Electricity in India: Balancing Rapid Growth and Green Ambitions

Electricity in India: Balancing Rapid Growth and Green Ambitions

India's electricity sector presents a fascinating paradox: a nation experiencing unprecedented economic expansion and soaring energy demand, yet fiercely committed to aggressive decarbonization goals. While the surge in consumption necessitates continued reliance on traditional sources, India is simultaneously making remarkable strides towards a cleaner, more sustainable energy future.

 

A Decade of Growth: Surging Demand and Expanding Capacity

Over the past decade, India’s power sector has expanded dramatically. Installed capacity rose from 305 GW in 2015–16 to 476 GW by June 2025, making India the world’s third-largest electricity producer. This growth parallels the country's economic momentum, urbanization, and widespread electrification.

Peak demand hit 242 GW in June 2025 and is projected to rise to 277 GW by 2026–27 and 458 GW by 2031–32, according to the National Electricity Plan. Generation also jumped from 1,168 BU in 2015–16 to over 1,824 BU in 2024–25.

Per capita consumption climbed from 957 kWh in 2013–14 to 1,395 kWh in FY24, a 45.8% rise but remains below the global average of 2,600 kWh, signaling further growth potential.

Electrification has been transformative: 100% village electrification was achieved by April 2018, and near-universal household access followed by 2019. Power shortages, once at 4.2% in 2013–14, dropped to just 0.1% by April 2025, thanks to better generation and grid management.

 

The Shifting Energy Mix: From Coal Dependency to Clean Power

Coal still dominates India’s generation mix  accounting for over 70% of electricity output from April 2024 to May 2025  with thermal power comprising 242 GW (49.9%) of installed capacity. However, India has already surpassed its 2030 target of 50% non-fossil capacity, reaching 242.78 GW (50.1%) by mid-2025.

Renewable energy (including large hydro) contributes over 234 GW, while nuclear adds 8.8 GW. Ambitiously, India is targeting 500 GW of non-fossil capacity by 2030, with over 176 GW under implementation and 72 GW in the bidding stage.

Though coal capacity is projected to reach 259.6 GW by 2031–32, emissions intensity is steadily declining — down 33% from 2005 to 2019, with a goal of 45% by 2030. The average emission factor is expected to drop to 0.43 kg CO₂/kWhnet by 2031–32.

 

Renewables: Leading the Global Clean Energy Race

India ranks among the top four global players in renewable energy. Installed RE capacity soared from 76 GW in 2014 to nearly 227 GW by mid-2025.

Solar has been the standout, growing from 2.82 GW in 2014 to 110.9 GW in 2025, with 23.8 GW added in FY25 alone. The PM Surya Ghar Yojana, launched in 2024, targets 30 GW of rooftop solar and offers free power (up to 300 units/month) to 10 million homes.

Wind power reached 51.3 GW, while hydropower stands at 49.4 GW. Biomass co-firing in thermal plants mandated at 5% from FY25 and 7% from FY26  is helping displace coal and cut emissions.

Clean energy is now economically competitive: solar tariffs hover around ₹2.54–₹2.65/kWh, and wind around ₹3.25/kWh — both cheaper than new coal-based generation.

 

Nuclear Power: A Low-Carbon Backbone

With 25 reactors and 8,880 MW of capacity, nuclear energy contributed 56.7 TWh in FY25 at a high plant load factor of 87%. India plans to raise nuclear capacity to 22,480 MW by 2031–32 and aims for 100 GW by 2047 under its “Viksit Bharat” vision.

A three-stage nuclear program leveraging thorium is underway, alongside foreign collaborations (e.g., France’s EDF and Russia’s Rosatom). India is also pushing for Small Modular Reactors (SMRs), with at least five expected by 2033.

 

Green Mobility and Biofuels: Decarbonizing Transport

The transport sector contributes 10–14% of India’s GHG emissions, with road transport making up 87%. EV adoption is accelerating: 7.8% of all vehicle sales in FY25 were electric, up from 5.6% two years earlier. The government aims for 30% EV penetration by 2030.

The PM E-DRIVE scheme and PLI for battery storage are bolstering EV infrastructure, targeting over 70,000 fast chargers and 50 GWh of battery capacity. Indian Railways, with 97% electrification as of February 2025, is on track to achieve net-zero emissions by 2030.

India is also the 3rd largest ethanol producer globally. Ethanol blending reached 12% in 2022–23, with a 20% target advanced to 2025–26. Compressed Bio-Gas (CBG) blending begins in FY26.

 

Distribution: The Sector’s Weakest Link

Despite impressive generation capacity, India’s distribution sector — dominated by state-run DISCOMs — remains financially fragile. Cumulative losses hit ₹6.77 lakh crore by FY23, driven by subsidized tariffs, inefficiencies, and high AT&C losses.

Though AT&C losses declined to 16.28% in FY24 (from 25.7% in FY15), some states still report losses over 30%. The Revamped Distribution Sector Scheme targets 250 million prepaid smart meters by March 2026 (25 million installed as of March 2025), but progress is slow due to cost and resistance.

Reducing AT&C losses below 12%, ensuring cost-reflective tariffs, and attracting private capital are essential for improving grid reliability and financial health.

 

Strategic Vision: Carbon Markets, Hydrogen, and Innovation

India is laying the groundwork for a green economy through policy and innovation:

  • Carbon Credit Trading Scheme (CCTS) is set to launch by 2026, enabling market-based decarbonization.
     
  • Green bonds raised ₹16,000 crore in FY23 for climate-aligned investments.
     
  • The Green Hydrogen Mission targets 5 MMT/year by 2030, supported by India’s vast solar and wind potential.
     
  • Battery storage is expanding, with a 73.9 GW target by 2031–32 and a ₹5,400 crore VGF scheme to support 30 GWh of capacity.
     
  • Offshore wind, with 71 GW potential, aims for 30 GW by 2030.
     
  • Battery recycling rules now mandate up to 90% recovery by 2026–27.
     

 

Conclusion: Powering a Greener Tomorrow

India’s electricity landscape is undergoing a fundamental shift. It is navigating the tension between growth and sustainability with increasing confidence by decarbonizing its grid, electrifying transport, and fostering innovation.

Coal will remain part of the mix for now, but the momentum is unmistakably green. With the right reforms and investments, India is not only on track to meet its net-zero goal by 2070, it could achieve it even sooner.

The transition from fossil-fueled growth to clean-powered prosperity is no longer aspirational, it’s already underway.