India’s energy transition has shifted gears decisively

As 2025 draws to a close, India’s energy transition appears to have shifted decisively into a higher gear. Over the past year, sustained policy momentum and faster market evolution have converged to reinforce the country’s renewable energy trajectory. With ~257 GW of renewable energy (RE) capacity now operational, India has established itself as the world’s fourth-largest renewable energy market.

Much of this momentum is rooted in broader strategic imperatives: diversifying the energy mix, strengthening energy security amid geopolitical headwinds, addressing intensifying climate risks, and meeting the rising power demand with low-carbon energy. With all this in mind, the government backed a budgetary push toward battery storage and green hydrogen this year, launched the Nuclear Energy Mission, and introduced incentives for domestic refining of rare earth elements under the National Critical Mineral Mission, among other measures.

Further, we saw more proactive regulatory engagement to address the evolving generation mix and grid challenges. Amendments to the Electricity Rules granted storage a clear legal identity, extended transmission-charge waivers, and enabled new commercial constructs such as leasing and shared infrastructure. This dynamic fine-tuning and policymakers remaining receptive to industry feedback contributed to a more conducive operating environment overall, which is key to sustaining both speed and scale in the sector.

Transmission planning made similar progress. Building on last year’s expanded roadmap to raise interregional capacity to 143 GW by 2027 and 168 GW by 2032, right-of-way (ROW) and land-acquisition norms were updated this year. As renewable projects increasingly push into new geographies, these interventions are well-timed.

Reforms also extended downstream. Efforts to strengthen discom finances through uniform accounting norms and selective privatization continued, alongside a growing emphasis on structurally modernizing the power system. Data-driven planning is beginning to take center-stage, opening the door to more granular, AI-enabled optimization across generation, transmission, and storage.

A key highlight of 2025 was also the emergence of a new digital infrastructure framework – the India Energy Stack (IES). The IES is poised to create a standardized, secure, and interoperable digital backbone across the energy value chain. By enabling open data exchange and seamless stakeholder integration, it has the potential to completely transform system-wide efficiency and renewable integration – ultimately the entire power sector as we know it today.

Market design also continues to evolve meaningfully. CERC’s push toward market coupling, SEBI’s approval of monthly baseload derivatives, and draft rules for storage-linked contracts collectively signal a power market that is becoming more liquid, sophisticated, and future-ready. Innovation in business models, ranging from virtual power plants to peer-to-peer mechanisms along with newer products and solutions, points to a gradual democratization of the power markets, critical for sustained sectoral growth.

That said…

2025 also surfaced friction points. Around 40 GW of capacity still awaits PPAs, and transmission buildout needs to accelerate to stay ahead of intermittent and hybrid inflows. Supply-chain concentration in batteries and critical minerals remains a strategic vulnerability.

Going forward, central and state governments should continue to work in close alignment to de-bottleneck execution, maintain regulatory clarity, and accelerate on-ground delivery.

Additionally, the RBI recently revised lending guidelines for renewable energy projects. While well-intentioned, these norms are likely to raise overall funding costs, delaying disbursal of funds and consequently straining fund availability for the projects. Considering the modular nature of renewables, greater flexibility could have supported faster construction timelines.

2026 must be a year of execution. India is already outpacing global energy-demand growth, driven by data centers, EV adoption, and real estate electrification. Meeting this surge will require faster transmission rollout, continued policy and regulatory stability to de-risk investments, and more resilient supply chains. The past year has underscored India’s dependence on external markets for rare earth elements and energy technologies.

There is significant scope for domestic R&D, particularly in energy storage. Beyond existing LFP batteries, India has a strong opportunity to build local capabilities in other battery technologies like aluminium–air, sodium-ion, as well as in long duration energy storage like liquid air. These offer grid stability without relying on critical minerals.

If anything, the past year confirms that India has entered its “Age of Electricity.” The next phase will be defined by integrated solutions, smarter grids, stronger asset quality discipline, and tighter public–private collaboration. With continued policy stability and the right partnerships, India’s clean-energy expansion can shape not just the power sector, but the arc of its economic transformation in the decade ahead.

The world beyond 500 GW has come a-knocking and India is charting a league of its own. My outlook for India’s renewable energy sector remains unequivocally bullish.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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