India’s power sector is evolving rapidly, driven by growing power demand and a focus on clean energy transition. Reforms in distribution, expansion of renewables, advances in storage, and digitalisation are reshaping the industry, while policy measures are steering the shift to clean energy. However, challenges such as the discoms’ financial stress, inadequate transmission capacity, fuel security, and the integration of variable renewable power continue to pose hurdles. In this context, industry experts share their views on the sector’s current status, key achievements, pressing challenges and the way forward….
What is your assessment of the current state of the power sector? What have been the key achievements in the past one year or so?
Ajit Kumar Bishoi
India has made significant progress in strengthening its energy sector in recent years. The country is successfully balancing the twin goals of meeting rising electricity demand and promoting sustainability. As one of the fastest growing major economies, India plays a central role in the global energy transition. Its energy demand is expected to grow at the fastest rate among major economies, driven by sustained economic growth. Consequently, India’s share in global primary energy consumption is projected to double by 2035.
Over the past decade, India’s power sector has seen robust expansion, driven by rising demand, infrastructure development and strong policy support for both conventional and renewable energy sources. The installed capacity has reached 490 GW as of July 2025, with electricity generation at 1,824 BUs in FY 2024-25. Non-fossil fuel sources now contribute 246 GW (50 per cent) of the total capacity, including 237.5 GW of renewables and 8.8 GW of nuclear.
Gajanan Kale
The Indian power sector is undergoing a significant transformation, with distribution emerging as the most critical and consumer-facing segment of the value chain. States that were once burdened with unreliable supply, high losses and weak customer service are now witnessing visible improvements. Technology adoption, data-driven monitoring and public-private partnerships have become crucial enablers of this shift, providing both efficiency gains and a more customer-centric service experience.
Odisha is a standout example. The Odisha government, in partnership with Tata Power, has driven one of India’s most ambitious distribution reforms. Since taking over in 2020, Tata Power operates four discoms – TP Central Odisha Distribution Limited, TP Northern Odisha Distribution Limited, TP Western Odisha Distribution Limited and TP Southern Odisha Distribution Limited – which have together invested over Rs 59.86 billion to modernise the network. This includes extensive infrastructure upgrades supported by supervisory control and data acquisition (SCADA) systems, power distribution training centres and the automation of field equipment such as ring main units (RMUs), which have strengthened network reliability and monitoring.
More than 40,000 transformers and 1,200 substations have been added, while nearly 300,000 faulty meters have been replaced to ensure accurate billing. As a result, aggregate technical and commercial (AT&C) losses have reduced by nearly 13 per cent as of FY 2025. Importantly, Odisha discoms have been recognised in the Ministry of Power’s (MoP) 13th Annual Integrated Ratings and Rankings report, securing A+ grades for two consecutive years, ranking them among India’s top-performing utilities.
The transformation is not just technical, it is also consumer-facing. Initiatives like Gaon Chala and state-wide Anubhav Kendras have extended customer service to rural and tribal areas, ensuring grievance redressal, digital billing and faster complaint resolution. Outages are less frequent, billing is more transparent and consumers’ trust in the system has steadily grown.
Ajay Sharma and Pankaj Kumar Gupta
The Indian power sector demonstrated resilience and growth during 2024-25, successfully meeting an all-time peak demand of 250 GW, with energy shortages reduced to just 0.1 per cent – one of the lowest levels ever. The per capita electricity consumption rose to 1,395 kWh, reflecting higher living standards and industrial activity. The Government of India (GoI) trust that the “Make in India” will significantly boost industrial production and is expected to accelerate the overall power requirement in the country in the years to come. India’s installed capacity reached 485 GW by June 2025, supported by rapid renewable additions (with solar crossing 100 GW) and the award of new thermal projects. Transmission expansion under the new National Electricity Plan (2023-32) gathered pace, while distribution reforms under the Revamped Distribution Sector Scheme brought AT&C losses down to around 15 per cent.
The NTPC group achieved its highest-ever generation of around 439 BUs, recording a 4 per cent growth. Its coal fleet delivered a plant load factor (PLF) of 77.44 per cent, the best in seven years and well above the national average, underlining NTPC’s role in ensuring grid reliability during peak demand periods. Installed capacity reached 78.6 GW in March 2025, with nearly 31 GW under construction. NTPC, with about 8 GW of operational renewable capacity and a pipeline exceeding 24 GW, is progressing towards its 60 GW target by 2032. Pumped storage also gained traction, with 5.6 GW of capacity allocated and detailed project reports under preparation.
NTPC expanded into nuclear through its ASHVINI joint venture (JV) with NPCIL-Nuclear Power Corporation of India Limited (NPCIL), achieving a breakthrough as the 4×700 MW Mahi Banswara project secured approvals. Notably, NTPC commissioned the world’s highest refuelling station in Leh, launched green hydrogen projects, achieved 98 per cent ash utilisation and scaled biomass co-firing to 700,000 MT. Specific water consumption fell to 2.58 litres per kWh, with zero liquid discharge at most stations. Alongside this, NTPC advanced work on new technologies, from carbon capture and utilisation linked to methanol and ethanol production, to torrefied biomass co-firing at coal plants, waste-to-energy technologies, etc. Financially, NTPC delivered its highest-ever realisation of Rs 1.6 trillion.
Arun Sharma
Over the past year, India’s power sector has entered a dynamic phase of evolution, underpinned by ambitious decarbonisation goals and accelerated clean energy adoption. The country has already achieved over 50 per cent of its installed electricity capacity from non-fossil fuel sources – five years ahead of the 2030 target. Financial year 2024-25 witnessed a record renewable capacity addition of 29.5 GW, including 23.8 GW from solar alone, taking the total renewable capacity to 220.1 GW. Between January and June 2025, renewable power generation rose by 24.4 per cent to reach an all-time high of 134.4 billion kWh.
Government-led initiatives, such as the production-linked incentive (PLI) schemes for solar photovoltaic (PV) manufacturing, battery storage and green hydrogen, have bolstered domestic manufacturing, strengthened energy security and reduced import dependence. The extension of transmission charge waivers for energy storage projects until 2028, along with the Rs 54 billion scheme to support 30 GWh of battery storage, underscores the government’s proactive approach towards ensuring smooth renewable integration into the grid.
India is steadily advancing towards its 500 GW non-fossil fuel capacity target by 2030, with solar and wind leading the charge. Technologies such as artificial intelligence (AI)-based forecasting, real-time monitoring and distributed infrastructure are playing an increasingly vital role, especially in complex terrain and high-demand industrial regions.
The Vision 2047 framework, anchored in decarbonisation, digitalisation, decentralisation and democratisation, is providing a clear road map for the sector’s long-term evolution. Utilities are embracing smart grid technologies and hybrid renewable-plus-storage models, while policy reforms are streamlining project execution by addressing long-standing challenges such as land acquisition and right-of-way approvals.
Advanced solutions, including drone-based surveys and digital twins, are transforming project planning and execution. Overall, the sector is moving away from one-size-fits-all approaches towards region-specific, data-driven strategies. Looking ahead, India’s power sector is well positioned to balance ambitious growth with operational agility, leveraging innovation, infrastructure readiness and supportive policies to build a resilient, inclusive and sustainable energy future.
What are the biggest challenges facing the sector? How can these be resolved?
Ajit Kumar Bishoi
The power sector is crucial to a country’s development and well-being. In India, a robust transmission and distribution system, including last-mile connectivity, is essential for economic growth. The goal is to ensure that everyone can sustainably afford clean and green electricity.
To address the challenges associated with the transition to sustainable and clean energy sources, a diversified energy strategy, including a smart mix of renewables combined with storage systems, nuclear, biofuels and thermal power, is essential to ensure energy security while minimising operational risks.
Power distribution continues to be the weakest link in the power sector value chain. The early turnaround of discoms is vital to meet consumer demands and sustain the country’s economic growth.
In the power exchange space, the Central Electricity Regulatory Commission’s (CERC) recent order directing the implementation of coupling is a welcome step. Market coupling will eventually bring greater transparency in the power sector. It will help create a more integrated and efficient Indian electricity market by promoting price convergence, enhancing competition, reducing discoms’ power purchase costs and enabling the optimum utilisation of installed capacity.
In the foreseeable future, we expect a significant increase in digital transactions and the introduction of many new contracts, resulting in the deepening of power markets. Power exchanges are expected to introduce new contracts related to peer-to-peer trading, capacity markets, contracts for difference in the form of virtual power purchase agreements (where brown attributes are traded through power exchange contracts), aggregation of distributed energy sources, market-based economic despatch, secondary reserves ancillary services, carbon markets, etc. These additions will diversify and scale up their existing offerings.
“India is successfully balancing the twin goalsof meeting rising electricity demand and promoting sustainability.” Ajit Kumar Bishoi
Gajanan Kale
While the sector has made significant progress, discoms across India continue to face structural challenges, including financial stress, high AT&C losses, weak infrastructure and delayed payments to generators, which ripple across the entire value chain.
When Tata Power assumed responsibility for Odisha’s four discoms, the challenge was not merely to close operational gaps but also to rebuild financial sustainability and consumer confidence. This turnaround was enabled by strong governance, operational autonomy and consistent support from the Odisha government.
A critical initiative was “Parivartan to Pragati”, a 10-module change management programme designed to embed accountability, agility and customer centricity in the workforce. These reforms went beyond infrastructure upgrades to address organisational culture and employee ownership.
Another critical responsibility has been ensuring the sector’s financial health. Odisha discoms now pay their monthly dues to generators and transmission companies on time, with no outstanding dues – a rare achievement in India’s distribution landscape. This has enhanced stakeholder confidence across the value chain.
The result is that Odisha’s discoms, once considered stressed, have steadily reduced AT&C losses, improved financials and delivered more reliable services. The state now demonstrates how distribution reform is possible when there is clear government backing, strong governance, private sector efficiency and a people-first approach.
“Odisha now demonstrates how distribution reform is possible when there is clear government backing, strong governance, private sector efficiency and a people-first approach.” Gajanan Kale
Ajay Sharma and Pankaj Kumar Gupta
Although 2024-25 was a year of strong performance, the power sector still faces critical challenges. Managing peak demand and flexibility is becoming increasingly complex with rising renewable penetration, leading to steep evening and seasonal ramps. This demands both fast-responding storage and flexible thermal plants. Thermal plants operate more efficiently at higher loads, which results in lower specific CO2 emissions per unit of electricity. Therefore, flexible operation of thermal plants needs to be optimised to ensure that they operate closer to higher load levels, thereby enhancing efficiency and reducing the carbon footprint. Fuel security is also a key concern. Despite improved domestic coal supply, ensuring adequate stocks during peak months, scaling captive coal, strengthening logistics and reducing import dependence remain priorities. Fuel costs – which are largely driven by transportation expenses and coal sourcing – constitute a significant portion of the overall power tariffs. Therefore, policy advocacy must focus on minimising the fuel component cost. Sourcing coal from the nearest location, which GoI is doing, can reduce logistics costs and help in moderating the cost of electricity for consumers. Project execution is another hurdle, as land acquisition, clearances, transmission readiness and manufacturing capacity can delay renewable and pumped storage projects (PSPs). Meanwhile, balancing decarbonisation with reliability is essential as coal continues to serve as the backbone of India’s power sector. Finally, cost-effective storage solutions, including long-duration and seasonal options, are crucial for round-the-clock renewable power. Apart from conventional storage technologies such as batteries and pumped hydro, chilled water storage can play an important role in storage technologies given the increase in the use of air conditioning. In this system, cooling units produce and store cold water during off-peak hours when renewable or thermal power is surplus. The stored chilled water is then used during peak demand hours, helping reduce stress on the grid and avoiding costly peak-time additions. It also enables thermal plants to operate more steadily during low-demand periods, thereby supporting flexibilisation, improving renewable energy utilisation and reducing emissions.
“The coming years will be about balancing energy security with the energy transition.” Ajay Sharma and Pankaj Kumar Gupta
Arun Sharma
India’s power sector has witnessed tremendous growth in recent years, driven by ambitious renewable energy targets, large-scale capacity additions and a strong policy push from the government. This progress has positioned the country as a global leader in the clean energy transition. Yet, despite these gains, the sector requires some strategic and systemic reforms to achieve long-term goals.
One of the key challenges is the mismatch between renewable energy expansion and transmission grid infrastructure. Government-led efforts, such as establishing state-backed transmission firms and targeting the addition of over 191,000 ckt km of lines by 2032, are encouraging but must outpace renewable expansions to avoid evacuation bottlenecks. Securing land for transmission corridors, resolving compensation-related disputes, and obtaining necessary permits and approvals from various regulatory bodies are a few complex issues that need immediate attention.
Equally pressing is the financial stress on discoms, where legacy debt, high AT&C losses and delays in subsidy disbursal undermine operational efficiency. Programmes such as the Ujwal Discom Assurance Yojana and the Revamped Distribution Sector Scheme have provided some relief, while recent measures by the Group of Ministers to enforce cost-reflective tariffs and leverage AI-driven operational reforms signal a clear intent to strengthen this critical link in the value chain.
Energy storage and flexible generation also remain important aspects. While policies to promote battery storage and solar-hybrid integration are under way, closing the storage gap is essential to fully harness India’s renewable potential.
Looking ahead, progress hinges on aligning capacity growth with infrastructure readiness, policy clarity and digital modernisation. With the government accelerating efforts on these fronts, the sector has the potential to evolve into a resilient, future-ready backbone for India’s sustainable growth.
“The Vision 2047 framework, anchored in decarbonisation, digitalisation, decentralisation and democratisation, is providing a clear road map for the sector’s long-term evolution.” Arun Sharma
What is your outlook for the sector for the near to medium term? What are the key emerging trends to watch in the coming years?
Ajit Kumar Bishoi
We are at a very interesting juncture right now, with significant policy initiatives being taken to drive the power sector forward. Power markets, and especially power exchanges, are key instruments in enhancing efficiency for all consumers.
The introduction of electricity derivatives is a major development in India’s evolving power market architecture. In the net zero energy transition – where distributed, intermittent sources of power generation are expected to contribute over 50 per cent of installed generating capacity by 2030 – the introduction of long-duration electricity derivatives products will help power market participants hedge their capex risks.
In order to move towards a greener economy, in June 2022, the MoP notified the Carbon Credit Trading Scheme, aimed at involving the corporate and private sectors in energy savings and carbon emission reductions. Meanwhile, the CERC has notified draft regulations for the trading of carbon credit certificates, with the final regulations expected shortly. With the successful operation of the renewable energy certificate and energy saving certificate markets over the years, the power exchanges are now poised to play a significant role in the development of a carbon market.
Policymakers and regulators have taken significant steps by notifying the resource adequacy framework, which emphasises the need for an optimal capacity mix to meet expected demand at the least cost. Going forward, new generation capacities, energy storage and other flexible resources will be required to reliably meet future demand at optimal costs.
Policymakers and regulators are taking steps to further deepen the short-term market to improve liquidity and price discovery. The goal is to increase the size of the short-term market from the current 10 per cent to nearly 25 per cent in the near future. The introduction of new reforms, such as market-based economic despatch (MBED), is the need of the hour, which can now be implemented following the successful roll-out of market coupling. The coupling of the day-ahead market and the real-time market with security constrained economic despatch will eventually lead to the implementation of MBED through the market coupling operator.
Today, we have a highly supportive policy and regulatory environment, creating significant opportunities for the power exchanges to serve the power market through a wide range of contracts with varying tenures, catering to diverse market segments.
Ultimately, the power exchanges serve as marketplaces, where buyers and sellers can efficiently and transparently manage their portfolios. Power Exchange India Limited continues to work towards enhancing this experience for all market participants.
Gajanan Kale
We are highly optimistic about the future. As India moves towards becoming a $10 trillion economy and achieving its 2070 net zero vision, the power sector will remain foundational to both growth and sustainability. Distribution will play a pivotal role in ensuring financial stability, consumer empowerment and system reliability.
One defining trend is the digital transformation of networks. Utilities are increasingly adopting SCADA systems, automated RMUs and real-time analytics to improve efficiency and transparency. Smart meter deployment is expanding – over 130,000 have already been installed in Odisha – alongside advanced IT tools that enhance billing accuracy and consumer engagement. Odisha’s first-of-its-kind power distribution technology centre, 24×7 integrated call centre, approximately 60 customer care centres, 3,000 fuse call centres and Anubhav Kendras (covering about 40 square km each) have created a strong, accessible service backbone even in rural areas.
Another important shift is decentralised and green generation. Consumers are becoming prosumers through rooftop solar, microgrids and distributed energy. Odisha is uniquely positioned in this transition – it is among the few states that provide state financial assistance (SFA) in addition to central financial assistance (CFA) for rooftop solar. The discoms have leveraged IT-enabled platforms to help customers seamlessly bridge the CFA-SFA gap, ensuring affordability and adoption at scale.
These advancements are aligned with Odisha’s Viksit Odisha 2036 vision, which dovetails with India’s Viksit Bharat goals of inclusive, sustainable and technology-led growth. The state’s experience – grounded in government support, private efficiency and community engagement – offers a scalable blueprint for other reforming states such as Uttar Pradesh and Rajasthan. Its success shows how sustained reforms, technology adoption and community engagement can modernise distribution networks and directly improve the quality of life for millions.
The Odisha model demonstrates the crucial role of government support, private sector efficiency and technology in making distribution financially sustainable, operationally efficient, and consumer-centric – a benchmark for other states to follow.
Ajay Sharma and Pankaj Kumar Gupta
The outlook for India’s power sector remains robust. In the near term, renewables plus storage is expected to become the default capacity model, with battery storage gaining traction through supportive policies and viability gap funding. Pumped storage will play a larger role in providing long-duration balancing. Thermal power will remain the grid’s backbone for baseload, equipped with emission control technologies and biomass co-firing to lower its carbon footprint. Gas-based capacity, if supported by affordable fuel supply, could serve as a peaking and balancing source.
For NTPC, the coming years are about balancing energy security with the energy transition. With 31 GW under construction, we have clear visibility to meet demand growth. On the clean energy front, we are on track to achieve 60 GW of renewable capacity by 2032, with 8 GW operational and over 24 GW under development. PSPs and other storage projects will add crucial grid flexibility. Nuclear is also re-emerging as a firm, clean baseload source, with the Mahi Banswara project advancing through our ASHVINI JV and NTPC Parmanu Urja Nigam Limited (NPUNL) exploring advanced technologies.
Arun Sharma
India’s power sector is entering a decisive phase of transformation, where the confluence of policy reforms, renewable capacity expansion and digital innovation is reshaping its future trajectory. While the near-term outlook remains stable, the medium term signals a structural shift towards a greener, smarter and more resilient grid.
Renewable energy will continue to lead this transformation, with India targeting 500 GW of non-fossil fuel capacity by 2030. This rapid build-out, however, brings into focus the need for parallel advancements in transmission infrastructure and grid readiness. The mismatch between renewable generation growth and grid absorption capacity is emerging as a key bottleneck, particularly in states with high renewable energy potential but limited evacuation capacity.
Another trend gaining momentum is the deployment of energy storage solutions and hybrid renewable models to address intermittency challenges. These solutions, ranging from battery storage to pumped hydro, will be critical to providing round-the-clock renewable power and ensuring system stability.
At the same time, the sector is seeing early signs of overcapacity risks in conventional power, especially in regions with sustained low demand. This underscores the need for more granular demand forecasting and integrated planning between generation and transmission.
Policy reforms, grid digitalisation and faster project clearances are key to unlocking private investments and accelerating execution. Going forward, the success of India’s energy transition will depend on its ability to harmonise infrastructure growth with market reforms while ensuring equitable access, reliability and sustainability across the grid.