India’s energy transition to be driven by storage, transmission capacity, nuclear power
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NEW DELHI: India’s energy transition has come a long way, with 50% of the country’s electricity generation capacity already coming from non-fossil sources led by solar and wind. However, the high capacity of clean energy installations doesn’t translate into high energy output, given that solar and wind are erratic power sources, resulting in a low capacity utilization factor.
The focus of policymakers and the industry is now set to shift towards building energy storage capacity and diversifying into more stable non-fossil sources such as nuclear power. This shift in policy and regulatory aspects and in terms of project implementation is expected to start in 2026, industry stakeholders said.
The year 2025 has been eventful in the renewable power and energy transition space. At this level of non-fossil capacity, some pertinent and persistent challenges have emerged, ranging from the piling up of unsigned power purchase agreements to forced curtailment of renewable power generation amid a lag of transmission capacity.
On the legislative front, the government has said the nuclear power sector will be opened to private companies after amending the current laws. This is aimed at achieving 100 GW of nuclear power capacity by 2047.
Srivatsan Iyer, chief executive officer (CEO) of Hero Future Energies, said integrating renewable energy capacity, both installed and upcoming, to the national power grid should be among the key focus areas.
“The challenge is no longer just about adding renewable capacity — it is about integrating it intelligently. To realize the full potential of clean energy, we must strengthen three foundational pillars: storage, transmission and a diversified, future-ready energy mix,” he said, adding that grid-scale storage would anchor a resilient power system, ensuring round-the-clock reliability as renewable penetration rises.
Storage will play a key role in shifting the use of solar power to serve evening peaks, firming up solar-wind generation, and managing seasonal variations, said Alekhya Datta, director, electricity and renewables division, at The Energy Research Institute (TERI).
“Falling Li-ion (Lithium-ion used by rechargeable batteries) costs, revival of pumped hydro, and future long-duration storage and green hydrogen will enable higher RE (renewable energy) generation share beyond 40-50%,” he added.
Mandatory storage
Earlier this year, the Central Electricity Authority (CEA) mandated the integration of storage capacity of at least two hours or 10% of any upcoming solar power capacity along with the project. Power distribution companies across states are also planning auctions to set up battery capacity. However, the sector is still at a very nascent stage and is expected to gain momentum in the coming year.
The government acknowledged the need for moving towards infrastructure strengthening. In a statement in October, the ministry said that with the growth of India's renewable energy space from 35GW in 2024 to over 197GW, excluding large hydro currently, the country’s next leap requires not just more megawatts but “deeper system reforms.”
The sector has now entered a phase where the focus is shifting from capacity expansion to capacity absorption. India is now dealing with grid integration, energy storage, hybridization and market reforms, the real foundations for a 500 GW-plus non-fossil future. In that sense, the recent moderation in capacity addition is a recalibration, a pause to ensure that future growth is stable, dispatchable and resilient.
According to Varchasvi Gagal, CEO of Datta Infra, India needs a 5-6x scale-up in storage deployment in the next five years to achieve a grid with round-the-clock green power supply.
Devansh Jain, executive director of INOXGFL Group, which is in the chemicals and renewables business, was of the view that the government’s policy support has been instrumental in enabling progress in this space.
"The consistency and clarity of recent reforms have strengthened industry confidence, allowing us to innovate boldly, collaborate meaningfully, and execute projects end to end with greater predictability," Jain said.
Along with storage capacity, a robust transmission network is the need of the hour. Lack of adequate evacuation and transmission capacity is at the core of the continuing instances of curtailment of RE generation and the piling up of inventory of unsigned power purchase agreements by electricity distribution companies.
Lagging grid expansion
About 44 GW of renewable power is yet to find buyers and power purchase agreements have not been signed. Despite policy statements and targets being announced, the progress in grid expansion has been far from satisfactory.
Addition in the transmission space has lagged amid issues such as land acquisition and right of way. In FY25, 8,830 circuit kilometres (ckm) were added, about 38% less than the 14,203 ckm added in FY24, CEA data showed. Overall, India has a power transmission network of 495,405 ckm, and, as per the National Electricity Plan, an additional 191,000 ckm of transmission lines would be required by FY32.
Akshay Hiranandani, CEO of Serentica Renewables, noted that several renewable energy producers have had to curtail output at certain pooling stations due to transmission constraints. Scaling storage infrastructure and maintaining a balanced clean-energy mix will be key to strengthening India’s long-term energy security.
Simarpreet Singh, ED & CEO of the Hartek Group, a renewable energy EPC company, said the real challenge, especially in the states of Rajasthan, Gujarat and Tamil Nadu, is no longer generation but moving this power to where it’s needed. He said that HVDC (high voltage direct current) networks will be critical because they can move massive amounts of electricity across great distances with very low losses, making them ideal for connecting renewable-rich regions with major demand centres.
As diversification in the energy space continues with a focus on transition and energy security, companies said that nuclear power and pumped hydro storage will play a quiet but decisive role in reducing thermal dependence.
Alekhya of TERI was of the view that nuclear power is best suited for round-the-clock baseload supply and for providing low-carbon process heat and electricity to hard-to-abate industries. Steady progress on large reactors and future introduction of small modular reactors will enhance both grid stability and industrial decarbonization.
Nuclear energy bill
"A bold, 'second-generation' reform of the nuclear governance framework can unlock this potential, attract global capital, and position India as a leader in nuclear power," he said.
The Centre introduced a bill in the Lok Sabha on 15 December to open up nuclear projects to private companies and excluding global component and fuel suppliers from liability.
The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Bill, 2025 (SHANTI) permits any company or joint venture to construct, own, operate, or decommission a nuclear power plant or reactor within the country. Currently, only government-owned companies are permitted to establish nuclear power plants.
This comes as a major course change for the country's energy sector as foreign and private investments are now expected to flow in and help India achieve its ambitious target of 100GW nuclear power capacity by 2047.
Private companies have already announced plans to enter this space and once the bill is enacted, there may be some movement in terms of new nuclear power generation projects. Currently, India has almost 9 GW of nuclear power capacity.