Reliance Industries recently announced plans to invest $10 billion in the clean energy sector by 2030, including the setting up of giga factories to manufacture solar modules, battery storage, electrolysers and fuel cells. Several other Indian companies are accelerating plans for growth in this direction. Adani Green Energy Ltd recently announced the acquisition of SB Energy, NTPC has announced a target of 60 gigawatt (GW) wind and solar energy by 2032 and recently floated a global tender for 1 GWh of grid-scale battery storage.
These moves could accelerate India’s energy transition journey by 12-24 months and potentially help India emerge as a global leader in sustainable energy.
McKinsey’s research confirms the inexorable trajectory of energy transition globally. Electricity could increase its share of final energy consumption from 19% to 30% by 2050. Renewables are emerging as the lowest-cost long-term option, out-competing fossil assets in some regions even before 2030. Green hydrogen is expected to speed up decarbonization of hard-to-abate sectors such as steel, heavy transport and refining. Energy storage will play an important role in stabilizing grids and reducing intermittence of renewables.
In India, too, change is underway, with strong recent growth in the renewable energy sector and falling solar-power tariffs. According to Central Electricity Authority of India projections, wind and solar energy could contribute 31% of gross electricity generation by 2029-30, up from 9.2% in 2018-19. The sector has attracted global institutional investors, with 60-70% of equity investments coming from sovereign wealth funds, pension funds, infrastructure funds and private equity.
Our analysis indicates that four fundamental shifts could accelerate the momentum of energy transition in India over the next decade.