India's Power Transmission Boom: Meeting the Rising Energy Demand with Ambitious Renewable Goals

India’s energy landscape is undergoing an unprecedented transformation, driven by both rising demand and ambitious policy goals. Positioned as one of the world’s fastest-growing economies, India’s demand for electricity is set to grow significantly, supported by rapid expansion across sectors such as industrial manufacturing, residential consumption, and electric mobility. The country is also committed to reducing its reliance on fossil fuels by investing heavily in renewable energy sources. As a result, India’s power transmission sector is set for explosive growth, guided by forward-thinking policies and significant financial backing.

Surge in Power Demand and Investment Needs

India is projected to experience a steeper rise in energy demand than any other nation in the next decade. According to the Central Electricity Authority, India anticipates an investment influx of around $110 billion between fiscal years 2022 and 2032. This capital is expected to fund the massive infrastructure expansion necessary to meet escalating demand while achieving renewable energy capacity goals. The projected rise in demand stems from several factors, including population growth, urbanization, and a sharp increase in industrial activity.

Japanese brokerage firm Nomura estimates that India’s power demand will grow at a compound annual growth rate (CAGR) of over 7 percent between the fiscal years of 2024 and 2027. This consistent increase places considerable pressure on the country’s power grid and highlights the need for advanced transmission networks to ensure a stable power supply, especially as renewable energy sources contribute more to the national grid.

Renewables: The New Power Mix

India’s energy strategy is increasingly centered around renewable sources, notably solar and wind. Together, these two sectors have met approximately 75 percent of the incremental power demand in recent years, a trend expected to continue as the government ramps up its renewable energy initiatives. Nomura forecasts that renewable sources will account for about 55 percent of India’s total power capacity, a shift that not only meets domestic demand but also helps India advance toward its climate goals. This substantial share reflects a national commitment to diversifying the power mix away from coal and other fossil fuels.

The International Energy Agency (IEA) has also taken note of India’s rapid economic rise and renewable ambitions. In its ‘World Energy Outlook’ report, the IEA highlights India as a major growth engine in the global economy. In 2023, the country’s output grew by an impressive 7.8 percent, and India is projected to become the world’s third-largest economy by 2028. In its Stated Policies Scenario (STEPS), the IEA projects that by 2035, India’s energy demand will increase by nearly 35 percent, with a potential tripling of its electricity generation capacity to reach 1,400 GW. This growth trajectory underscores the importance of renewable energy in India’s evolving power mix.

National Electricity Plan and Transmission Targets

In an effort to achieve its renewable energy goals, India recently launched its National Electricity Plan (Transmission), a comprehensive roadmap outlining the future of India’s power grid. The plan sets an ambitious target of transmitting 500 GW of renewable energy capacity by 2030, scaling up to over 600 GW by 2032. This infrastructure development is essential to facilitate the distribution of renewable energy across the country and to reach areas with limited access to clean energy sources.

ICRA, a major Indian credit rating agency, projects that the share of renewable energy, including hydropower, in India’s power generation will reach 35 percent by FY30, up from the 21 percent observed in FY24. Meeting this target requires not only increased generation but also an expanded transmission network capable of accommodating the variable nature of renewable sources like solar and wind.

Achieving Renewable Purchase Obligations (RPOs) and Climate Goals

The government’s commitment to renewable energy is also evident in its renewable purchase obligation (RPO) targets. By fiscal year 2030, India aims to meet 43.3 percent of its electricity consumption through renewable sources. This target necessitates a doubling of the current renewable energy capacity of 200 GW, an ambitious yet attainable goal given the ongoing investments and favorable policy environment. The RPO targets align with India’s broader climate goals, which include achieving 50 percent of its installed power capacity from non-fossil fuel sources by the end of the decade.

To meet these targets, India has been proactive in attracting both domestic and foreign investment. Government-led initiatives, such as production-linked incentives for solar manufacturing and policies encouraging green hydrogen production, are designed to accelerate renewable energy deployment. Private sector participation is also robust, with companies in India increasingly viewing renewable energy as both a strategic investment and a responsibility.

The Path Ahead: Challenges and Opportunities

While India’s renewable energy targets and power transmission upgrades are ambitious, several challenges lie ahead. For one, integrating intermittent renewable energy sources such as solar and wind into the national grid requires substantial investment in energy storage and smart grid technologies. Additionally, scaling up infrastructure in remote or underserved areas poses logistical challenges, although technological advancements in grid management and transmission can help mitigate these issues.

Nevertheless, the outlook remains positive. As India approaches its 2030 goals, the country’s commitment to clean energy will likely yield benefits beyond the environment. The shift to renewables is expected to create job opportunities, foster technological innovation, and strengthen India’s energy security by reducing its dependence on imported fossil fuels.

Conclusion: Powering India’s Future

India stands at a critical juncture in its energy journey. With a strong commitment to renewable energy and a clear policy direction, the country is well-positioned to meet its future energy needs sustainably. The power transmission sector’s growth, supported by a mix of government policies, financial investments, and private sector participation, is pivotal to realizing India’s vision of a cleaner, greener, and more resilient energy ecosystem. The coming decade promises a remarkable transformation for India’s power sector, setting a benchmark for energy transitions globally.