At a recent press conference, Manohar Lal, Union Minister of Power, highlighted the remarkable transformation that the power sector has undergone in the past 11 years and set out the vision for the decades ahead. He noted that electricity lies at the heart of economic growth and improvement in living standards, and that the government has made the sector a central focus in its drive towards making India a developed nation by 2047. Edited excerpts…
Power demand
India’s electricity demand has expanded rapidly, with peak power touching 250 GW in May 2024, nearly double the level recorded in 2014. Peak demand could rise to 270 GW by 2025-26. India’s system has managed well so far and is planning ahead for both thermal and renewable capacity additions. While peak shortages have been eliminated, with no gap recorded in recent months, the overall energy shortage stood at a marginal 0.1 per cent in April 2025, a sharp improvement from the 4.2 per cent level of shortages recorded in 2013-14. This marks a shift towards sufficiency, with the possibility of the country soon moving into a surplus situation, which would open up greater opportunities for exports. Power supply availability has also improved significantly at the consumer end. Rural areas now receive an average of 22.6 hours of supply per day, while urban areas receive 23.4 hours, with the small gap attributed to technical factors. This gap is expected to be eliminated as network upgrades progress.
Generation
The generation segment has seen significant progress. Coal availability has remained stable, ensuring smooth generation, and coordination with the coal department is functioning effectively. Comprehensive plans have been formulated under the Shakti Policy to support this. Further, hydro additions have been scaled up, with 3 GW commissioned during 2024-25 and another 3 GW lined up for next year. Both NHPC Limited and SJVN Limited have been granted Navratna status to enhance autonomy and accelerate project development.
The expansion in capacity has been a key enabler. In 2024-25 alone the country added 34 GW of new generation capacity, of which 29.5 GW came from renewable energy – the highest-ever in a single year. This has raised the total installed capacity to 475 GW as of March 2025 from 249 GW in 2014. Total electricity generation grew by 5.2 per cent in 2024-25, rising from 1,739 BUs in 2023-24 to 1,829 BUs in 2024-25. On the export side, India supplied 4,665 MW in 2023-24 and is preparing for more, including through joint ventures with Saudi Arabia and the UAE for two 2 GW each subsea HVDC transmission projects involving a combined investment of about Rs 905 billion.
Transmission
The transmission network, too, has seen significant expansion, with line length reaching 494,000 ckt km in 2024-25 from 291,000 ckt km in 2013-14. To strengthen the intra-state transmission system, it has now been brought under the Late Payment Surcharge (LPS) Rules. This step is expected to attract more private investment in intra-state transmission, which has so far lagged behind interstate transmission. While several players have been active in the interstate segment, their participation in intra-state transmission was limited. The introduction of the LPS Rules for intra-state projects aims to encourage private sector participation by providing them greater financial security.
One of the major challenges in transmission projects has been securing right of way for laying transmission lines. Earlier, compensation offered to farmers for their land was based on fixed rates, which were often inadequate. To address this, the rules have been revised to ensure that compensation is linked to prevailing market rates, determined by independent third-party agencies. Farmers will receive fair compensation, ranging from 30 per cent to 200 per cent of the assessed market value, depending on the nature of the land and project requirements. This reform is expected to ease land acquisition hurdles and accelerate transmission development.
With the increasing requirement for power evacuation, India is now moving beyond the existing 765 kV transmission lines. High voltage lines of 1,100 kV, already in use in countries such as China and the US, are being introduced. Approval has been granted for nine such lines, which are targeted for development by 2034. These ultra-high voltage lines will enable the evacuation of significantly higher power while occupying less land, making transmission more efficient and space-saving.
Both pumped storage and battery storage projects have been integrated into the transmission framework. These projects, which are already under development, will be commissioned by June 30, 2028. The government has provided waivers on transmission charges for power evacuated through such storage systems, thereby supporting the country’s growing need for flexible and reliable energy storage solutions.
Distribution
On the distribution side, efficiency gains are visible. Aggregate technical and commercial (AT&C) losses have been reduced from 22.62 per cent in 2013-14 to 16.12 per cent in 2024-25. The gap between the average cost of supply and average revenue realised, which stood at Re 0.78 per unit a decade ago, has narrowed sharply to Re 0.10 per unit. The roll-out of smart meters has played a decisive role in this turnaround. Installation rates have accelerated from 4,000 per day in 2023 to 115,000 per day as of May 2025, with 31.4 million already deployed. Prepaid meters are being prioritised, beginning with all government offices and colonies by August 2025, and extending to large load consumers by November 2025. This shift to prepaid meters is expected to strengthen discom cash flows and free up resources for investments across generation, transmission and distribution. The aim is to make all electricity meters prepaid over time. This brings transparency, reduces theft, prevents billing disputes and allows consumers to monitor their usage in real time. To encourage adoption, we are even considering a 2-5 per cent concession on prepaid bills. Under the Revamped Distribution Sector Scheme (RDSS) , nearly 100,000 smart meters are being installed daily, with a target of 250 million by 2026. While the deadline may slip slightly, the roll-out is progressing steadily, supported by rebates of Rs 900 per meter. The RDSS also focuses on reducing AT&C losses and strengthening discom finances. The RDSS, with an outlay of Rs 1.3 trillion, is being rolled out to modernise networks and reduce losses. Around 28 per cent of physical progress has been achieved, including projects for feeder segregation and efficiency improvement.
Clean energy
The vision is to build a clean, reliable energy mix where solar, wind and hydro are supported by storage systems. Nuclear capacity will also expand as a non-fossil fuel option. While coal will remain relevant for baseload power in the near term, the trajectory is clearly towards renewables. We are also developing green corridors and planning to declare certain states as “green states” based on renewable penetration. Surplus power will be exported. India already supplies to Bhutan, Myanmar and Bangladesh, and we are in discussions with the UAE and Saudi Arabia. Domestically, the surplus can power data centres and industries like steel and cement, lowering their costs and boosting competitiveness.
Nuclear power is expected to assume a bigger role in the future. The current nuclear capacity is 8 GW, with projects for 15 GW already approved and a pipeline of 22-23 GW under planning. The long-term target is to achieve 100 GW of nuclear capacity by 2047, in line with the strategy to gradually replace thermal after 2035 as part of India’s commitment to net zero by 2070. The government is working to shorten the typical 13-year gestation period for nuclear projects to eight to nine years, with several states already offering sites. To support this, Union Budget 2025-26 has allocated Rs 200 billion for nuclear development, including small modular reactors, with plans to involve the private sector in the programme.
The government is stepping up efforts to support round-the-clock (RTC) clean power. Storage is being promoted through both pumped storage systems and batteries. In parallel, new codes and policies are shaping the energy efficiency agenda. The revised Energy Conservation Building Code (ECBC) issued this year has led to measurable gains, with over 3,500 commercial buildings complying and achieving energy savings of around 18 per cent. So far, 26 states and union territories have formally notified the ECBC, while 13 states have incorporated its provisions into their building by-laws. Over 3,500 buildings have been approved as ECBC-compliant, with Kerala being the first state to officially notify and implement the code.
Guidelines for electric vehicle charging and battery swapping have been notified, while new standards are being introduced to regulate air conditioner temperatures to between 20°C and 28°C.
Meanwhile, cybersecurity protocols are being tightened across generation, transmission and distribution to guard against emerging threats.
Outlook
Several key announcements have been made in the sector. The country currently has adequate generation capacity, and renewable sources such as solar and wind are available as per their natural cycles – solar during daylight hours and wind when the wind blows. To ensure reliable RTC power supply, the government is promoting storage solutions such as pumped storage projects and battery energy storage systems. Viability gap funding has been extended to support these initiatives. The current programme includes 13.2 GW of storage capacity, while a new scheme targets an additional 30 GWh, backed by an investment of Rs 330 billion. These measures are designed to attract greater private sector participation in developing battery storage infrastructure.
Another critical reform is the creation of a national carbon market, which will be launched by June 2026. This platform will allow states and industries to trade carbon credits, providing compliance flexibility for renewable purchase obligations and fostering competition in emissions reduction.
Conclusion
India’s power sector has transformed over the past decade, achieving near self-sufficiency while expanding renewables, strengthening transmission and modernising distribution. With record capacity additions, lower losses and private sector reforms, it is well positioned to meet the rising demand. The road map for the sector – driven by storage, nuclear expansion and a carbon market – underscores India’s commitment to sustainability and competitiveness on the path to becoming a developed, net-zero nation by 2047.
“India’s power sector has transformed over the past decade, achieving near self-sufficiency while expanding renewables, strengthening transmission and modernising distribution.”