Power Sector in India

India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 442.85 GW as of April 30, 2024.

Advantage India

Growing
Demand

*India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 472.46 GW as of April 30, 2025.

*Growing population along with increasing electrification and per-capita usage will provide further impetus. Power consumption in India in FY23 logged a 9.5% growth to 1,503.65 Billion Units (BU).

*The all-India peak power demand in FY26 is expected to be 277 GW. In FY25, India consumed 1,694 billion units of electricity, an increase of 33% over FY21, translating into a 5-year CAGR of 7.4%.

*India's energy demand is expected to grow in the range of 6–6.5 per cent over the next five years, ratings agency ICRA.

Attractive
Opportunities

*According to a report by Motilal Oswal, the Indian power sector presents an investment opportunity worth Rs. 40,00,000 crore (US$ 461.95 billion) over the next decade, driven by rising demand, infrastructure upgrades, and the transition to clean energy.

*Renewable energy and transmission infrastructure offer attractive prospects, such as Power Grid’s Rs. 2,00,000 crore (US$ 23.10 billion) Capital Expenditure (capex) opportunity.

*India's wind energy sector is making significant strides towards achieving the ambitious target of 100 GW of production by 2030, according to the Indian Wind Turbine Manufacturers Association (IWTMA).

Policy
Support

*India has unveiled a comprehensive plan worth Rs. 9.15 lakh crore (US$ 109.50 billion) to enhance its power infrastructure and meet a projected demand of 458 GW by 2032. This initiative, led by the Ministry of Power under Prime Minister Narendra Modi, aims to strengthen the national power grid and boost energy security.

*Cabinet approves PM-Surya Ghar: Muft Bijli Yojana for installing rooftop solar in one crore households. The government aims to power one crore homes by FY27. Gujarat leads with 3.51 lakh solar-powered households (18.14%), followed by Maharashtra (1.92 lakh, 22.79%), Uttar Pradesh (75,602, 8.69%), Kerala (65,423, 7.73%), and Rajasthan (26,622, 3.14%).

Higher
Investments

*The nation plans to invest Rs. 9,15,920 crore (US$ 107 billion) by 2032 to develop additional transmission lines, supporting its goal to nearly triple its clean power capacity.

*India’s power sector is expected to attract investment worth Rs. 17 lakh crore (US$ 205.31 billion) in next five to seven years.

*India’s energy storage sector is poised to attract an investment of Rs. 4,79,000 crore (US$ 56.07 billion) by 2032, as per the India Energy Storage Alliance (IESA).

*Avaada Group announced on April 29, 2025, that it has signed an initial agreement with the Maharashtra government to develop two pumped storage projects in the state, with a combined capacity of 3,600 megawatts (MW). The projects, which include the 2,400 MW Pawana Falyan and the 1,200 MW Sirsala, will require a cumulative investment of Rs. 15,100 crore (US$ 1.77 billion).

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Last updated: Aug, 2025

Power Industry Report

May, 2025

Introduction

Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy. The fundamental principle of India’s power industry has been to provide universal access to affordable power in a sustainable way. The Ministry of Power has made significant efforts over the past few years to turn the country from one with a power shortage to one with a surplus by establishing a single national grid, fortifying the distribution network, and achieving universal household electrification.

India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, agricultural, and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

India was ranked fourth in wind power capacity and solar power capacity and fourth in renewable power installed capacity, as of 2021. India is the only country among the G20 nations that is on track to achieve the targets under the Paris Agreement.

India's wind energy sector is making significant strides towards achieving the ambitious target of 100 GW of production by 2030, according to the Indian Wind Turbine Manufacturers Association (IWTMA). The all-India peak power demand in FY26 is expected to be 277 GW. In FY25, India consumed 1,694 billion units of electricity, an increase of 33% over FY21, translating into a 5-year CAGR of 7.4%.

India's energy demand is expected to grow in the range of 6-6.5% over the next five years.

Market Size

India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 472.46 GW as of April 30, 2025.

As of April 30, 2025, India has a total installed capacity of 223.62 GW for renewable energy sources, including large hydropower. The breakdown is as follows: Wind power at 51.05 GW, solar power at 107.94 GW, biomass/co-generation at 10.74 GW, small hydro power at 5.10 GW, waste to energy at 0.85 GW, and large hydro at 47.92 GW. This diverse mix highlights India's significant strides in expanding renewable energy infrastructure for a more sustainable energy future.

India's power generation witnessed its highest growth rate in over 30 years in FY23. Power generation in India increased by 6.80% to 1,452.43 billion kilowatt-hours (kWh) as of January 2024. According to data from the Ministry of Power, India's power consumption stood at 1,503.65 BU in April 2023.

The peak power demand in the country stood at 2,49,856 GW upto February 2025.

The coal plants registered a PLF of 73.7% for the first nine-months period in FY23 compared to 68.5% in FY22 for the same period.

Thermal power plant load is estimated to improve by 63% in FY24, fuelled by strong demand growth along with subdued capacity addition in the sector.

According to a report by Motilal Oswal, the Indian power sector presents an investment opportunity worth Rs. 40,00,000 crore (US$ 461.95 billion) over the next decade, driven by rising demand, infrastructure upgrades, and the transition to clean energy.

Developments/Investments

Total FDI inflows in the power sector reached Rs. 1,67,926 crore (US$ 19.68 billion) between April 2000-December 2024, accounting for 2.74% of the total FDI inflow in India. From April 2000-December 2024, India recorded FDI inflow worth Rs. 1,82,012 crore (US$ 21.33 billion) in the non-conventional energy sector.

Some major investments and developments in the Indian power sector are as follows:

India’s energy storage sector is poised to attract an investment of Rs. 4,79,000 crore (US$ 56.07 billion) by 2032, as per the India Energy Storage Alliance (IESA).
Avaada Group announced on April 29, 2025, that it has signed an initial agreement with the Maharashtra government to develop two pumped storage projects in the state, with a combined capacity of 3,600 megawatts (MW). The projects, which include the 2,400 MW Pawana Falyan and the 1,200 MW Sirsala, will require a cumulative investment of Rs. 15,100 crore (US$ 1.77 billion).
India has achieved a historic milestone, surpassing one billion tonnes of coal production in FY24, reinforcing its commitment to energy security and self-reliance. The country produced 997.83 million tonnes of coal during the fiscal year, marking a significant step towards reducing import dependence and strengthening domestic energy supply.
Bharat Heavy Electricals Limited (BHEL) and Hitachi Energy India have secured a contract from Adani Energy Solutions to develop India’s largest private power transmission project, valued at Rs. 12,000 crore (US$ 1.41 billion). The project aims to establish high-voltage direct current (HVDC) terminals to facilitate power transmission from Bhadla, Rajasthan, a major renewable energy hub, to Fatehpur, Uttar Pradesh.
In FY25 (until February 2025), the power generation in India was 1667.60 BU.
In 2023-24, India’s renewable energy sector received Rs. 32,141 crore (US$ 3.7 billion) in foreign investment.
India has received a cumulative amount of US$ 3.8 billion in foreign direct investment (FDI) in the solar energy sector over the past three fiscal years and the ongoing fiscal year until September 2023.
The power generation industry in India will require a total investment of Rs. 33 lakh crore (US$ 400 billion) and 3.78 million power professionals by 2032 to meet the rising energy demands, as per the National Electricity Plan 2022-32.
By 2031, the current installed nuclear power capacity is expected to rise from 7,480 MW to 22,480 MW because of the progressive completion of projects under construction and accorded sanction.
As informed in August 2023, towards achieving carbon neutral Ladakh, NTPC is setting up a hydrogen fuelling station, and solar plant and providing five fuel cell buses for operation on intracity routes of Leh.
In August 2023, North Eastern Electric Power Corporation Limited (NEEPCO), a 100% subsidiary of NTPC, took a significant step towards sustainable energy development by signing a Memorandum of Agreement (MoA) with the Government of Arunachal Pradesh.
In July 2023, NTPC’s Group installed capacity touched 73,024 MW.
In July 2023, PFC signed various MoUs worth Rs. 2.37 lakh crore (US$ 29 billion) with 20 companies in the clean energy space.
In August 2023, Tata Power EV Charging Solutions Limited (TPEVCSL), a Tata Power group Company and Zoomcar, a leading marketplace for car sharing, entered into a Memorandum of Understanding (MoU) to promote widespread electric vehicle adoption and deliver a seamless, user-friendly charging experience to EV users nationwide.
In August 2023, SJVN was conferred with “2nd Annual Greentech Quality & Innovation Award 2023” under the category of Quality Improvement.
In June 2023, Tata Power, one of the leading players in the electric vehicle (EV) charging infrastructure space, collaborated with the Ayodhya Development Authority to set up EV charging points in public parking locations across the city.
Tata Power Company has been recognised as the country's ‘Most Attractive Employer Brand,’ according to the recently published Randstad Employer Brand Research (REBR) 2023 report by HR services provider Randstad India.
In June 2023, a Memorandum of Understanding (MoU) was signed between NHPC Limited and the Government of Odisha through GRIDCO Limited for “Development of Pumped Storage Projects (PSPs) and Renewable Energy in the State of Odisha”.
India has the potential to attract an investment of over US$ 20 billion in renewables in 2023.
In May 2023, NTPC commenced its venture into hydrogen and energy storage solutions with the establishment of a hydrogen hub in Andhra Pradesh.
In May 2023, TP Saurya Tata Power Trading Company Ltd. signed a power purchase agreement to set up a 200 MW solar project at Bikaner, Rajasthan.
Adani Group is exploring a US$ 3 billion investment in Vietnam’s seaport ecosystem and wind and solar energy projects.
In February 2023, Tata Power inaugurated ‘Divyang’ a managed customer relations centre in Mumbai, which is a first among Indian power utilities.
In January 2023, the Union Cabinet (CCEA) approved investment of Rs. 2,614 crores (US$ 315 million) for SJVN’s 382 MW Sunni Dam Hydro Project.
In January 2023, President of India laid foundation stone of SJVN’s 1000 MW Bikaner Solar Power Project in Rajasthan.
In January 2023, the President of India dedicated transmission system built by PowerGrid for 8.9 GW of solar power in Rajasthan.
Mumbai headquartered Essar Group has formed the Essar Energy Transition (EET) with the objective to invest a total of US$ 3.6 billion in developing a range of low carbon energy transition projects over the next five years.

Government Policies & Initiatives

The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth. Some initiatives by the Government to boost the Indian power sector are as below:

PM Surya Ghar scheme is expected to save the government Rs. 75,000 crore (US$ 8.60 billion) annually in electricity costs, add 30 GW of solar capacity, generate 1,000 billion units over 25 years, and reduce CO2 emissions by 720 million tonnes.
The government aims to power one crore homes by FY27. Gujarat leads with 3.51 lakh solar-powered households (18.14%), followed by Maharashtra (1.92 lakh, 22.79%), Uttar Pradesh (75,602, 8.69%), Kerala (65,423, 7.73%), and Rajasthan (26,622, 3.14%).
India has unveiled a comprehensive plan worth Rs. 9.15 lakh crore (US$ 109.50 billion) to enhance its power infrastructure and meet a projected demand of 458 GW by 2032. This initiative, led by the Ministry of Power under Prime Minister Mr. Narendra Modi, aims to strengthen the national power grid and boost energy security. The Government of India has approved new Inter State Transmission System (ISTS) schemes to evacuate 9 GW of RE power from Rajasthan and Karnataka. These schemes will be implemented through Tariff Based Competitive Bidding (TBCB) mode. These schemes are part of 500 GW RE capacity by 2030 out of which 200 GW is already connected.
The Union Cabinet has sanctioned the PM-Surya Ghar: Muft Bijli Yojana. This initiative, with a total budget of Rs. 75,021 crore (US$ 9 billion) aims to install rooftop solar systems and offer complimentary electricity of up to 300 units per month to one crore households.
The Union Budget 2025-26 marks the launch of a Nuclear Energy Mission, which focuses on the research and development (R&D) of Small Modular Reactors (SMRs). The government has allocated Rs. 20,000 crore (US$ 2.33 billion) for this initiative, with the aim of developing at least five indigenously designed and operational SMRs by 2033.
The Union Budget 2025-26 outlines a strategy for the development of Bharat Small Reactors (BSRs), which are designed to reduce land requirements and support industries in decarbonization efforts. Under this plan, private sector entities will provide land, cooling water, and capital, while the Nuclear Power Corporation of India Limited (NPCIL) will be responsible for the design, quality assurance, operation, and maintenance of the reactors.
In the Union Budget 2025-26, the government boosted its flagship rooftop solar initiative, PM Surya Ghar: Muft Bijli Yojana, by allocating Rs. 20,000 crore (US$ 2.33 billion) an 80% increase to fast-track the deployment of rooftop solar projects.
In the Budget for 2024, the government's power sector initiatives have been allocated funds that are 50% higher. Increased funds have been allocated to green hydrogen, solar power, and green-energy corridors in line with the renewable energy target for 2030.
In the Union Budget 2022-23, the government allocated Rs. 7,327 crore (US$ 885 million) for the solar power sector including grid, off-grid, and PM-KUSUM projects.
Under the Union Budget 2022-23, the government announced the issuance of sovereign green bonds, as well as conferring infrastructure status to energy storage systems, including grid-scale battery systems.

Road Ahead

In the current decade (2020-29), the Indian electricity sector is likely to witness a major transformation with respect to demand growth, energy mix and market operations. India wants to ensure that everyone has reliable access to sufficient electricity at all times, while also accelerating the clean energy transition by lowering its reliance on dirty fossil fuels and moving toward more environmentally friendly, renewable sources of energy. Future investments will benefit from strong demand fundamentals, policy support and increasing government focus on infrastructure.

The Government of India is preparing a 'rent a roof' policy for supporting its target of generating 40 GW of power through solar rooftop projects by 2022. It also plans to set up 21 new nuclear power reactors with a total installed capacity of 15,700 MW by 2031.

The Central Electricity Authority (CEA) estimates India’s power requirement to grow to reach 817 GW by 2030. Also, by 2029-30, CEA estimates that the share of renewable energy generation would increase from 18% to 44%, while that of thermal energy is expected to reduce from 78% to 52%.

The government plans to establish renewable energy capacity of 500 GW by 2030.

References: Central Electricity Authority, Ministry of New and Renewable Energy, Media Reports, Press Releases, Press Information Bureau (PIB), Union Budget 2022-23, Union Budget 2023-24