India's power sector has the potential of US$ 478.58 billion (Rs. 40 trillion) investment over next decade: Motilal Oswal

The power sector in India presents investment opportunities estimated at over US$ 478.58 billion (Rs. 40 trillion) in the next decade, according to a report by brokerage Motilal Oswal. Of this potential, US$ 406.80 billion (Rs. 34 trillion) is expected to be directed towards capital expenditure, with the remaining amount allocated for optionality. The report indicates that generation, transmission, and smart metering will comprise approximately 86%, 10%, and 4% of this investment. Key factors driving this significant investment include a higher compounded annual growth rate (CAGR) in power demand, upgrading and replacing outdated infrastructure, and transitioning to cleaner energy sources. Motilal Oswal notes that India is uniquely positioned with real GDP and per capita growth, technological advancements, and electrification as key drivers that could sustain increasing power demand for years.

The brokerage projects that power consumption in India could compound at over 7% in the next decade, supported by robust GDP growth and emerging demand drivers such as electric vehicles (EVs) and data centres, expected to contribute one-third of power demand growth by 2035. These sectors account for a negligible share of power demand in India. The report compares India's current energy consumption trends with those of China in the early 2000s, highlighting a potential inflection point for Indian power consumption as it is expected to grow by 6.5-7% over the next decade, significantly higher than the 5% CAGR observed in the past 2 decades. At COP26 in 2021, India committed to a comprehensive 5-part "Panchamrit" pledge, which includes achieving 500 GW of non-fossil electricity capacity, generating 50% of energy requirements from renewable sources, and reducing emissions by 1 billion tonnes by 2030. Additionally, India aims to lower the emissions intensity of GDP by 45% and achieve net-zero emissions by 2070.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.