A Plan Incorporating Vision, Driven by Power Source

A Plan Incorporating Vision, Driven by Power Source

India, now the fourth-largest economy globally, is strategically positioning its energy policy to address the trilemma of availability, affordability, and sustainability. This approach is crucial as India transforms into a major economic powerhouse with rapidly growing energy demand.

Key developments in India's energy sector include:

Rapid Renewable Expansion

In the first half of 2025, India added a record 22 GW of wind and solar capacity, achieving its Paris Agreement target of 50% installed electrical capacity from non-fossil fuel sources five years early. By 2027, approximately 48% of the projected 610 GW total installed power capacity is expected to come from renewables, including wind, solar, and battery storage systems to support round-the-clock supply.

Continued Dependence on Coal

Despite renewable capacity growth, fossil fuels still dominate electricity generation, accounting for roughly 75% of actual generation in early 2025. India plans to add 80 GW more coal-fired capacity by 2032 to meet its growing energy needs and maintain grid stability.

Balancing the Trilemma

India’s policy prioritizes energy security, ensuring availability even if affordability or sustainability goals face short-term trade-offs. Investments in both renewable and conventional energy infrastructure enable this, while grid upgrades and energy storage are recognized as critical to improving affordability and sustainability in the future.

Aligning with Economic Growth

With peak electricity demand expected to grow 11% by 2027, India's strategy aims to sustain industrial and economic growth as it becomes a top global economy by expanding capacity securely and sustainably.

Policy Implications

India’s energy transition is framed as a megatrend demanding smart investments, technology scaling, and infrastructure coordination. While renewables drive sustainable growth, coal remains central to affordability and availability in near to medium term.

Mission Anveshan

To uncover untapped oil and gas reserves, the Geology & Petroleum Ministry launched Mission Anveshan, sending modern survey ships, drones, and seismic crews to explore frontier basins like the Andaman Sea.

Enhanced Oil Recovery

To maximise the extraction of crude oil from ageing fields, India employs techniques such as pumping steam, CO2, or chemicals to squeeze the last drops of oil that natural pressure leaves behind.

Just-Transition & Climate-Justice

Ensuring energy access for India's 1.4 billion citizens without compromising the environment is a key concern in India's low-carbon shift.

Exploration in Frontier Basins

Exploration in frontier basins like the Andaman and Mahanadi requires ultra-deep-water rigs and seismic that private explorers deem high-risk.

Sub-surface AI & Hydrogen Engineering

A new skill-set is emerging, combining artificial-intelligence tools for mapping underground rocks with engineering know-how for producing, storing, and piping hydrogen.

Accelerated Depreciation

To make expensive green technology more attractive on the balance sheet, companies are granted a tax break that allows them to write off the cost of new equipment much faster than normal.

City-Gas Distribution

City-Gas Distribution has been authorized in 307 Geographical Areas covering 733 districts, with PNG connections crossing 15 million and over 7,500 CNG stations operational.

Infrastructure Investment Trust for Pipelines

This financial vehicle bundles mature pipelines into units, sells them to investors (who earn toll income), and frees up cash for the operator to build new lines.

The Energy Trilemma

The Energy Trilemma, which balances import-dependence, price stability, and decarbonisation, is relevant to India's energy development.

Hydrogen Purchase Obligation

A rule that would force big energy users to buy a minimum share of green hydrogen, similar to the Renewable Purchase Obligation for solar or wind power, is being considered.

Discovered Small Fields

The government auctions tiny, already-found oil/gas pools that large firms skipped over, known as Discovered Small Fields, on light-touch rules so smaller, nimble players can profitably produce them.

Geopolitical Volatility

Geopolitical volatility, such as disruptions in the Red Sea and Strait of Hormuz, can add USD 5-7 per barrel insurance premiums.

Viability Gap Funding

Viability Gap Funding is a one-time government grant (up to 40 percent of project cost) that makes socially useful but marginally profitable projects such as rural bio-refineries bankable for private firms.

National Green Hydrogen Mission 2023

The National Green Hydrogen Mission aims to produce 5 MMTPA green H2 by 2030, with ₹ 17,490 crore in incentives and a 125 GW RE-linked electrolyser target.

Carbon Capture, Utilisation & Storage

This technology vacuum-cleans carbon-dioxide from factory chimneys, then either turns it into chemicals or buries it deep underground so it never reaches the sky.

Sovereign Risk-Guarantee Fund

This government-backed pool of money covers part of the losses if high-risk deep-sea exploration wells turn out dry, encouraging companies to venture into tough geology.

The National Biofuel Policy 2018 (amended 2022)

The policy advanced the 20 percent ethanol mandate to October 2025 and widened the feedstock basket. By March 2025, ethanol blend reached 19 percent, saving approximately ₹1.26 lakh crore in forex and paying over ₹1 lakh crore to farmers.

Open Acreage Licensing Policy

This "pick-your-own-block" scheme allows explorers to flag any unallocated square on India's geology map, bid for it, and start drilling-no need to wait for fixed-menu auctions.

Infrastructure Bottlenecks

Infrastructure bottlenecks, such as last-mile spur lines to industrial parks and land acquisition delays, raise pipeline capital expenditure by up to 25%.

Unified Pipeline Tariff

One flat, distance-agnostic transport fee for shipping gas anywhere on India's national grid ensures that remote States pay almost the same rupees per unit as coastal ones.

Annual Gas Production in 2023-24

Annual gas production in 2023-24 reached 36.44 BCM, reversing a decade of stagnation.

Gas India Price Index

A proposed digital marketplace benchmark would show the real-time rupee price of natural gas traded across India instead of government-fixed rates.

The Oilfields (Regulation & Development) Amendment Act, 2024

This act allows for "hybrid leases" and simplified compliance for Discovered Small Fields.

Limited Domestic Capacity

India faces limitations in domestic capacity for high-pressure, high-temperature (HP-HT) drilling and for ≥ 2 MW electrolyser stacks, relying on EU-East-Asia supply-chains.

Maize-for-fuel

Maize-for-fuel may strain water tables in semi-arid belts, and second-generation (lignocellulosic) technologies remain sub-scale.

Refining capacity

India's refining capacity exceeds 256 MMTPA, ranking India fourth globally.

[1] Ministry of Power, Government of India (2023). Integrated Energy Policy of India 2023. New Delhi: Ministry of Power.

[2] Ministry of New and Renewable Energy, Government of India (2023). National Green Hydrogen Mission 2023. New Delhi: Ministry of New and Renewable Energy.

[3] Ministry of Petroleum and Natural Gas, Government of India (2023). National Hydrogen Energy Mission. New Delhi: Ministry of Petroleum and Natural Gas.

[4] Ministry of Finance, Government of India (2023). Budget Speech 2023-24. New Delhi: Ministry of Finance.

[5] NITI Aayog (2023). India Energy Outlook 2023. New Delhi: NITI Aayog.

1. India's energy strategy, aimed at becoming a top global economy, focuses on expanding capacity securely and sustainably to sustain industrial growth, addressing the trilemma of availability, affordability, and sustainability in energy.
2. In the first half of 2025, India added a record 22 GW of wind and solar capacity, achieving its Paris Agreement target five years early, signifying a rapid expansion in renewable energy.
3. By 2027, approximately 48% of India's projected 610 GW total installed power capacity is expected to come from renewables, including wind, solar, and battery storage systems to support round-the-clock supply.
4. Despite the growth in renewable capacity, fossil fuels still account for roughly 75% of actual generation, and India plans to add 80 GW more coal-fired capacity by 2032 to meet its growing energy needs and maintain grid stability.
5. The government's Viability Gap Funding, up to 40 percent of project cost, makes socially useful but marginally profitable projects such as rural bio-refineries bankable for private firms.
6. Emerging technology in India includes sub-surface AI for mapping underground rocks, hydrogen engineering for producing, storing, and piping hydrogen, and carbon capture, utilization, and storage to reduce carbon emissions.
7. Various initiatives, such as the National Green Hydrogen Mission and the Open Acreage Licensing Policy, are designed to accelerate India's transition to a low-carbon economy while ensuring energy access for its 1.4 billion citizens without compromising the environment.

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