Indian Energy Transition – The Three Fundamental Pillars
India is projected to see its final energy demand double to 1200 Mtoe by 2070, with an anticipated annual growth rate of 5-6 percent over the coming one to two decades.
India’s energy transition rests on three core pillars, fundamental to its journey towards sustainable energy. These pillars aim to address approximately 90 percent of India’s current carbon emissions.
- Grid Decarbonisation – This involves transitioning towards cleaner energy sources, with a focus on integrating renewable energy into the national grid.
- Industrial Decarbonisation – Aiming to reduce emissions from energy-intensive industries and those with challenging emission profiles by adopting efficient technologies and sustainable practices.
- Transport Transition – Emphasising the promotion of electric vehicles, enhancing public transport, and supporting alternative fuels like compressed natural gas (CNG), biofuels, and hydrogen fuel cells. This also includes urban planning, smart mobility, and promoting awareness to foster behavioural change.
Grid Decarbonisation
India’s power sector contributes approximately 1.18 billion MT of carbon dioxide equivalent (GtCO₂e) emissions, with coal power alone accounting for around 96 percent of this, or 1.13 GtCO₂e. At COP26, India set an ambitious 2030 decarbonisation target, aiming to cut energy-related emissions by 50% and achieve 500 GW of non-fossil generating capacity.
Accelerating renewable energy (RE) integration is critical to meeting this target. As of September 2023, non-fossil fuels constitute roughly 44% of India’s energy mix, which is expected to increase to 57.4% by 2026-27, potentially reaching 64% by 2030-31. Figures 1 and 2 illustrate the changes in the energy mix over time.
Solar energy has significantly influenced India’s economic and environmental landscape. In the first half of 2023, India generated 50 billion units (BU) of solar power, a 12.34% increase from September 2022. Over the past nine years, installed solar capacity has surged 24.4-fold, reaching 75.57 GW as of February 2024. Solar tariffs have decreased substantially, from Rs. 6.47 per kWh in 2013-14 to Rs. 2.54 per kWh in 2023, highlighting solar energy’s increasing competitiveness and cost-effectiveness.
India’s wind energy capacity stood at 44.7 GW as of December 2023, with a goal of 100 GW by 2030. Wind energy is projected to represent 17.13% of installed capacity by 2029-2030. Offshore wind potential in Gujarat and Tamil Nadu is estimated at 70 GW, with the Indian Government aiming for 30 GW of offshore wind projects by 2030, although a realistic figure of 4 GW may be achievable by 2030.
Key initiatives to boost renewable energy in India include:
- Waiving Inter-state Transmission System (ISTS) charges for solar and wind projects commissioned before 30 June 2025.
- Establishing a Renewable Purchase Obligation (RPO) trajectory until the fiscal year 2029-30.
- Creating mega renewable energy parks to provide developers with land and infrastructure for large-scale projects.
Industrial Decarbonisation
Grid decarbonisation could potentially cut around 46% of emissions in India’s electricity sector, while industrial decarbonisation could address an additional 30% of energy-related emissions. A variety of solutions is required, and industrial companies are exploring options to reduce emissions.
The decarbonisation strategies for industrial companies include:
- Energy efficiency – Modifying production equipment to lower energy consumption per unit of output.
- Maximising renewable energy consumption.
- Direct electrification.
- Low-carbon hydrogen and biomass as alternative fuels.
- Carbon Capture Utilisation & Storage (CCUS).
The primary emission-intensive sectors, responsible for approximately 21% of total emissions and around 70% of industrial emissions, include Steel, Cement, and Fertiliser & Ammonia. The decarbonisation pathways for these sectors are as follows:
| Sl No | Description | Steel | Cement | Fertiliser and Ammonia |
| 1 | Emission | Steel industry contributes around 12% of emissions in the industrial sector. As per the IEA, emission intensity in steel ranges from 2.2 to 2.4 T of CO₂ per ton of crude steel produced. | Cement industry contributes ~27% of industrial sector emissions and 8% of India’s total emissions. | Each ton of ammonia production emits approximately 2.0 – 2.2 tons of CO₂. |
| 2 | Renewable energy pathway | Transition from fossil-based captive electricity generation to hybrid or round-the-clock renewable energy sources. | By 2030, achieve a 5-20% thermal substitution rate using biomass and waste. By 2070, exceed a 50% thermal substitution rate. | By 2030, partially substitute grid/captive electricity with renewable energy; by 2070, achieve 100% renewable power for all electricity needs. |
| 3 | Initiatives and technologies | – 20% reduction in specific energy consumption per ton of steel. – Pilot demonstrations of H₂ direct reduced iron (DRI) and H₂ injection in blast furnaces by 2030. – Phasing out Blast Furnaces and Basic Oxygen Furnaces (BOF). |
– Clinker substitution through fly ash, slag, and waste gypsum. | By 2030, implement green hydrogen/ammonia plants to replace grey hydrogen; by 2070, achieve 100% replacement of grey hydrogen with green hydrogen. |
Transport Transition
The transport sector ranks as India’s third-largest carbon emitter, contributing 12-13% of total emissions. Transitioning to low-carbon powertrains such as Battery Electric Vehicles (BEV), Hydrogen Internal Combustion Engines (H2-ICE), Fuel Cell Electric Vehicles (FCEV), and biofuel blending is crucial.
Enhanced urban planning and optimised logistics also play critical roles, with initiatives such as integrated transport systems, logistics optimisation, and modal shifts from road to rail.
A summary of sectoral transition pathways in transportation is provided below:
| Mode | Target EV Penetration by 2030 | Long-Term Target by 2070 |
| 2W | 20-50% | 100% electrification |
| 4W | 15-20% | Transition to BEV and FCEV |
| Bus | 6-8% | BEV and FCEV transition |
| Rail | Complete electrification | – |
| Aviation | Blending of green fuels | Complete transition to green fuels |
| Freight | Complete phase-out of fossil fuel by 2070 |
Conclusion
Grid decarbonisation, industrial decarbonisation, and transport transition are essential for reducing approximately 90% of India’s emissions. Accelerated growth in renewables, particularly solar and wind, is vital, with various initiatives supporting renewable energy adoption, industrial decarbonisation strategies, and transport electrification.
Tata Consulting Engineers (TCE) has developed considerable expertise across grid decarbonisation, covering 27 GW in solar PV projects, 6 GW in onshore wind, and battery storage projects up to 1000 MWh, as well as 15 GW in large hydro assignments. TCE also offers comprehensive engineering services for industrial decarbonisation, including green hydrogen, green ammonia, and green steel projects. In transportation, TCE supports EV infrastructure design and raw material extraction for batteries, demonstrating a robust commitment to India’s energy transition journey.
