The energy sector in India

Energy sector in India

India does not yet have an electricity network that is stable and serves the entire country. A large part of the population is not connected to the grid and there are almost daily outages in major cities. India’s power sector is one of the most diversified in the world. It uses conventional, unsustainable sources such as coal, natural gas, oil and nuclear power and renewable sources such as wind power, solar power, hydropower, domestic waste gas and biomass.

The Indian government is aiming for India to run entirely on renewable energy, so the power industry is undergoing a major transformation. It is renovating infrastructure and investing in green forms of energy such as wind and solar power.

The Indian government recognises the need for private investment in the sector. Hence, many initiatives have been taken, including the introduction of numerous incentive schemes to promote investment. The Indian government has set itself ambitious targets for the next decade. For instance, the country aims to reduce CO2 emissions by 2030, to get 50% of its total electricity from renewable energy sources and to reduce net CO2 emissions to zero by 2070.

This creates interesting opportunities for companies in the energy sector, not least because economic growth is rapidly increasing demand for energy.

Snapshot of the energy sector in India

According to India’s energy minister, India’s total generation capacity in February 2023 was 412.21 GW, of which about 100 GW was from clean sources. India is targeting an electricity capacity of 500 GW from clean sources by 2030, of which about 280 GW should come from solar power.
India has the second highest wind power generation capacity in Asia after China.
India ranks fifth among fastest-growing solar industries and is the cheapest producer of solar power in the world.
India ranks fourth globally in terms of renewable energy generation. Over the next five years, the government has allocated $42 billion for innovation in and scale-up of the power sector.
India received a score of 89.4 points in the World Bank’s 2019 ‘Ease of doing business – Getting Electricity’ survey. This examines how easy it is for a business to get connected to the electricity grid and the reliability of supply, transparency of tariffs and price of electricity. In comparison, Denmark received a score of 90.2.

Our expert

Deepmala Datta Head of Business Development

Growth drivers of India's energy sector

The energy sector has an investment potential of 225 billion dollars over the next 5 years.
India ranks third globally in terms of renewable energy targets.
There are government plans to achieve ‘Power for All’ through special schemes offering low-income and rural households free or heavily subsidised grid connection. Thus, the Indian government wants to build a 100% coverage grid.
In addition, the Indian government has made available 1.3 billion dollars for 60 so-called solar cities, which are 50 solar parks of 40 GW.
Under the Green Energy Corridor programme, the Indian government plans to build 12,600 kilometres of transmission lines, both between and within states.