At the India Infrastructure Forum 2025, the session on the electricity sector brought together key stakeholders to deliberate on the future of the power industry in India. The session began with brief remarks and an interaction with Dr Srikant Nagulapalli, Additional Secretary, Ministry of Power, followed by a panel discussion among Dr Nagulapalli; Rimali Batra, Partner, DSK Legal; Ajay Dua, Director, NTPC Limited; and Dr Puneet Tyagi, Chief General Manager (Engineering – HVDC), Power Grid Corporation of India (Powergrid). The discussion centred around defining the sectoral targets for 2030, formulating effective strategies to achieve them, identifying emerging opportunities and addressing critical challenges that could impact the sector’s growth and transformation.
State of the sector
Over the past decade, the power sector has seen remarkable progress, with installed capacity nearly doubling from 249 GW to 475 GW. Looking ahead, plans are in place to expand this capacity further to 777 GW. As the country’s power demand grows, there is a focus on meeting this demand from non-fossil energy sources. Currently, renewable energy constitutes 48 per cent of the total installed capacity, with a target of reaching 64 per cent by 2030, broadly outlining the sector’s strategic direction.
India’s power demand continues its upward trajectory. In 2024, the country successfully met a peak demand of 250 GW. The projections indicate a substantial increase, with peak demand expected to reach 335 GW during daytime hours by 2030, and approximately 325 GW during non-solar hours. The primary goal is to meet this peak demand in a reliable manner. The peak demand has grown by 10-15 GW every year, and going forward, the sector anticipates it to increase by 15-20 GW every year.
Transmission lines are becoming increasingly vital as renewable energy penetration grows. Recognising this, India has significantly augmented its national grid over the past decade, adding almost 200,000 circuit kilometres (ckt km). Currently, the grid stands at 492,000 ckt km, with plans to add another 130,000 ckt km over the next five years. A strategic approach is to distribute renewable energy generation across the states, aiming to minimise the length of new lines and, where feasible, expand state grids. Plans for evacuating over 200 GW of capacity at the interstate transmission system (ISTS) level have already been approved. To ease right of way challenges, the central government has increased compensation for landowners by linking it to the market value of land. This significant change is expected to facilitate the laying of transmission lines, especially in peri-urban and urban areas.
In the distribution segment, aggregate technical and commercial losses have declined from approximately 23 per cent to 16 per cent over the past decade. The target is to further reduce these losses to 10-12 per cent to attract investment and ensure assured returns, actively supported by the government through policy initiatives aimed at improving sector viability.
Renewable energy integration
The primary challenges associated with renewable energy pertain to intermittency and variability. These factors directly impact the grid and power dispatch. India’s robust national grid, connecting various generation sources, serves this purpose effectively, providing support in case of renewable energy variability. To manage the uncertainty associated with dispatchable power from renewables, renewable energy management centres (RMCs) have been established for forecasting. Based on the accuracy of these forecasts, the grid’s uncertainty can be kept under control. Currently, there are 13 RMCs, with plans to augment and upgrade their technology to incorporate more artificial intelligence (AI) and machine learning for highly accurate forecasting.
A key challenge with renewable energy, unlike conventional power plants, is that its generation locations are predetermined by resource availability, such as solar irradiance and wind speeds. This necessitates the establishment of solar and wind capacities in these resource-rich areas, requiring extensive transmission lines to deliver electricity to consumption centres. As renewable energy projects have a low gestation period (typically 12-18 months), compared to the longer time required for transmission infrastructure, planners are undertaking renewable energy potential-based planning for the transmission system, leading to the construction of heavy corridors designed with future renewable energy potential in mind. These high-capacity high voltage direct current (HVDC) links, requiring 48-54 months for construction, are being built to accommodate future potential, and connectivity is granted based on this ongoing progress.
As renewable energy is variable in nature, the transmission system needs to be capable of handling its intermittency. There is increasing focus on the adoption of controllable transmission resources, including various HVDC systems and static synchronous compensators that can manage this variability, leading to more flexible grids. The tariff-based competitive bidding has proven successful, and the growing private-sector participation in the ISTS – with approximately 15 per cent of it privately owned and operated (higher in new projects) – is a strong indicator of this trend. Over the past one to two years, private investors have accounted for about 50 per cent of the ISTS, with the remaining share being taken up by powergrid, marking a very positive sign for the sector’s future.
At the intra-state level, there is a need to expand transmission grids to support the growing penetration of renewable energy. Tariff-based competitive bidding is also being promoted at the state level, with ongoing policy initiatives and active collaboration with the transmission industry to address issues and attract further investment. The power ministry is working with states to establish a threshold beyond which projects will be awarded through tariff-based competitive bidding.
NTPC’s evolving role
In view of the increasing power demand, the government has set a target to add 80 GW of coal-based thermal capacity in the next five to six years. Of this, 26 GW is earmarked for NTPC Limited, which is actively progressing towards this goal. Currently, NTPC has approximately 14 GW of coal capacity under construction, with about 3 GW expected to be commissioned this year and an additional 1.5 GW next year. In the previous financial year, new coal projects totalling around 9 GW were awarded. Beyond coal, NTPC’s subsidiary, NTPC Green Energy Limited, also plans to add approximately 3 GW of renewable energy this year and another 5 GW next year. By 2032, NTPC Limited plans to add 120 GW 120 GW of green capacity in the installed capacity and 120 GW of other capacity.
In the coal-based power generation segment, efforts are directed towards reducing environmental emissions. NTPC Limited has awarded contracts for flue gas desulfurisation (FGD) systems for 95 per cent of its 60 GW operational coal-based capacity, of which FGD is already operational for around 12 GW. The remaining capacity is expected to be equipped with FGD systems within one to two years to ensure compliance with sulphur oxide emission norms. For nitrous oxide control, coal burners, specifically overfired burners, have been modified, and the company is currently within the mandated limit of 450 mg per Nm3 set by the Ministry of Environment, Forest and Climate Change.
Further, all coal-based generating stations are undergoing flexibilisation. This is important because the significant influx of solar power during the daytime requires coal-based stations to operate with greater flexibility. Although traditionally designed for base load operation, NTPC stations are now capable of backing down to 55 per cent generation, which is a significant achievement. In contrast, many state-run generating stations continue to struggle with this flexibility, a concern often highlighted by the government and regulators. As renewable energy capacity grows, it is essential for all thermal power stations to adapt to operating at a minimum generation level of 55 per cent. As stations are designed for maximum efficiency near full generation, operating at lower loading levels affects their efficiency. However, this challenge has been addressed through the Central Electricity Regulatory Commission’s (CERC) tariff regulations, which allow for a corresponding increase in heat rate and auxiliary power consumption to compensate for the loss in efficiency. Additionally, the feasibility of two-shift operations is currently being evaluated.
The way forward
With regard to rural electrification, the Electricity Act of 2003 was introduced to address two major challenges: access to electricity and financial viability. Since then, significant progress has been made on the access front – all villages and willing households are now connected to the electricity grid. Transmission and distribution (T&D) networks have expanded significantly, reaching remote areas through various government initiatives. The issue of inadequate generation capacity, previously constrained by demand outstripping supply, has largely been resolved with private investment. While the government continues to focus on improving financial viability, this area still requires substantial attention. Although power generation has been liberalised, T&D networks, by nature, remain natural monopolies, regardless of whether they are publicly or privately owned.
The co-location of generation sources is particularly important for optimising the use of existing transmission infrastructure. The CEA recently released an advisory aimed at maximising the utilisation of transmission lines originally designed to evacuate solar power, which often remain underutilised during night-time hours. The advisory encourages setting up additional capacity at the same site, supported by battery storage, to enable power evacuation during non-solar hours. This approach is critical for meeting demand beyond daylight hours and underscores the importance of co-locating solar generation with battery storage systems.
Aligned with the vision of Viksit Bharat 2047, achieving energy independence will require the domestic manufacturing of critical equipment and technologies. However, to achieve this goal, several challenges must be addressed. These include supply chain disruptions due to geopolitical factors and limitations in local manufacturing capacity. The development of longer transmission lines capable of carrying high power across vast distances is essential, particularly through HVDC systems, which must be produced domestically. Additionally, components such as gas insulated substations and aluminium-based equipment used in substations are key areas where domestic manufacturing capabilities need significant strengthening.
The Central Electricity Authority (CEA) has undertaken initiatives to accelerate the development of pumped storage plant projects. It has reduced the time required for project facilitation and detailed project report approvals. Additionally, budgetary allocation has also increased, with financial assistance of up to Rs 7.5 million per MW now permitted. As per broader objectives, the CEA plans to achieve 30-40 GW of installed capacity.
While battery energy storage system projects are more complex to install, they benefit from relatively low operational expenditure. To encourage their adoption, the government has launched a viability gap funding scheme that provides financial support for 13 GWh of battery storage capacity. The broader goal, as per CEA estimates, is to achieve 40 GWh of battery storage by 2030-2032.
For nuclear energy, the government is planning to introduce relaxation in the policy and regulatory frameworks to generate strong interest from the private sector. For hydropower, there are plans to install new capacity in the north-eastern states, with central public sector undertakings actively engaged in these developments.
To conclude, India’s electricity sector stands at a pivotal moment of transformation. With well-defined targets for capacity expansion, renewable energy integration and decarbonisation, the future roadmap is both ambitious and firmly rooted in progressive policies. To realise the sector’s vision for 2030 and beyond, sustained attention to regulatory certainty, transmission infrastructure, discom financial stability and the strengthening of domestic manufacturing will be critical.
