India’s energy transition: Ambition meets execution

At COP26 in 2021, Prime Minister Modi announced India’s commitment to achieve net-zero emissions by 2070 and 500 gigawatts (GW) of non-fossil fuel-based energy capacity by 2030. This seemed aspirational: India’s total installed capacity (fossil and non-fossil combined) back then was just 400GW.

Today, though, it’s becoming reality. Installed clean capacity now stands at c.250GW, the fourth largest in the world, and represents 50% of India’s power generation¹.

Legacy sector, new cycle

The BSE Power Index of listed power generation and transmission companies peaked in 2008. Capacity addition peaked in 2012. In the following decade, the sector was in hibernation. But since the end of 2021, the index has doubled, and the capital goods cycle has turned.

The covid pandemic masked early signs of revival, but the post-covid period has seen a surge in project announcements, order inflows, and policy clarity. There has also been a wave of new listings in the green economy. 

By September 2025, India’s total grid-connected capacity had reached 501GW, including around 197GW of renewables². Solar additions will accelerate to 35.3GW in 2025 – up 3 times from the pre-2021 run-rate. Wind and hydro additions could reach 5.3GW and 2.7GW, respectively. Year to date, coal added just 5.1GW³.

To deal with power intermittency the grid has been readied. It is now being further upgraded with US$100bn of investment.

This growth in renewables is underpinned by solar (and incrementally solar plus battery) being cheaper than coal, which has provided the key economic push. However, policy has also played a key role. For example:

There has been action via fiscal incentives and clearance of policy hurdles. Both public and private capital has been put to work. Land acquisition in India remains a key hurdle though. Timelines can also be unpredictable, especially compared to China’s centralised model. But the political will, combined with the well-proven economics of renewables vs fossil fuel, has been a key enabler of India’s decarbonisation efforts.

However, the real shift is not just in generation – it’s in infrastructure build-out, equipment demand, and balance sheet monetisation. This is opening up potential structural investment opportunities in grid infrastructure, solar equipment, and energy storage, with domestic champions emerging across the value chain.

“This is opening up potential structural investment opportunities in grid infrastructure, solar equipment, and energy storage.”

Corporate India: Leading the change

India ranks sixth globally in corporate net-zero commitments, with 127 companies publicly disclosing targets, according to credit rating agency ICRA’s ESG survey⁴. This is driving adoption of captive renewable power and scaling of commercial and industrial developers.

For example, in a hard to abate sector like cement, India’s largest company Ultratech is targeting net zero emissions by 2050 and 85% non-fossil consumption by 2030. This compares with a level of 36% in March 2025.

In addition, Reliance Industries has committed to net zero by 2035 for its refining and petrochemicals business; it is also planning $10bn of capex in its clean energy business. Meanwhile, automobile manufacturing company Mahindra & Mahindra is targeting net zero by 2040.

These plans are not limited to the private sector: Indian Railways is now almost completely electrified.

Investment opportunities

As India continues on its ambitious journey towards decarbonisation, where do the potential investment opportunities lie?

Grid expansion: $100bn investment plan

India’s transmission grid is undergoing a $100bn upgrade to handle renewable intermittency and connect new capacity. Over 10 high-voltage corridors are under construction.

We see opportunity for transmission asset owners and developers to grow. State-owned utilities like PowerGrid tend to be stable return annuity assets that benefit from a falling interest rate environment. Their existing assets can provide sufficient cash flow for future investments.

The investment universe also encompasses equipment providers and engineering, procurement and construction (EPC) companies, which are likely to see multi-year order book growth, in our view.

In 2024, with euphoria around capex growth, these stocks reached elevated multiples which have since moderated following near-term execution hurdles seen by PowerGrid. They are now trading well below their peaks despite no fall in earnings, capacity doubling and growth in their order book.

Mid-cap names, in particular, like Votamp (transformer manufacturer) and Skipper (transmission tower manufacturer) are primarily domestic businesses that have seen this pattern. Multinational companies like GE Vernova T&D India, Siemens Energy and Hitachi Energy have outperformed and trade at elevated valuations (60-70x price-to-earnings) compared to domestic names in the 15-20x range.  

Solar equipment: Domestic players protected

India’s solar module manufacturing capacity is expected to exceed 100GW by 2030, according to research provider BloombergNEF, second only to China. Domestic players have benefited from import duties on Chinese products and production-linked incentives schemes for local manufacturing. Despite being more expensive than China, the domestic industry has flourished: annual revenues of the top three listed players crossed $2.8bn in 2025, with net margins of 5-15%. 

“Domestic players have benefited from import duties on Chinese products and production-linked incentives schemes for local manufacturing”.

Integrated players are emerging with scale and backward integration, such as Premier Energies, Waaree, Vikram Solar, or Tata Power Solar. These are not perfect businesses, but they are policy-protected and capacity-rich.

According to BNEF, India module capacity will meet 185% of demand by 2030, while cells will be 72%. The gaps remain in wafer, anode, and cathode capabilities; thus opportunities may lie in integrated companies with scale.

In the long term, we view entry barriers to be low and see potential for overcapacity. US tariffs have also cast scepticism on the industry’s export potential.

Wind: Overcapacity

India’s operational wind turbine nacelle manufacturing capacity of 16GW is more than 2.5 times what is needed to meet its expected 2030 onshore wind demand. There is no offshore wind demand yet. India’s annual wind auction volumes have not crossed 2GW since 2022.

Storage: From hype to execution

Battery prices are down 60% in two years. India’s BESS (Battery Energy Storage System) target has been raised from 47GW to 74GW by 2032, and the majority of that has been awarded. Fiscal incentives are in place, and recent bids show storage costs nearing parity with peak power.

Reliance Industries has the most scaled plan with a 40GWh battery plant expected in 2026. It will be interesting to see if the government introduces trade barriers against China as domestic capacity scales, given the perceived recent shift in geopolitical allegiance. India’s expected battery cell manufacturing is likely to fall short of forecast demand.

Green hydrogen: Early days

India is the fifth largest consumer of hydrogen in the world, with 6-7 million tonnes per annum. At present, India is dependent on natural gas for this so there is a lot of incentive to move to green hydrogen, which is produced using renewable electricity, particularly as solar power costs are significantly cheaper than coal. Government and state incentives are in place but projects are at the pilot stage.

Summary

India’s energy transition is no longer just about policy ambition – it’s about execution, monetisation, and capital goods leverage. Developers bear execution risk and require endless capital. Capital goods players, by contrast, benefit from shorter cycles, pass-through pricing, and multi-year order visibility.

In 2024, 15 clean-energy companies listed in India, cumulatively raising $2.7 billion; this was across the value chain, ie, power producers, EPC companies and equipment manufacturers.

In 2025, there has been six listings, but there are 10 ready for initial public offering. Our focus in this environment is the home-grown equipment space, which is not likely to be disrupted by policy or import duty change.

India’s energy transition has picked up momentum across sectors and there is a focus on domestic manufacturing. As a result, the investment opportunities have multiplied in the last two years. We are focusing our attention on the transmission sector where we see lower risks of oversupply or policy change plus export opportunities as the world upgrades its grids to power AI, EVs and more.

¹ Asian Power, ‘India achieves 50% clean power generation ahead of 2030 target’, (asianpower.com), July 2025.
² Indian Infrastructure, ‘Roadmap for Growth: Strengthening infrastructure to keep pace with capacity expansion’, (indianinfrastructure.com), September 2025.
³ BloombergNEF, ‘India Market Outlook 2H 2025: Rising tide lifts all boats’, October 2025.
⁴ Seneca ESG, ‘India Secures Sixth Rank Globally in Net-Zero Commitments’, (senecaesg.com), December 2024.