Key Trends Shaping India’s Energy Sector
- Renewable Power Expansion: One of the strongest trends currently shaping India’s energy landscape is the expanding renewable power capacity. The government has set an ambitious target of achieving 500 GW of non-fossil fuel capacity by 2030. As of December 2024, the installed renewable energy capacity reached 209.4 GW, accounting for over 43% of the total power capacity. Solar energy leads this growth, with 97.8 GW installed, followed by wind (48.2 GW), hydro (52.1 GW), and bioenergy (11.3 GW).
- Green Hydrogen Production: Though green hydrogen market is facing several challenges (both domestically and internationally) such as high CAPEX requirement, uncertainty around demand offtake, fragmented markets internationally, etc., the government is still betting big on its potential to help reach its net zero target. One good example of it is rising number of hydrogen fuelled buses. The National Green Hydrogen Mission, with an outlay of INR19,744 crore, aims to produce 5 million metric tonnes of green hydrogen annually by 2030.
- Growing Market Share of Electric Vehicles (EVs): India’s EV market experienced significant growth in 2024, with total EV sales reaching approximately 1.94 million units, marking a 27% increase from the previous year. This surge elevated EVs to about 7.5% of all vehicle sales in the country, up from 6.4% in 2023. Electric two-wheelers continue to dominate this space as they accounted for 59% of total EV sales, with approximately 1.15 million units sold, and followed by three wheelers with a 35% share in total EV sales during 2024.
- Expansion of Energy Storage Solutions: To manage the intermittency of renewables, India is also investing in energy storage systems. The energy storage market expanded 1.7 times in 2024, reaching a total pipeline capacity of 114 GWh, comprising 20 GWh of Battery Energy Storage System (BESS) and 91 GWh of pumped storage projects. The government has introduced a Viability Gap Funding (VGF) scheme with a budget of around US$452 million to support the development of 4 GWh of BESS by FY2026. The India Energy Storage Alliance (IESA) projects a cumulative market potential of around 250 GWh of battery energy storage requirements by 2032.
- Growing Use of Natural Gas/LNG: India’s natural gas consumption increased by 11% in 2024, y-o-y, reaching 66.63 billion cubic meters (bcm). This growth is attributed to higher usage in industries, refineries, and the residential and transport sectors. Industrial gas consumption rose 22%, refining by 26%, residential and commercial use by 14%, and transportation by 12%, y-o-y. Tracking the growth in consumption, country’s LNG imports surged by a strong 21%, y-o-y. Gas demand is likely to stay healthy in the country as the government is eyeing 15% of natural gas’s share in its energy mix by 2030, up from under 7% currently.
- Digitalization: India’s energy sector is undergoing a significant transformation through the integration of digital technologies, enhancing efficiency, reliability, and sustainability:
- Smart Meter Deployment: Under the Smart Meter National Programme, India is deploying millions of smart meters nationwide. These devices provide real-time energy consumption data, enabling consumers to optimize usage and utilities to improve billing accuracy and outage management.
- AI-Driven Energy Management: Companies are deploying AI-powered systems for demand-side management, predicting peak loads, and optimizing electricity use across sectors.
- Virtual Twin Technology: Digital twins simulate energy assets and operations, allowing for design optimization, predictive maintenance, and efficient integration of renewables like solar and wind into the energy mix.
- Internet of Things (IoT): It is enabling remote monitoring and control of power infrastructure, facilitating proactive maintenance and reducing downtime.
