load factors are expected to improve to 63% in FY24, driven by strong demand growth and limited new capacity addition.
Electricity consumption remains led by industry at 41.8%, followed by households at 24.3%, agriculture at 17%, and commercial use at 8.3%. Consumption growth has been steady, with power use rising 33% between FY21 and FY25 at a five-year CAGR of 7.4%. India met a record peak demand of 241.2 GW in December 2025, highlighting the scale of demand growth.
The investment outlook for the sector remains robust. According to Motilal Oswal, the Indian power sector offers an investment opportunity of Rs. 40,00,000 crore (US$ 461.95 billion) over the next decade, driven by rising demand, infrastructure upgrades, and a transition toward clean energy.
Developments/Investments
Power is one of the key sectors attracting FDI inflow into India, and it accounted for about 2.65% of the total FDI inflow until June 2025. From April 2000-June 2025, India recorded FDI inflow worth Rs. 1,69,772.12 crore (US$ 23.05 billion) in the non-conventional energy sector. Total FDI inflows in the power sector reached Rs. 1,21,734.99 crore (US$ 19.8 billion) between April 2000-June 2025, accounting for 2.7% of the total FDI, underscoring strong investor confidence and the sector’s long-term growth potential.
Some major investments and developments in the Indian power sector are as follows:
- The Union Budget has allocated Rs. 48,396 crore (US$ 5.48 billion) to the power sector, encompassing investments in new and renewable energy. This represents a 30% increase from the previous year's outlay of Rs. 37,143 crore (US$ 4.20 billion).
- The PM-KUSUM scheme (Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan) has received Rs. 2,600 crore (US$ 294.20 million), up from Rs. 2,525 crore (US$ 285.71 million) in FY25.
- Power Finance Corporation Limited (PFC) has entered into a Memorandum of Understanding (MoU) with the Government of Madhya Pradesh, under which it will provide financial support of Rs. 26,800 crore (US$ 3.17 billion) to the state's power utilities.
- Over the next decade, India plans to invest Rs. 42,00,000 crore (US$ 488.37 billion) to upgrade its power sector, modernizing renewable energy, battery storage, and transmission networks to meet rising demand.
- Following the enactment of the landmark Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act in December 2025, India has unlocked the world's largest untapped nuclear market, targeting over US$ 214 billion in investments to achieve a 100 GW capacity by 2047.
- India and Canada are nearing a Rs. 24,982 crore (US$ 2.8 billion), 10-year uranium-supply agreement under which Canada’s Cameco Corp. would provide uranium fuel to support India’s expanding nuclear power programme.
- On October 30, 2025, India and Nepal agreed to develop two new 400 kV cross-border transmission lines, connecting Inaruwa to New Purnea and Lamki (Dodhara) to Bareilly, to strengthen electricity trade and regional grid integration.
- India aims to cut green hydrogen costs from Rs. 401.60 (US$ 4.50) per kg to Rs. 89.24 (US$ 1) per kg by 2030, according to former NITI Aayog CEO Mr. Amitabh Kant.
- India plans to double capex to Rs. 72,72,600 crore (US$ 850 billion) by 2030, with Rs. 25,66,800 crore (US$ 300 billion) directed to power and transmission, led by NTPC, Tata Power, and Power Grid Corporation.
- The International Solar Alliance (ISA), launched by India and France at the 21st Conference of the Parties (COP21) in 2015, the ISA of 100+ countries aims to mobilise Rs. 86,09,000 crore (US$ 1 trillion) by 2030. It aims cut solar costs, and promote affordable clean energy, especially for Least Developed Countries (LDCs) and Small Island Developing States (SIDS).
- India’s thermal power sector is set to attract Rs. 2,30,000 crore (US$ 26.71 billion) in investments by 2027-28, with private players contributing around one-third, supporting the addition of 80 GW capacity by 2031-32 and ensuring stable base load energy alongside renewable growth.
- India’s energy storage sector is poised to attract an investment of Rs. 4,79,000 crore (US$ 56.07 billion) by 2032, as per the India Energy Storage Alliance (IESA).
- Adani Group will invest US$ 60 billion in power by FY32 to build 50 GW renewable capacity, expand transmission to 30,000 km, and strengthen coal-based baseload to support India’s 1,000 GW capacity target.
- On September 6, 2025, Adani Power has signed an agreement with Bhutan’s Druk Green Power to develop the 570 MW Wangchhu hydroelectric project with Rs. 6,000 crore (US$ 700.2 million) investment, marking the first project under their 5,000 MW hydropower partnership.
- Hindustan Power has signed a 25-year Power Purchase Agreement (PPA) with Uttar Pradesh Power Corporation Limited (UPPCL) for a 435 MW Direct Current (DC) solar project, supporting the state’s 22,000 MW clean energy goal by FY27 and boosting private sector participation in renewable growth.
- Tata Power, with 43% of its portfolio in green energy, plans to invest 60% of its Rs. 1,46,000 crore (US$ 16.96 billion) capex to expand renewable capacity to 23 GW by FY30, supporting India’s 500 GW non-fossil fuel target.
- On August 21, 2025, PFC signed a US$ 175.78 million loan agreement with Germany’s KfW, to fund projects under the Revamped Distribution Sector Scheme (RDSS) and strengthen India’s power distribution sector.
- In July 2025, NHPC Ltd signed a MoU with IIM Jammu to drive leadership development, capacity building, and research collaboration. The partnership will deliver executive training, joint case studies, and knowledge-sharing platforms to build a future-ready workforce.
- On July 27, 2025, NHPC Ltd and Indian Oil Corporation Ltd (IOCL) signed an MoU to jointly develop pumped storage, hydroelectric, and renewable energy projects in India and overseas, aimed at accelerating clean energy expansion and strengthening their renewable portfolios.
- Avaada Group announced on April 29, 2025, that it has signed an initial agreement with the Maharashtra government to develop two pumped storage projects in the state, with a combined capacity of 3,600 megawatts (MW). The projects, which include the 2,400 MW Pawana Falyan and the 1,200 MW Sirsala, will require a cumulative investment of Rs. 15,100 crore (US$ 1.77 billion).
- On April 21, 2025, DVC and Coal India Ltd signed an MoU to develop a Rs. 16,500 crore (US$ 1.92 billion) 2x800 MW ultra-supercritical coal power plant at Chandrapura and explore additional thermal and green energy projects.
- On April 21, 2025, Prime Minister Mr. Narendra Modi inaugurated the first 660 MW unit of the 1,320 MW Buxar Thermal Power Project by SJVN, a Rs. 13,757 crore (US$ 1.6 billion) investment to enhance power supply in Bihar and the Eastern Region.
- India has achieved a historic milestone, surpassing one billion tonnes of coal production in FY24, reinforcing its commitment to energy security and self-reliance. The country produced 997.83 million tonnes of coal during the fiscal year, marking a significant step towards reducing import dependence and strengthening domestic energy supply.
- Bharat Heavy Electricals Limited (BHEL) and Hitachi Energy India have secured a contract from Adani Energy Solutions to develop India’s largest private power transmission project, valued at Rs. 12,000 crore (US$ 1.41 billion). The project aims to establish high-voltage direct current (HVDC) terminals to facilitate power transmission from Bhadla, Rajasthan, a major renewable energy hub, to Fatehpur, Uttar Pradesh.
- In FY25, the power generation in India was 1,821 BU, representing a 5% year-on-year growth over the 1,734 BU generated in FY24
- On December 13, 2024, PGCIL and ONGC signed an MoU to collaborate on green hydrogen and clean energy projects, leveraging their strengths to explore new business opportunities and support India’s energy transition.
- In 2023-24, India’s renewable energy sector received Rs. 32,141 crore (US$ 3.7 billion) in foreign investment.
- India has received a cumulative amount of US$ 3.8 billion in foreign direct investment (FDI) in the solar energy sector over the past three fiscal years and the ongoing fiscal year until September 2023.
- The power generation industry in India will require a total investment of Rs. 33 lakh crore (US$ 400 billion) and 3.78 million power professionals by 2032 to meet the rising energy demands, as per the National Electricity Plan 2022-32.
Government Policies & Initiatives
The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth. Some initiatives by the Government to boost the Indian power sector are as below:
- 55 solar parks across 13 states have been approved, with a sanctioned capacity of nearly 40 GW, accelerating large-scale deployment.
- The deployment of Direct Benefit Transfer (DBT) through the Public Financial Management System (PFMS) has bolstered the Digital India initiative across more than 1,206 schemes in FY 2024-25, with transactions of Rs. 2.23 lakh crore (US$ 26.37 billion).
- The UJALA LED scheme has been rolled out across the nation, delivering annual energy savings of 47,883 million kWh, cost savings of Rs. 19,153 crore (US$ 2.27 billion), avoidance of 9,586 MW in peak demand, and a yearly reduction of 3.88 million tonnes of CO₂ emissions as of January 2025.
- The ARTHA Framework (Align, Rank, Target, Harness, and Adapt) has been launched in September 2025 to strategically map carbon credit opportunities and prioritize projects for green financing.
- The National Policy on Biofuels 2018, as amended in 2022, among other measures advanced the target for 20% ethanol blending in petrol to Ethanol Supply Year (ESY) 2025-26, from the original 2030 timeline.
- Green Energy Corridor Phase-I nears completion with 20 GW of 24 GW commissioned across eight states, while Phase-II progresses rapidly and Phase-III is slated for FY26, enhancing renewable power integration. Powergrid is the implementing agency for Pahse-ll. The project cost for this transmission project works out to Rs. 20,773.70 crore (US$ 2.46 billion) and the central grant will be 40% of project cost.
- Under the New Solar Power Scheme, works valued at Rs. 50 crore (US$ 5.66 million) have been sanctioned for the off-grid solar-based electrification of 9,961 households, as of 30 June 2025.
- PM Surya Ghar scheme is expected to save the government Rs. 75,000 crore (US$ 8.60 billion) annually in electricity costs, add 30 GW of solar capacity, generate 1,000 billion units over 25 years, and reduce CO2 emissions by 720 million tonnes.
- The government aims to power one crore homes by FY27. Gujarat leads with 3.51 lakh solar-powered households (18.14%), followed by Maharashtra (1.92 lakh, 22.79%), Uttar Pradesh (75,602, 8.69%), Kerala (65,423, 7.73%), and Rajasthan (26,622, 3.14%).
- India has unveiled a comprehensive plan worth Rs. 9.15 lakh crore (US$ 109.50 billion) to enhance its power infrastructure and meet a projected demand of 458 GW by 2032. This initiative, led by the Ministry of Power under Prime Minister Mr. Narendra Modi, aims to strengthen the national power grid and boost energy security. The Government of India has approved new Inter State Transmission System (ISTS) schemes to evacuate 9 GW of RE power from Rajasthan and Karnataka. These schemes will be implemented through Tariff Based Competitive Bidding (TBCB) mode. These schemes are part of 500 GW RE capacity by 2030 out of which 200 GW is already connected.
- The government launched a Rs. 5,400 crore (US$ 627.3 million) Viability Gap Funding scheme for 30 GWh Battery Energy Storage Systems and extended the Inter-State Transmission System waiver for storage projects till June 30, 2028.
- The PLI Scheme for High Efficiency Solar Photovoltaic (PV) Modules, with an outlay of Rs. 24,000 crore (US$ 2.78 billion) has enabled 48,337 MW of capacities, with 17 GW of modules, 6 GW of cells, and 2 GW of ingot-wafer manufacturing operational as of March 31, 2025.
- India may introduce a PLI-like scheme to boost domestic transmission equipment and renewable energy evacuation, with 190,000 ckm lines and 1,270 GVA capacity planned, attracting over Rs. 9,00,000 crore (US$ 104.54 billion) investment by 2035.
- As of January 2025, the UJALA and SLNP schemes have collectively distributed over 38 crore LED lights, saving Rs. 19,153 crore (US$ 2.22 billion) annually, cutting 3.87 crore tonnes of CO₂, and significantly boosting India’s energy efficiency.
- The Union government has approved Rs 8,146 crore (US$ 946.2 million) Tato-II Hydro-Electric Project in Arunachal Pradesh, adding 700 MW capacity, 12% free power to the state, and boosting local infrastructure, employment, and socio-economic development.
- The Union Cabinet has sanctioned the PM-Surya Ghar: Muft Bijli Yojana. This initiative, with a total budget of Rs. 75,021 crore (US$ 9 billion) aims to install rooftop solar systems and offer complimentary electricity of up to 300 units per month to one crore households.
- The Union Budget 2025-26 marks the launch of a Nuclear Energy Mission, which focuses on the research and development (R&D) of Small Modular Reactors (SMRs). The government has allocated Rs. 20,000 crore (US$ 2.33 billion) for this initiative, with the aim of developing at least five indigenously designed and operational SMRs by 2033.
- The Union Budget 2025-26 outlines a strategy for the development of Bharat Small Reactors (BSRs), which are designed to reduce land requirements and support industries in decarbonization efforts. Under this plan, private sector entities will provide land, cooling water, and capital, while the Nuclear Power Corporation of India Limited (NPCIL) will be responsible for the design, quality assurance, operation, and maintenance of the reactors.
- In the Union Budget 2025-26, the government boosted its flagship rooftop solar initiative, PM Surya Ghar: Muft Bijli Yojana, by allocating Rs. 20,000 crore (US$ 2.33 billion) an 80% increase to fast-track the deployment of rooftop solar projects.
- In the Budget for 2024, the government's power sector initiatives have been allocated funds that are 50% higher. Increased funds have been allocated to green hydrogen, solar power, and green-energy corridors in line with the renewable energy target for 2030.
Road Ahead
The Indian power sector is poised for a major transformation in the current decade (2020-29), shaped by rising demand, a changing energy mix, and evolving market operations. The country’s vision is to provide reliable electricity access to all while accelerating the clean energy transition by reducing dependence on fossil fuels and expanding renewable energy adoption.
Strong demand fundamentals, supportive policies, and increasing government focus on infrastructure are expected to drive future investments. According to the Central Electricity Authority (CEA), India’s power requirement is projected to reach 817 GW by 2030. By 2029-30, the share of renewable energy in power generation is expected to rise sharply from 18% to 44%, while thermal energy’s share is likely to decline from 78% to 52%. In line with this vision, the government has set a target of installing 500 GW of renewable energy capacity by 2030, positioning India as a global leader in clean energy.
References: Central Electricity Authority, Ministry of New and Renewable Energy, Media Reports, Press Releases, Press Information Bureau (PIB), Union Budget 2024-25, Union Budget 2025-26, Union Budget 2026-27
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