Meeting soaring energy demand without losing sight of climate goals
In late 2024, theInternational Energy Agency (IEA) reported that the energy consumed just by India’s air conditioners would outstrip Mexico’s entire power consumption within the next decade. This is as much a sincere reflection of India’s expanding middle class and its rapid economic growth as it also highlights the direct effects of climate change-induced heat stress, the brunt of which many Indians are already more than bearing.
Between 2014-2015 and 2024-2025, India’s peak electricity demand soared by nearly 85%. The IEA’s World Energy Outlook 2024 also projected that India would lead global energy demand growth in the next 10 years.
Unfortunately, this urgent need for more power runs up against the country’s ambitions of phasing out coal. According to Shruti Sharma, programme lead at the International Institute of Sustainable Development (IISD), India’s energy transition is being pulled by two engines: one running on clean energy and the other on fossil fuels. Right now, the fossil engine is heavier, slowing the momentum we need for a faster, cleaner future.
“IISD’s last estimates from 2023 show that fossil fuel subsidies [were] five-times the subsidies for clean energy in FY 2022-2023. The rapidly increasing energy demand is behind the hybrid approach, bolstering all forms of energy supplies in 2023 but sadly limiting the pace of the energy transition,” she said.
India also faces the dual challenge of deploying renewable energy in an environment replete with infrastructure nurtured on fossil fuels even while making it resilient enough to withstand the extremes being wrought by climate change.
In this chapter, let’s delve into the current status, future plans, and inherent challenges of India’s coal, nuclear, and renewable energy sectors, along with an overview of its energy transition trajectory.
Coal conundrum
Coal continues to be the backbone of India’s energy sector, involved in the production of more than 70% of the country’s electricity. In fact, India is one of the world’s largest producers of coal-based energy, second only to China. In FY 2024-2025, India surpassed one billion tonnes in coal production, showcasing a 5% growth in output compared to the previous year.
As a result, emissions from the power sector are climbing at a time when climate science is unequivocal that carbon emissions must fall sharply to keep global warming within safe limits (‘safe’ of course has become a relative term).
Public sector enterprises like Coal India, Ltd. and Singareni Collieries Company, Ltd. dominate the sector. To meet rising demand, the Indian government has been prioritising the expansion of coal output and improving the extraction infrastructure, including in the form of rail corridors and coal washeries. Several new coal-fired power plants are also either under construction or in the pipeline.
Contemporarypredictions suggest that India’s coal demand is likely to rise until at least 2030, possibly peaking around 2035. According to a vision document prepared by the Union Ministry of Coal, the fuel will continue to play a critical role in meeting base-load requirements, especially in States that depend heavily on cheap thermal power. At the same time, India is also attempting to increase coal-use efficiency through measures like supercritical and ultra-supercritical technologies, flexible operation of thermal plants to accommodate renewables, and coal gasification.
According to the IEA, in a net-zero carbon emissions scenario, unabated coal use must fall by more than 90% worldwide by 2050. For India, this means balancing domestic coal dependency with its international climate commitments.
The power sector in India is its largest source of carbon emissions, making coal the biggest culprit. Further, open-cast mining accounts for more than 90% of coal production, leading to large-scale land degradation, deforestation, and even water pollution. There’s also the air pollution resulting from coal combustion. One 2022 study by the Centre for Research on Energy and Clean Air found that emissions from coal-based power plants are responsible for more than 100,000 premature deaths in India every year — a staggering figure. New research has also shown that air pollution from coal plants can decrease crop yields by as much as 10%.
As the cost of renewable energy sources drops and climate regulations tighten, there is increasing financial risk for investors in new coal projects. And yet, millions of livelihoods — including miners, informal workers, and their families — are at risk in a transition scenario.
“Any energy transition roadmap must ensure that the benefits of energy transition are the same for everyone,” said Bharath Jairaj, a clean energy expert and executive director at WRI India. “Socialising the benefits in a manner that’s similar to India’s telescopic tariff and welfare systems might be the key.”
Nuclear, a promise delayed
The Indian physicist Homi J. Bhabha dreamed of establishing nuclear energy in India as early as the 1950s. India’s civil nuclear programme began in the 1960s and the industry has received increased attention since 2008, when India and the U.S. signed their famed nuclear deal. However, nuclear technologies currently have a rather small position in India’s energy environment.
India’s nuclear power capacity doubled in a decade: from 4,780 MW in 2014 to 8,180 MW in 2024. Despite this growth, nuclear energy contributes less than 3% to the country’s total electricity generation. It is nonetheless regarded as a key low-carbon option if the country is to attain long-term energy security and reduce emissions.
The stated goal of the Indian government is to nearly triple the present nuclear capacity by 2031-2032, reaching a production of 22,480 MW. Further, a long-term aspirational goal is to attain 100 GW by 2047 — the centennial year of India’s independence. To this end India is banking on a fleet-mode construction strategy, specifically on domestic 700-MW pressurised heavy water reactors, to expedite capacity augmentation.
As part of India’s three-stage nuclear programme, the nuclear establishment is also investigating the use of small modular reactors, thorium-based reactors, and fast-breeder reactors are also being investigated. If successful, the prototype fast breeder reactor at Kalpakkam — which is almost ready after significant cost and timeline overruns — might signal the start of a new stage in India’s advanced nuclear programme.
Indeed, while new reactors like the units in Kudankulam are in the picture, delays and budget overruns have rendered the sector vulnerable to being outpriced by other renewable energy options. Nuclear projects are still managed and carried out by the Nuclear Power Corporation of India, Ltd., the main public sector developer and operator, and under strict safety-regulatory supervision.
Communities living near nuclear reactors are often concerned about the safety of such facilities operating so close to their homes. While safety technologies have advanced in leaps and bounds over the years, the problem may lie with public perception and the opacity surrounding the establishment’s operations. To add insult to injury, India does not yet have a permanent high-level repository for radioactive waste.
Likewise, while India does have civil nuclear agreements with various countries, the lack of clarity on liability laws and technology transfer has curtailed foreign participation and investment.
Renewables’ race against time
In 2008, the then-government had set a modest target of generating 20 GW of solar power by 2022. But India exceeded expectations with 70 GW of solar energy that year. By 2024, India’s solar capacity had touched 105.65 GW — more than half of the country’s total installed renewable capacity.
In fact, solar still leads the growth followed by wind at a comparable second; the rest is accounted for by biomass, small hydroelectric dams, and waste-to-energy facilities.
“This sector has benefitted from lower technological costs and good, solid policy. India’s international commitments under the Paris Agreement and following COP meetings have served as targets for us to work towards. And this approach is working,” Bharath said.
At the COP26 climate talks in Scotland in 2021, India announced an ambitious target: to achieve 500 GW of non-fossil fuel capacity by 2030. This demanded an annual renewable addition of approximately 40-50 GW — a major increase above the existing rate.
IISD research has shown that existing Central government subsidies are already sufficient to fully bridge the cost gap for solar photovoltaics and battery energy storage systems, according to Sharma.
“However, for offshore wind, green hydrogen, and electric vehicles, additional policy support could be critical. With small, strategic public financial flows, India can unlock much larger private investments — turbocharging the clean energy transition,” she added.
To stimulate domestic solar manufacturing, the government has proposed innovative approaches such as state-specific renewable energy purchase obligations and production-linked incentives (PLIs). Energy storage, particularly battery and pumped hydroelectric projects, is also garnering more attention as a way to manage intermittency.
According to Sharma, the single biggest bottleneck in the path to India’s low-carbon power sector is the weight of electricity subsidies. Half of all energy subsidies still go to keeping power prices artificially low, especially for agriculture, making it harder to invest in renewables and strengthen distribution companies. Without faster reform of subsidy or better targeting of electricity subsidies, India’s energy transition risks getting stuck in first gear.
Apart from that, large renewable installations require a substantial amount of land, which can cause problems with agriculture, forests, and wildlife habitats. Grid operators are facing an increasing problem in managing the fluctuation caused by solar and wind generation. Renewable electricity is increasingly being curtailed, particularly during low-demand hours, due to a lack of enough storage or flexible backup capacity.
As India’s renewable capacity grows, energy storage has emerged as a vital missing piece in assuring 24/7 reliability. Without adequate storage, the system fails to manage the fluctuation of solar and wind, resulting in curtailments and grid instability.
Currently, India’s storage infrastructure is inadequate. According to the Central Electricity Authority (CEA), pumped hydroelectric accounts for the majority of India’s storage capacity — around 4.7 GW — while battery storage is still in its early stages. Recognising this, the Indian government has established ambitious plans, including a target of 47 GW of battery storage by 2031-2032.
“Five years ago, storage wasn’t a part of the conversation. Today, one cannot talk about energy without storage,” Bharath, who is very optimistic about the technology, said.
Sharma shared his outlook: “India’s battery energy storage systems [BESS] are on track to reach cost parity with peak evening electricity tariffs by 2028. Our analysis shows that the current viability gap funding of Rs 3,760 crore ($458 million) is enough to bridge the cost gap — no extra subsidies are needed.”
The need of the hour then is speed: “accelerating BESS auctions and reforming power markets could unlock investment and help scale beyond the initial 4 GWh target toward the 208 GWh needed by 2030,” Sharma added.
The PLI plan for advanced chemistry cell batteries is a significant legislative initiative which aims to generate 50 GWh of domestic manufacturing capacity. Large-scale battery storage projects, such as the 500 MW/1,000 MWh project proposed by the Solar Energy Corporation of India in 2024, are taking shape.
However, cost remains a significant barrier, with lithium-ion battery prices remaining relatively high despite global drops. “Even so, it’s becoming more affordable every day,” Sharma said.
India is also looking at alternative chemistries, such as sodium-ion and flow batteries, to diversify its storage technologies and reduce its reliance on crucial minerals like lithium and cobalt, which bear their own geopolitical and environmental dangers.
Policy momentum
Across all sectors, the success of India’s energy transition will be determined not only by technology but also by policy strength and clarity.
Well-designed policies may boost investment, foster innovation, and ensure a fair and inclusive transition, protecting disadvantaged areas even as new sectors emerge, according to Bharath. “The best policy is one that achieves multiple outcomes.”
India’s Green Energy Corridor project is an instructive example: it was primarily designed to solve the technical difficulty of transporting renewable power, but then it also created over 15,000 jobs in its first phase, upgraded rural grid infrastructure, and improved power quality in numerous states.
Similarly, the PM-KUSUM initiative, which aims to solarise agricultural pumps, has reduced farmers’ reliance on diesel while increasing rural incomes and contributing to renewable energy targets.
Such policies show that, when intelligently implemented, energy measures may simultaneously support climate action, economic growth, and social fairness, making the transition simpler and more politically viable.
India’s energy mix — dominated by coal, supplemented by nuclear power, and increasingly infused with renewables like solar and wind — seems to be positioning the country as a key player in the global clean-energy transition. But even lofty promises aside, Bharath said, “We are exactly where we need to be.”
Ashmita Gupta is a science writer.