India’s energy sector is at a critical juncture, balancing economic growth, energy security, and climate commitments. With rapid urbanisation, industrial expansion, and rising power demands, the country is undertaking transformative initiatives to ensure sustainable and efficient energy production. The Economic Survey 2024-25 sheds light on key developments in India’s energy landscape, including power generation, renewable energy advancements, and the challenges of transitioning to a cleaner economy.
Power generation and distribution
India’s total installed power capacity reached 456.7 GW as of November 2024, reflecting a 7.2% year-on-year growth. This expansion is driven by renewable energy sources, which now account for approximately 47% of the total capacity. The addition of transmission lines faced setbacks due to extreme monsoon conditions but continues to improve reliability and coverage.
The government has implemented major reforms in power distribution to enhance efficiency. Under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA), ₹1.85 lakh crore has been invested to strengthen distribution networks, electrifying 18,374 villages and providing power to 2.9 crore households. The Revamped Distribution Sector Scheme, launched in 2021, has further improved power supply quality, with urban areas now averaging 23.4 hours of electricity per day and rural areas reaching 21.9 hours.
Renewable Energy surge: Solar, wind and hydro
India has made significant strides in renewable energy, with total installed capacity surging to 209.4 GW by December 2024. Solar power leads the sector with 97.8 GW, followed by wind energy (48.2 GW), bioenergy (11.3 GW), and hydroelectric power (52.1 GW). The government has launched several schemes to accelerate renewable energy adoption:
- PM-KUSUM Scheme: Promoting solar energy in agriculture, with 7.28 lakh solarised agricultural pumps installed.
- Solar Park Development: Establishing 55 parks with a cumulative 39.9 GW capacity.
- Green Energy Corridor Projects: Strengthening transmission for renewables across 15 states.
Additionally, the PM-Surya Ghar: Muft Bijli Yojana aims to install rooftop solar systems in one crore households, adding 30 GW of capacity by 2027. The simplification of rooftop solar installation regulations in 2024 has reduced bureaucratic hurdles, expediting deployment.
Coal and thermal power: A necessary transition
Despite the rapid growth of renewables, coal remains India’s backbone for power generation. The country holds about 10% of the world’s coal reserves, making it an indispensable resource. However, to mitigate emissions, the government has focused on upgrading coal plants with Advanced Ultra Super Critical (AUSC) technology, reducing emissions by 11% compared to traditional thermal plants.
Coal-fired capacity additions peaked in the 2010s, and shutting down plants without alternatives would pose economic and energy security risks. The focus remains on balancing efficiency improvements in coal plants while gradually integrating more renewables.
Green hydrogen and Nuclear push
India’s ambitious National Green Hydrogen Mission aims to produce 5 million metric tonnes of green hydrogen annually by 2030, reducing dependence on fossil fuels and cutting emissions. The initiative is expected to add 125 GW of renewable capacity, create 50 million tonnes of CO2 reductions, and drive investments in electrolyser manufacturing.
Nuclear energy is also gaining traction, though challenges remain. Public safety concerns and the concentration of uranium reserves in select countries limit expansion. Despite this, nuclear power contributed 2.49% to India’s total electricity generation in 2023, with new projects being evaluated to boost its role in the energy mix.
EVs and energy efficiency
The transition to electric mobility is a crucial pillar of India’s net-zero commitment. In 2024, new regulations allowed for faster electricity connections for EV charging stations, expediting infrastructure development. The Viability Gap Funding scheme has allocated ₹7,453 crore to support offshore wind and solar energy projects, further integrating clean energy into transport solutions.
Energy efficiency measures, such as smart metering and demand-side management programs, are being aggressively pursued. Over 2.8 lakh crore worth of projects under the Revamped Distribution Sector Scheme have been approved to enhance grid efficiency.
Challenges in energy transition
While India’s energy sector is making remarkable progress, several hurdles remain:
- Intermittency in Renewables: Solar and wind power are inherently variable, requiring large-scale battery storage solutions.
- Grid Integration Costs: Upgrading transmission networks for a renewable-heavy grid demands significant investment.
- Land and Resource Constraints: Expanding solar and wind projects in densely populated regions is challenging.
- Global Supply Chain Dependencies: Critical minerals for battery storage and solar panel production are dominated by a few countries, posing supply risks.
- Investment Gaps: Meeting the target of 500 GW of non-fossil fuel capacity by 2030 will require increased domestic and foreign investments.
The road ahead
India’s energy sector is undergoing an unprecedented transformation, with a clear trajectory towards sustainability. The focus on renewable energy, coal efficiency improvements, green hydrogen, and electric mobility reflects a holistic strategy to balance energy security with climate goals.
The government’s policies, financial incentives, and regulatory reforms are playing a crucial role in this transition. With continued innovation, public-private partnerships, and infrastructure investments, India is well on its way to achieving its 2070 net-zero target while ensuring economic growth and energy access for all.
