Decoding India’s Energy Transition

General Studies Paper-3

Context

• Recently, the World Economic Forum (WEF) revealed that India secured 71st position in 2025, down from 63rd in 2024 and 67th in 2023 because of several ‘structural challenges’.

India’s Global Standing in Energy Transition

• The World Economic Forum (WEF), in collaboration with Accenture, recently released its 2025 Fostering Effective Energy Transition report.
• It evaluates 118 countries based on the Energy Transition Index (ETI), which assesses their performance and readiness for clean energy transformation.
  • India ranked 71st with an ETI score of 53.3, down from 63rd in 2024.
  • Sweden retained the top spot with an ETI score of 77.5.
• Renewable Energy Expansion: Increased from 48 GW in 2009 to 204 GW in 2024, achieving a 10% CAGR.
  • Projected solar PV capacity for 2025–2029 is 188–278 GW, making India a global leader (IRENA, 2025).

Persistent Structural Challenges

• Fossil Fuel Dependence: India is the third-largest renewable energy producer (1.77 EJ) after China (13.9 EJ) and the U.S. (6.65 EJ).
  • Fossil fuels remain dominant in the national energy mix.
  • Coal consumption rose to 21.98 Exajoules (EJ) in 2023, up from 6.53 EJ in 1998, marking a 5% CAGR.
  • Petroleum use has increased, especially in agriculture, between 2022 and 2023 (NITI Aayog, 2024).
• Unequal Access to Clean Energy: Disparities in clean cooking fuel access continue to plague rural and low-income households:
  • The Pradhan Mantri Ujjwala Yojana (PMUY) has expanded LPG access to Below Poverty Line (BPL) households.
  • However, sustained usage is limited due to cost, supply issues, and inconvenience, leading to fuel stacking (use of multiple fuels).

Other Challenges

• High Fossil Fuel Dependence: Despite progress, fossil fuels still supply the bulk of India’s primary energy and are responsible for 75% of total greenhouse gas (GHG) emissions.
• Rising Energy Demand: India’s primary energy supply has grown by 54.5% in the last decade due to its booming population and economic growth. Meeting future demand sustainably remains a challenge.
• Emissions Intensity: India has reduced emissions intensity of its GDP by 33% from 2005-2019, but steep further reductions are still required for net-zero aims.
• Financing & Investment: Achieving massive renewable targets and grid modernization will need sustained and increased domestic and international investment.
• Grid Integration & Flexibility: Integrating high shares of variable renewables (solar, wind) requires developing grid storage, transmission upgrades, and market reforms to ensure reliability.
• Technological Gaps: Wider adoption of emerging technologies like green hydrogen, battery storage, and advanced grid management is needed for deep decarbonization.
• Data & Governance: Accurate, timely energy data and robust policy frameworks are required for evidence-based decision making and proper monitoring of transition progress.
• Social Considerations: The transition must remain inclusive – ensuring energy access, affordability, and job creation while navigating potential transitions in coal-dependent regions.

Related Flagship Missions & National Strategies

• National Solar Mission: Aims for 100 GW of solar capacity, promoting grid-connected and off-grid solar projects.
• National Green Hydrogen Mission: Targets 5 million metric tonnes of green hydrogen annually by 2030, with ₹19,744 crore allocated for incentives and R&D
• PM Surya Ghar: Muft Bijli Yojana: Supports rooftop solar installations for households, with over 17 lakh systems already deployed.
• Production Linked Incentive (PLI) Scheme: ₹24,000 crore allocated to boost domestic manufacturing of solar PV modules and wind turbines.
• Viability Gap Funding (VGF) for Battery Energy Storage Systems (BESS): ₹5,400 crore scheme to build 30 GWh of storage capacity.
• Elevated Investment Caps: NTPC and NLCIL received approval to invest ₹20,000 crore and ₹7,000 crore respectively in renewable projects.
• National Transmission Plan for 500 GW: Ensures seamless evacuation and integration of renewable power into the grid.
• Interstate Transmission System (ISTS) Waiver: Reduces project costs by waiving transmission charges until 2028.
• Renewable Purchase Obligations (RPOs): Mandate DISCOMs to procure a fixed percentage of power from renewable sources.
• Green Open Access Rules: Facilitate easier access for consumers to buy renewable energy directly from producers.
• Strengthened Power Purchase Agreements (PPAs): Provide long-term certainty for investors.

Way Forward: Opportunities to Catalyze Energy Transition

• Infrastructure and Technology: India needs to focus on:
  • Grid stability, energy storage, and interconnectors.
  • Off-grid solutions for electrifying remote regions.
  • Strengthening schemes like PM Surya Ghar Muft Bijli Yojana through better monitoring and accountability.
• Green Finance and Industrial Alignment: India needs robust financial support to de-risk and scale clean energy projects:
  • The National Green Hydrogen Mission (2023) offers state-specific incentives tied to industrial strengths.
  • The National Investment and Infrastructure Fund (NIIF) can help co-finance clean energy projects by lowering systemic investment risks.
• Policy Stability and Long-Term Capital: Stable and adaptive energy policies to attract long-term risk capital.
  • Regulatory clarity to bolster investor confidence in India’s energy systems.

Conclusion

• India continues to demonstrate key strengths, including improvements in energy efficiency, clean energy investments, and progressive energy policies, despite a downward shift in rankings.
• A multi-tiered strategy – combining targeted policies, financing mechanisms, and decentralized infrastructure – will be crucial to align economic growth with sustainable energy goals.