The Business Bytes
New Delhi, November 9, 2024 (TBB Bureau): India’s power sector is gearing up for unprecedented growth, driven by a surge in energy demand and ambitious renewable energy targets that are reshaping the country’s energy landscape. With projections indicating that India will see a greater increase in energy demand over the next decade than any other country, investments in the nation’s power infrastructure are set to reach new heights.
The Central Electricity Authority (CEA) anticipates that the country will attract around $110 billion in investments from FY22 to FY32 as it scales up power generation and transmission capabilities to meet the demand. Japanese brokerage Nomura predicts that India’s power demand will expand at a compound annual growth rate (CAGR) of over 7% between financial years 2024 and 2027, underlining the nation’s rapid industrial and economic growth.
India’s renewable energy share is expanding at a remarkable rate, with solar and wind energy sources now projected to meet approximately 75% of incremental power demand. “The share of renewable energy will grow from here on. It will account for 55% of the total power capacity,” said Nomura in a recent report, reflecting a strong outlook for clean energy’s role in India’s power mix.
According to the International Energy Agency’s (IEA) ‘World Energy Outlook’ report, India — having been the fastest-growing major economy in 2023 with a growth rate of 7.8% — is poised to become the world’s third-largest economy by 2028. In the IEA’s Stated Policies Scenario (STEPS), India’s energy demand is expected to rise by nearly 35% by 2035, with electricity generation capacity projected to triple, reaching around 1400 GW.
In line with these projections, India’s recently launched National Electricity Plan (Transmission) sets an ambitious target of transmitting 500 GW of renewable energy installed capacity by 2030, with plans to exceed 600 GW by 2032. This policy underscores the government’s commitment to achieving 50% of its installed power capacity from non-fossil fuel sources by the end of the decade.
The rating agency ICRA estimates that renewable energy, including hydro, will make up 35% of India’s power generation by FY30, up from 21% in FY24. Meeting the government’s renewable purchase obligation (RPO) target of 43.3% by FY30 will require more than doubling the current renewable energy capacity of 200 GW.
With such transformative policies and investments in place, India’s power sector is not only set for robust growth but also primed to play a pivotal role in driving the global shift toward a sustainable energy future.
