A blend of policy drive, industry participation, and global partnerships now defines the complex clean energy transition underway in the world’s most populous nation, writes Manish Pant.
India’s shift to sustainable energy sources is ambitious, complex, and multifaceted.
On July 29, the Solar Energy Corporation of India (SECI)—the nodal agency for renewable programmes—completed green ammonia procurement at Rs.55.75 ($0.64) per kg. The winning bid, submitted by Acme Cleantech Solutions, proposes supplying 75,000 metric tonnes (mt) annually to fertiliser manufacturer Paradeep Phosphates. This discovered price of approximately $641 per mt marks a dramatic fall from the $1,153 per mt recorded in Germany’s H2Global auction in 2024.
While some experts caution that the price may be unsustainable due to infrastructure and regulatory lag, cost-quality trade-offs, and developer risk exposure, others view it as a strategic leap in India’s bid to become a global green hydrogen hub.
Just weeks earlier, Manohar Lal Khattar, Union Minister for Power, announced the government’s intent to standardise temperature settings on air conditioners. “Users won’t be able to cool below 20°C or heat beyond 28°C. We have cautiously reduced the lower limit to 20°C. It has been suggested that cooling be fixed at 24°C, but we don’t want this to lead to an uproar from a section of users.” The announcement did precisely that. A storm broke out on the microblogging site X (formerly Twitter), with users decrying the move as an infringement on personal freedom in a tropical country grappling with record-breaking heat.
Both examples highlight the intensity of public interest and the polarising emotions that India’s energy transformation continues to provoke, both domestically and abroad.
India today stands at the cusp of one of the world’s most ambitious energy transitions. With a power sector that has grown to an installed capacity of 484.8 GW as of June 2025, the country has not only achieved universal electrification but also reduced power shortages to near zero. Almost half of this capacity now comes from non-fossil sources, positioning India as a global leader in clean energy growth.
Addressing Tata Power’s 106th AGM in early June, Natarajan Chandrasekaran, Chairman, Tata Sons, noted, “India, despite relying on coal to meet the peak summer demand, met only 42 per cent of the demand growth from coal generation in 2025.” He observed that the country’s clean energy capacity had crossed 200 GW, accounting for 46 per cent of total installed capacity, and overtaken Germany to become the world’s third-largest solar and wind power generator. “Solar generation is expected to rise by over 135 per cent in the next two years. This is expected to be bolstered by wind and hydropower generation, growing at a CAGR of 36 per cent and 18 per cent in the very same two-year period,” he added.
Yet this transformation is not just about numbers. It also reflects a shift in strategy, ambition, and vision, as the world’s fastest-growing major economy seeks to balance rising energy demand with its commitment to sustainability and net-zero emissions by 2070.
The New Energy Playbook
India’s energy ministers have been vocal about this trajectory. Power Minister Khattar emphasises that peak power demand is expected to double within a year, reaching 250 GW in 2024-25, and could climb to 270 GW this year. From being a net importer of electricity in FY2013-14, the country now exports power to its neighbours, with newer markets opening up. “A VSC (voltage sourced converter)-based HVDC (high voltage direct current) system has been proposed for a 2 GW grid interconnection with Saudi Arabia, involving a 1,400 km subsea cable. A similar 2 GW capacity has been proposed for the UAE via a 1,600 km subsea cable. The Rs.900 billion MoU—Rs.470 billion for Saudi Arabia and Rs.430 billion for the UAE—will start yielding results in the future,” informs Khattar.
His counterpart, Pralhad Venkatesh Joshi, Union Minister for New & Renewable Energy, highlights the democratisation of renewables through schemes like PM Surya Ghar Muft Bijli Yojana for subsidised residential rooftop solar and PM-KUSUM for solar adoption in agriculture. Such initiativeshave driven solar tariffs down from Rs.11 a unit in 2010 to around Rs.2.15 today, cheaper than thermal power, which averages Rs.6 per unit. “Under the PM Surya Ghar, we have planned 30 GW of capacity. Within a year, we have achieved 1.4 million connections, which will be completed shortly. Through a few more policy changes, we expect to reach 3-3.5 million connections, possibly even 4 million!”
Complementing these physical deployments is a planned digital backbone, the India Energy Stack, designed to enable seamless data sharing, real-time analytics, and consumer-centric energy services across generation, distribution, and consumption. This digital public infrastructure (DPI) is expected to accelerate the modernisation of India’s power ecosystem. “DPI, such as the India Energy Stack, will play a vital role in integrating renewable energy, enhancing distribution companies’ efficiency, and delivering transparent, reliable, and future-ready power services. What Aadhaar did for identity and UPI (Unified Payments Interface) achieved for digital payments, the India Energy Stack will accomplish for the power sector, unlocking seamless, secure, and consumer-centric energy services for every citizen,” predicts Khattar. A dedicated task force comprising experts from the technology, power, and regulatory domains is already working on its development.
Meanwhile, Hardeep Singh Puri, Union Minister for Petroleum & Natural Gas, has emerged as a key voice in global energy diplomacy. He notes that hydrocarbons are being repositioned through ambitious exploration, diversified sourcing, and large-scale biofuel integration, all while ensuring energy affordability. “India firmly believes that the global energy transition must be just, inclusive, and equitable. For 1.4 billion Indians, and billions more across the Global South, the energy transition is not just about decarbonisation; it is about inclusive and integrated development with dignity,” Puri told the gathering at the Vienna meeting of the Organization of the Petroleum Exporting Countries in July.
India’s deepening clean energy commitments are shaped not only by domestic demand but also by regional dynamics and strategic imperatives. One of the country’s oldest renewable sources, hydropower continues to play an important role in grid stabilisation and clean energy generation. Installed capacity has risen from 35.8 GW in 2014 to 48 GW in 2025, with a national target of 55 GW by 2030. Following the Pahalgam terror attack in April, India has put the Indus Waters Treaty with Pakistan on hold, highlighting the geostrategic significance of hydropower infrastructure. The Siang Upper Multipurpose Storage Project—under consideration as a buffer dam on a Brahmaputra tributary—reflects growing concerns over China’s upstream dam-building activity in Tibet. In parallel, the central government is supporting new hydropower initiatives through targeted financial and infrastructural incentives, particularly in the Northeastern states, where vast potential remains untapped.
Growth in Motion
India’s clean energy potential is vast. The National Green Hydrogen Mission targets 5 million metric tonnes (MMT) of annual green hydrogen production by 2030, with a significant share intended for export. Maurits van Tol, CEO, Catalyst Technologies, sees India as uniquely positioned. “Europe is constrained not just by cost but also by population density. In contrast, India has regions with substantial available land suitable for the large-scale deployment of solar and wind. While natural gas will play its role in various applications, I expect to see greater growth in green hydrogen over time, thanks to the conditions for producing low-cost electricity at scale.”
Renewables are already reshaping the power mix. As of June this year, solar capacity has increased nearly 40-fold over the past decade, reaching 119 GW, while wind has grown to 52 GW. Large parks in Rajasthan (Bhadla) and Gujarat (Khavda) showcase India’s ability to build mega projects, while rooftop solar and distributed models ensure households and farmers are active participants. Minister Joshi’s vision for annual renewable investments reinforces the momentum. “Foreign direct investment in the sector has crossed around $20 billion since 2020. In 2023 alone, it reached $5 billion, nearly double the pre-COVID levels. We are now hopeful of auctioning 50 GW of renewable capacity every year.”
Hydrocarbons, though still dominant, are being realigned with the new vision. Puri notes that exploration acreage is expanding fivefold, while refining capacity will reach 310 MMT by 2028. “With 250,000 sq km open for exploration under OALP (Open Acerage Licensing Policy) Round-10, and being close to discovering a Guyana-scale oilfield in the Andaman Sea, India is in the midst of one of the most ambitious plans to enhance the efforts to drill for more. India’s target is to increase the country’s exploration acreage to 0.5 million sq km by 2025 and 1.0 million sq km by 2030.” Under the OALP framework for hydrocarbon exploration, companies may bid year-round for oil and gas blocks of their choice, using centralised government data and without awaiting formal bid rounds.
Simultaneously, ethanol blending has reached 18.5 per cent—up from 1.5 per cent in 2014—putting India on track to meet its 20 per cent target by 2025-26. Vikram Gulati, Country Head & Executive Vice President Corporate Affairs & Governance, Toyota Kirloskar Motor, believes ethanol derived from crops and residues strengthens energy security and empowers farmers. “The government’s vision of transforming farmers from annadatas (food producers) to urjadatas (energy producers) throu
gh ethanol is resonating. People are surprised to learn that ethanol can be derived not just from sugarcane, but also from spoiled rice, millets, and even parali (crop residue).”
Pune-headquartered Blue Energy Motors is doubling down on green mobility, investing Rs.35 billion in electric truck manufacturing while expanding liquefied natural gas (LNG)-based freight solutions. Says Anirudh Bhuwalka, CEO, “Despite challenges like limited charging or refuelling infrastructure and higher initial costs, adopting green trucking solutions such as LNG and electric vehicles is pivotal for India’s sustainable future. As battery technology evolves and costs continue to fall, we expect electric trucks to become mainstream, especially for short-haul operations. For long-distance freight, LNG and hydrogen stand out as viable, lower-emission solutions compared to conventional diesel.”
The market for large-scale, multi-technology, multi-phase initiatives is expanding rapidly, driven by the need to counter renewable intermittency and meet peak demand. Tata Sons’ Chandrasekaran notes, “Complex auctions have emerged as a leader in India’s clean power auctions, making up more than 60 per cent of the total volume in 2024. India’s storage market is also gaining momentum.” His remarks reflect the growing industry appetite for firm and dispatchable power, as seen in Hero Future Energies’ bids for round-the-clock (RTC) supply..“The firmness and dispatchability of power required in complex tenders stand in sharp contrast to the variability of typical solar and wind generation in plain-vanilla tenders. Distribution companies are primarily interested in peak power projects for their ability to ensure a consistent supply and better match demand patterns, which effectively addresses the duck curve challenge and enhances both bankability and operational viability in power procurement,” says Ashutosh Vyas, Head of Energy Business, Hero Future Energies.
The country’s largest oil and gas explorer, ONGC, also echoes this sentiment. The company is pursuing a four-pillar strategy, including aggressive growth in renewables and diversification into petrochemicals and LNG. Arunangshu Sarkar, Director of Strategy & Corporate Affairs, avers, “The second pillar is renewable energy, including solar, wind, round-the-clock supply, pumped storage, battery storage, and hydrogen. We are working aggressively in this space, with inorganic and organic approaches to our growth strategy. Initially, we will pursue inorganic growth to gain experience through partnerships or acquisitions, followed by organic expansion.” These efforts highlight the dynamism of India Inc., aligning industrial growth with clean energy.
Analysts also see promise. India’s energy transition has been shaped by landmark developments, from subsidy-free solar reverse auctions to the rise of central public sector enterprises like SECI and NTPC, which reduced counterparty risk and catalysed private investment. Regulatory interventions such as the 2030 non-fossil energy targets, evolving renewable purchase obligations, and the 2022 late payment surcharge rules have further strengthened sectoral stability. “While many nuanced events have happened in the space, some key milestones that can be identified in the renewable energy journey are solar competitive reverse auctions without viability gap funding, which indicated the sector no longer needed subsidies. This also led to new floors to bid tariffs being discovered, making solar competitive with fossils,” says Sehul Bhatt, Director, Crisil Intelligence, a Mumbai-based advisory. He estimates that 75-80 per cent of the 275-285 GW of capacity additions by 2030 will come from solar and wind.
Meanwhile, Chua Wei Jun, Biofuels Analyst, S&P Global Commodity Insights, highlights biofuels’ role in diversifying energy sources and enhancing rural incomes. “Engaging farmers in the biofuel supply chain can create new income opportunities and promote agricultural sustainability. Additionally, raising public awareness about the benefits of biofuels can boost acceptance and demand. Lastly, this initiative highlights the importance of innovation and technology in developing efficient biofuel production processes, paving the way for a greener future in transportation.”
Jun also makes a strong pitch for expanding the marketing of compressed biogas (CBG) beyond city gas networks. “As CNG subsidies phase out, adopting a more robust and flexible pricing mechanism is essential to stabilise prices and encourage investment in CBG production. Implementing feed-in tariffs could be an effective strategy, guaranteeing a fixed price for each unit of CBG produced over a defined period. This would provide pricing stability and attract investments in biogas plants.” Measures such as enhancing distribution infrastructure, establishing partnerships with local producers, and supply-side incentives—including mandatory blending obligations and financial support for biogas plants—can further facilitate expansion in urban and rural markets.
The potential, therefore, is not just about megawatts; it is about economic transformation, new industries, and the creation of millions of green jobs in the world’s third-largest energy consumer.
Structural Faultlines
This monumental transition is not without its challenges. As Suresh Kumar Narang, CEO, Nabha Power—a Punjab-based thermal generator—points out, while non-fossil sources now account for half of India’s installed capacity, coal still produces nearly three-quarters of the electricity consumed. “While climate pressures are real, India has committed to a just and orderly transition. Thermal power remains our backbone for ensuring base load stability There was a pause in thermal additions for a few years, but global conflicts, energy security concerns, and the limitations of renewable intermittency have since taken centre stage.” Thermal power plants remain indispensable for base load stability, and India is expected to add about 80 GW of new coal-based capacity by 2032. Even as plants adopt efficiency measures such as biomass co-firing and explore carbon capture, the continued reliance on coal underlines the complexity of the transition.
India plans to discontinue investments in new thermal projects beyond 2035. As an alternative, the Union Budget 2025-26 outlines a dedicated Nuclear Energy Mission, targeting operationalisation of at least five indigenously developed small modular reactors (SMRs) by 2033. SMRs are nuclear fission reactors designed to produce less than 300 MW of electrical output (MWe), offering scalability, enhanced safety, and easier construction compared to traditional large-scale reactors. However, it currently takes up to 13 years to build a nuclear plant. Power minister Khattar states, “We are trying to reduce this to eight or nine years. We are also planning at least one nuclear project in areas outside seismic zone 5, so that we have a reliable 24×7 base load as we move away from thermal.” This is imperative if India plans to achieve 100 GW nuclear capacity by 2047.
Infrastructure constraints persist. Crisil Intelligence identifies land acquisition hurdles and transmission connectivity as critical bottlenecks for scaling renewables. Bhatt says, “The provision of contiguous parcels of land in the right locations is a critical requirement for achieving the 2030 energy transition goal [of 500 GW of installed non-fossil capacity] for the country. Supply chains would be another key aspect; however, the localisation of solar and wind component supply, which has already occurred in the case of the latter, places greater control over policy and the shaping of the industry in the hands of the government.”
Easing land availability would require coordinated action at both the central and state levels, as the Land Acquisition Act, 2013, often slows infrastructure development due to procedural and consent-related barriers. Renewable energy minister Joshi, however, affirms the government’s commitment to boosting local industry. “Through PLI (Production Linked Incentive) schemes, we are building giga factories for solar photovoltaic, battery storage, and electrolysers. India is becoming a global manufacturing hub for renewables, from modules to green hydrogen equipment, supporting the Aatmanirbhar Bharat (self-reliant India) vision.
India’s green hydrogen ambition is clear, but ONGC admits progress remains largely confined to pilot projects, with issues of affordability, scalability, and infrastructure yet to be resolved. “Green hydrogen in India is still at a nascent stage, and we haven’t made extensive inroads yet. We have completed one pilot project at an existing plant, where we produce approximately 50 kg of green hydrogen per day. This is derived from wastewater—specifically, produced water—with a purity level of around 99 per cent,” says Sarkar. The company, however, remains committed to expanding in solar, wind, CBG and green hydrogen, as well as its derivative, green ammonia.
Hero Future Energy’s green hydrogen division echoes that while government support is strong, much more policy clarity and R&D funding are needed to make hydrogen globally competitive. Remarks Sudhir Pathak, Head of Central Design & Engineering, “Looking beyond our borders, it’s evident that major economies have faced significant pushback on green policies. Despite the global constraints, we are witnessing strong government support. Serious and sustained government-industry interactions are essential for formulating effective policies and enabling timely course correction.” Pathak sees the `1 trillion allocation under the Research, Development and Innovation Scheme for national programmes in quantum computing, artificial intelligence and green hydrogen as a potential game-changer. “Drawing parallels with developed economies—where intellectual capital played a pivotal role in their advancement—we believe that a multi-faceted approach to decarbonisation will ultimately guide us toward a sustainable, developed future.”
The transport sector faces hurdles too. Blue Energy Motors highlights the lack of refuelling and charging infrastructure for green trucks. Says Bhuwalka, “For zero-emission trucking to take off, the government needs to strengthen policies with clear incentives, tax breaks, practical regulations, and faster development of charging and LNG refuelling networks. A supportive framework can ease upfront costs and encourage early adopters. On the other hand, the private sector must invest boldly in modern technologies, local production, driver training, and after-sales support.” He is emphatic about corporations, original equipment manufacturers (OEMs), energy suppliers, and logistics players coming together.
Toyota Kirloskar Motor’s Gulati points to taxation structures that penalise hybrids despite their efficiency. “As is the case with all clean vehicle technologies, hybrid vehicle manufacturing costs are higher than conventional petrol cars, and the tax rate differential is minimal; inadvertently, the actual rupee tax paid by the consumer is more than the corresponding petrol cars. While OEMs must continue investing to bring down costs through scale, we are also working with the government to ensure consumers aren’t inadvertently penalised with higher taxes for choosing clean technologies.” All eyes are now on the GST reforms, billed as the central government’s “Diwali gift to the nation”. The proposed overhaul aims to correct inverted duty structures, ease compliance, and boost consumption by simplifying taxation slabs.
Global volatility adds further risks. ONGC’s international subsidiary, ONGC Videsh Ltd’s struggles in recovering dues from its overseas oil investments in Russia and Venezuela, broader uncertainties in global oil markets, and US tariffs on Indian imports—imposed to penalise the country over Russian oil purchases—illustrate how geopolitics can disrupt India’s energy security.
An Everyday Transition
With GDP projected to grow at an average rate of 6.7 per cent, India is expected to become an upper-middle-income nation with a per capita income of $4,500 by FY2030-31. Amid this steady expansion, one can already sense rising aspirations, as evidenced in a recent development. Over the past several weeks, the country’s ethanol blending rollout has faced engine performance concerns, largely due to older vehicle calibration, limited flex-fuel adoption, and patchy consumer awareness. Critics have pointed to Brazil’s success, attributing it to mandated flex-fuel vehicles, tax incentives, clear labelling, and decades of policy continuity and infrastructure readiness.
Calling ethanol and natural gas India’s ‘bridge fuels’ for a non-disruptive shift towards net-zero emissions by 2070, the Ministry of Petroleum and Natural Gas claims that over the past decade, ethanol blending has saved `1.44 trillion ($16.5 billion) in foreign exchange, substituted 24.5 MMT of crude oil, and reduced carbon dioxide emissions by 7.36 MMT, equivalent to planting 300 million trees. In FY2025-26 alone, farmers are expected to earn `400 billion from ethanol sales, while forex savings are projected at `430 billion. Declares Puri, “Ethanol is not just fuel; it’s a farmer’s dividend. Every litre blended is a step towards rural prosperity and energy independence.” Dismissing recent concerns about ethanol-blended fuel as misinformation spread by vested interest groups, he asserts that not a single case of engine failure or breakdown has been reported since E20 blended fuel became a base fuel ten months ago. Introduced full five years ahead of schedule, E20 is a mix of 80 per cent petrol and 20 per cent ethanol.
While the jury may still be out on the fuel blending saga, it is clear that the energy transition has moved beyond policy corridors into the rhythms of daily life. From road transport, it is now preparing to take to the skies. Most recently, Air India and Indian Oil Corporation Ltd signed an agreement for the supply of sustainable aviation fuel, aligning with global net-zero targets for civil aviation by 2050. With 570 new aircraft on order, the Indian flag carrier is poised to operate one of the lowest carbon-emitting fleets in the world.
Whether it’s farmers producing ethanol, households installing rooftop solar, or industries embracing clean freight, India’s energy shift is becoming a collective endeavour—comprising producers, prosumers, and pragmatic choices. And it is this inclusive momentum, rooted in grassroots innovation and national ambition, that positions the country at the forefront of the global journey from hydrocarbon atoms to green energy molecules.
India’s Clean Energy Opportunity
Solar Surge: With tariffs at Rs.2.15/unit, cheapest power source; 119 GW capacity & rising
PM Surya Ghar Muft Bijli Yojana: Rooftop solar drive with 30 GW target; millions of households empowered
Wind & Hydro Growth: Wind (52 GW) + Hydro (48 GW) scaling fast; grid stability boost
Green Hydrogen Hub: 5 MT annual production target by 2030 + 5 MT exports
Biofuel Dividend: 18.5% ethanol blending saves forex, boosts farmer incomes
Green Mobility: EVs, LNG & hydrogen trucks; $35 bn in investments underway.
FDI Magnet: $20B inflows since 2020; $5 bn in 2023 alone
Storage Revolution: Pumped hydro + battery storage driving round-the-clock renewables
Regional Power Exports: Grid links to UAE & Saudi Arabia via subsea HVDC
Manufacturing Push: PLI schemes for solar, batteries, and electrolysers
India Energy Stack: Proposed digital backbone to connect assets, analytics and consumers across the energy value chain.
Job Creation: Millions of green jobs across solar, wind, hydrogen, EVs, and biofuels
Transformation Challenges
Coal Dependence: Still ~75% of electricity from coal despite rising renewables.
Thermal Expansion: 80 GW new coal capacity planned by 2032 for base load stability.
Nuclear Delays: Plants take 8-13 years; 100 GW target by 2047 faces execution risks.
Land Bottlenecks: Acquisition hurdles under 2013 Act slow renewable projects.
Grid & Transmission Gaps: Lack of contiguous land + transmission limits constrain scale-up.
Green Hydrogen Hurdles: Still at pilot-stage; affordability, infrastructure, and scalability issues.
Mobility Barriers: Sparse charging/refuelling infra + high EV/truck costs deter adoption.
Policy & Tax Gaps: Hybrids taxed heavily; clean vehicle incentives need reform.
Global Volatility: Geopolitics, tariffs, and oil market shocks threaten energy security.
Consumer Awareness: Patchy adoption of ethanol, flex-fuel vehicles, and clean tech.