Power Electricity sector in India

India is the third largest electricity producer globally. During the fiscal year (FY) 2023–24, the total electricity generation in the country was 1,949 TWh, of which 1,734 TWh was generated by utilities.

The gross electricity generation per capita in FY2023-24 was 1,395 kWh. In FY2015, electric energy consumption in agriculture was recorded as being the highest (17.89%) worldwide. The per capita electricity consumption is low compared to most other countries despite India having a low electricity tariff.

The Indian national electric grid has an installed capacity of 475.211 GW as of 31 March 2025. Renewable energy plants, which also include large hydroelectric power plants, constitute 46.3% of the total installed capacity.

India's electricity generation is more carbon-intensive (713 grams CO2 per kWh) than the global average (480 gCO2/kWh), with coal accounting for three quarters of generation in 2023.

The government declared its efforts to increase investment in renewable energy. Under the government's 2023-2027 National Electricity Plan, India will not build any new fossil fuel power plants in the utility sector, aside from those currently under construction. It is expected that non-fossil fuel generation contribution is likely to reach around 44.7% of the total gross electricity generation by 2029–30.

Power sector investment in India

According to research by Broking Motilal Oswal, India's electricity industry offers investment potential of more than $478.58 billion (Rs. 40 trillion) over the next decade. Of this potential, US$406.80 billion (Rs. 34 trillion) is planned to go towards capital spending, with the remainder set aside for optionality. According to the research, 86% of this expenditure will go towards generation, 10% to transmission, and 4% to smart metering.

This large Power sector investment in India is being driven by a greater compounded annual growth rate (CAGR) in power consumption, the upgrading and replacement of obsolete infrastructure, and the switch to greener energy sources. Motilal Oswal observes that India is ideally positioned, with real GDP and per capita development, technology breakthroughs, and electrification as important factors that might maintain rising electricity demand for years.

The study predicts that electricity consumption in India will increase by more than 7% over the next decade, owing to strong GDP development and rising demand drivers like electric vehicles (EVs) and data centres. These sectors account for a tiny portion of India's electricity requirement, but they are estimated to account for one-third of power demand growth by 2035.

Power Transmission

Transmission system plays an important role in supply of power to the consumers through the vital link between the generating stations and the distribution system. The energy resources like coal, hydro and renewable are unevenly distributed in India. Coal reserves are mainly available in Central and Eastern part of the country, whereas hydro energy resources are primarily available in Himalayan Range in the Northern and North-Eastern parts. Renewable resources like wind and solar potential are also mainly concentrated in states like Tamil Nadu, Uttara Pradesh, Haryana, Andhra Pradesh, Karnataka, Rajasthan, Maharashtra, Gujarat & Ladakh etc. The major load centres of the country are located in central part including Northern, Western and Southern regions. This skewed distribution of resources necessitated development of robust transmission system including establishment of inter-regional corridors for seamless transfer of power from surplus to deficit regions/areas. In this process, it enables access to power generation from anywhere in the country to various consumer spread throughout the country.

The transmission system has expanded over the years for evacuation of power for evacuation of power from generating stations to load centre through Intra State and Inter State Transmission System. The progressive integration of regional Gautam Energy Solution started in 2020, and on 31st December 2021, our country achieved 'ONE NATION'-'ONE GRID'-'ONE FREQUENCY' with synchronous interconnection of Southern Region Grid with rest of the Indian Grid with the commissioning of 765kV Raichur-Solapur Transmission line. However, there were constraints in market operation due to transmission congestion resulting into market splitting and different market prices in different regions. During 2023-24, about 36% of electricity transacted through power exchanges was constrained due to transmission congestion. Further, strategically important Ladakh region was not interconnected with national electricity grid.

Key components of the ₹40 trillion investment

The ₹40 trillion investment will be given to several components of the electricity industry, including:

• Renewable Energy: A large percentage of the investment will go towards increasing renewable energy capacity, such as solar, wind, and hydropower. This would help India meet its lofty renewable energy ambitions and minimize its carbon impact.
• Solar Power: India has enormous solar potential, and the investment will assist the construction of large-scale solar power facilities around the nation. This will help India lessen its dependency on fossil fuels while also lowering greenhouse gas emissions.
• Wind Power: India has various places with favourable wind conditions, making it ideal for wind energy production. The financing will help to create wind farms in these locations.
• Hydropower: India has a wide network of rivers and streams, which provide several opportunities for hydropower generation. The investment will support the modernisation and expansion of current hydropower facilities and the development of new projects.
• Transmission and Distribution: Investments in updating and modernising the power infrastructure will be critical to ensuring the efficient and dependable distribution of energy to customers throughout the nation. This will include updating existing transmission lines, constructing new substations, and integrating smart grid technology.
• Energy Efficiency: Initiatives that encourage energy efficiency in India power sector, such as upgrading appliance standards and introducing smart grid technology, can assist in decreasing energy usage and expenses. This will cut total energy consumption, relieving stress on the power system and lowering greenhouse gas emissions.
• Research and Development: Investments in R&D will help to create new technologies and innovations in the India power sector, such as improved energy storage systems and efficient power production. This will contribute to increased efficiency and dependability in the electricity industry, as well as cost savings.