Power is one of the most important infrastructure elements, essential to national wellbeing and economic development. For the Indian economy to grow steadily, enough electrical infrastructure must exist and be developed. India’s power generation sources range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste.

Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country. Although power generation has grown more than 100-fold since independence, growth in demand has been even higher due to accelerating economic activity.

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’s total renewable energy installed capacity has reached 223.62 GW, marking an impressive 16.87% increase compared to 180.80 GW in April 30, 2024. 

As of April 30, 2025, Solar energy contributed 107.94 GW, followed by 51.05 GW from wind power, 10.74 GW from biomass, 5.10 GW from small hydropower, 0.85 from waste to energy, and 47.92 GW from hydropower.

India’s storage-backed renewable energy capacity is projected to rise sharply to 25–30 gigawatts (GW) by FY28 from almost nil in FY25, according to Crisil Ratings. 

According to a government report, India’s share of renewable energy in electricity generation surged to 12.1% in FY24 from 6% in FY15.

India's energy firms have made significant progress in the global energy sector. According to the S&P Global Platts Top 250 Global Energy Rankings 2022, Oil and Natural Gas Corp. Ltd. ranked 14th.

Power is one of the key sectors attracting FDI inflow into India, and it accounted for about 2.74% of the total FDI inflow until December 2024. 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. 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.

As per the National Infrastructure Pipeline 2019-25, energy sector projects accounted for the highest share (24%) out of the total expected capital expenditure of Rs. 111 lakh crore (US$ 1.4 trillion).

Investments in the renewable energy space have increased significantly over the past few years. SJVN Limited is looking to develop 10,000 MW solar power projects inviting investment of Rs. 50,000 crore (US$ 6.56 billion) in the next five years in Rajasthan. Adani Group has announced an investment of US$ 20 billion over the next 10 years in renewable energy generation and component manufacturing. NTPC has announced that it would invest Rs. 2-2.5 crore (US$ 0.27-0.34 million) over the next 10 years to expand renewable capacity.

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%.

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. 

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.

In FY25 (until February 2025), the power generation in India was 1667.60 BU.

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

India has large reserves of coal. As of April 30, 2025, the total installed coal thermal power capacity in India stood at 212.71 GW.

As of April 30, 2025, India’s gas thermal power capacity stood at 20.13 GW, and lignite thermal power capacity stood at 6.62 GW.

India’s diesel thermal power capacity was 0.58 GW, as of April 30, 2025.

Solar energy is the largest renewable energy source in India. Projects like the Jawaharlal Nehru National Solar Mission are creating a positive environment among investors keen to make use of India’s potential. There are plans to set up four solar power plants of 1 GW each. As of April 30, 2025, India had 175.70 GW of renewable energy sources (RES) capacity (excluding large hydro).

With a large swathe of rivers and water bodies, India has enormous potential for hydropower generation. As of April 30, 2025, India’s hydro power generating capacity stood at 47.92 GW.

As of April 30, 2025, India had 8.78 GW of installed nuclear capacity. With one of the world’s largest reserves of thorium, India has huge potential in nuclear energy generation.

A total of 222.85 GW of generation capacity from non-fossil fuel sources has been installed in the country as of February 28, 2025.

India emerged as the world’s third-largest producer of wind and solar energy electricity in 2024, surpassing Germany, according to the sixth edition of Ember’s Global Electricity Review. The report highlighted that wind and solar accounted for 15% of global electricity generation in 2024, with India’s share at 10%.

Electrification in the country is increasing with support from schemes like Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY), and Integrated Power Development Scheme (IPDS). India has also launched the Mission Innovation CleanTech Exchange, a global initiative that will create a whole network of incubators across member countries to accelerate clean energy innovation.

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 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.

India is set to become a global manufacturing hub with investment across the value chain. The Central Electricity Authority (CEA) estimates India’s power requirement to grow to reach 817 GW by 2030. 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)