India's Energy Transition Lags Amid Land, Funding And Regulatory Hurdles

(MENAFN- Live Mint)

India is significantly trailing China in energy transition. The country has added about 25GW of solar and 5GW of wind capacity in fiscal year 2025 (FY25), but it is only a fraction of China's nearly 300GW in the same period. In the first six months of this year alone, China installed 221GW of solar capacity. For India to keep pace, the speed of expansion has to be much faster, industry leaders and policymakers told Mint.

“For India to keep pace, the speed of expansion has to be much faster and both the appetite and capabilities exist to make that possible," Praveer Sinha, chief executive officer (CEO) and managing director, Tata Power, said at Mint's Sustainability Summit on 3 September.

With an annual capacity addition of 29.52GW, the total installed renewable energy (RE) capacity in the country has reached 220.10GW as of March 2025, up from 198.75GW in the previous fiscal. India has set a target of achieving 500GW of non-fossil fuel-based capacity by 2030, as part of its commitments under the 'Panchamrit' goals.

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India's Panchamrit goals include five climate commitments, including reducing carbon emissions, carbon intensity of the economy and boosting renewable energy, to achieve net-zero emissions by 2070.

But technology alone will not drive the shift.

Industry leaders flagged hurdles around land, transmission, financing and regulation that are stalling adoption of clean energy.“There is a restriction in terms of geography of where you can get land. The government has to work on that. Secondly, for thermal or nuclear power you require four times the capacity of transmission lines. Getting approvals is an issue. Finally, securing financing and ensuring that it is at a competitive rate is another bottleneck," Sinha added.

Land requirements vary significantly by technology, with thermal power needing 3-5 acres per megawatt of capacity, while wind requires significant spacing for turbines. Solar land use typically ranges from 2 to 10 acres per MW, and a nuclear energy facility requires 1.3 sq. miles per 1,000MW of installed capacity.

He added that the problem of who buys the power remains unresolved.“You have utilities who are already committed to long-term power purchase agreements. The question is how do they get out of it and start moving for these low cost options?," said Sinha.“The ability of these utilities to pay, who already have huge liabilities on their books and large looming losses, poses another hurdle."

Delays or defaults in payments by distribution companies (discoms) remain a risk for investors because they can disrupt cash flows and delay project execution. State-owned discoms had accumulated losses of ₹76.5 trillion by FY23, according to a Reserve Bank of India report in December.

For nuclear energy, challenges stretch beyond land and financing.“Challenges remain the same as others, with harsher regulations for nuclear power. Apart from land acquisition, water sourcing is another hurdle," said B.V.S. Sekhar, executive director, Nuclear Power Corp. of India.

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Public perception, too, is a big challenge for nuclear power in India, but Sekhar said the government is working to improve conditions.“We are countering it, there is growing appreciation. Many states are coming to help us locate sites, which earlier opposed Nuclear. And then, the supply chain is the issue, very less manufacturers who make nuclear-grade equipment and components," he added.

India currently operates 25 nuclear reactors across seven locations, with a total installed capacity of 8,880MW, contributing about 3% of the country's electricity generation, according to the ministry of power.

Eight reactors with 6,600MW capacity are under construction, and another ten reactors with 7,000MW capacity are in pre-project stages. The government has set a target of achieving 100GW of nuclear power capacity by 2047.

The most challenging issue is the cost of the cleaner substitutes that is slowing adoption.

On green hydrogen, Derek M. Shah, CEO and managing director, L&T Energy GreenTech, said,“The elephant in the room is why do we use a more expensive substitute? Even though we do want to decarbonize, this is being addressed in multiple ways. Tech advancement in electrolyzers, renewable energy, these are big subjects challenging the industry. This is possibly in a stringent manner being addressed by most."

Grey hydrogen, produced from fossil fuels, currently costs about $1.80-$2.50 per kg in India, significantly less than green hydrogen, which is projected to cost around $3.80-$5.00 per kg in India by 2030, according to a Bain and Co. report in June 2025.

Despite the bottlenecks, the industry executives agreed that energy transition is inevitable and has to be pursued on multiple fronts.“Coal has been the workhorse for the last five decades, but there is an opportunity to transition in the next 10 to 20 years, if not immediately," said Sinha.

Gautam Reddy, CEO, AM Green, said,“From tech readiness, policy evaluation and demand, renewables has advanced a lot more. Hydrogen is starting to take off, Nuclear is still a little behind. So put your money in all three, and you will do well."

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The share of coal in India's total energy generation increased to 79% to 16,906 petajoules (PJ) in 2023-24, about two percentage points more than previous year, according to the ministry of statistics and program implementation's (MoSPI) Energy Statistics in India 2025. Meanwhile, India is committed to achieve the net-zero emission target by 2070.

In terms of investments in the sector, experts believe that investors should make balanced bets on all developed and emerging energy sources.“The challenge of 2070 net zero is so huge that we don't have an 'either or' option. All clean tech has to be used, and be integrated over time," said Sekhar.

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