As India accelerates its clean energy push, the government has cautioned against viewing climate action in isolation, calling instead for a broader rethinking of the country’s entire energy system over the coming decade.
India needs to approach the next phase of its transition “not as a climate policy problem in isolation, but as a broader energy system strategy”, the Economic Survey 2025-26, tabled in Parliament on Thursday, said.
The survey said such an approach must prioritise pragmatism over signalling and ensure the availability of sufficient dispatchable power capacity to support industrialisation and social development even as renewable energy capacity continues to expand.
It warned that as renewable energy penetration rises, the cost of maintaining dispatchable thermal capacity increases even as its utilisation declines, while grid stability challenges intensify.
Strengthening Grid Infrastructure
Highlighting system preparedness as a key constraint, the Survey emphasised the need to strengthen transmission and distribution networks, invest in energy storage and grid-management technologies, and restore emphasis on hydro and nuclear power as long-horizon anchors for low-carbon development.
On the international front, the survey said India’s negotiating stance must remain grounded in first principles, including “predictable and front-loaded finance reflecting full-system costs”, technology flows that “support resilience rather than compliance”, and commitments that respect “differentiated capabilities, responsibilities and risk exposures”.
India is taking mitigation action by phasing in renewable energy, improving energy efficiency and diversifying energy sources to green hydrogen and nuclear power, with the approach focused on prioritising energy security, affordability and industrial competitiveness.
Addressing Resource Intensity
The Survey noted that India has already made significant progress in clean energy deployment, with non-fossil fuel sources now contributing over 50% of installed power capacity. However, it flagged persistent challenges, noting that solar and wind energy systems are highly material-intensive and require capital-intensive energy storage technologies for grid integration.
To sustain renewable energy momentum, challenges such as “high capital costs, land acquisition delays, and grid availability” need to be addressed through appropriate instruments, including “innovative financing mechanisms and optimised project execution”, it said.
The survey added that large-scale integration of “Battery Energy Storage Systems (BESS) and Pumped Storage Hydropower (PSP)” can address renewable variability, ensure grid stability and enable reliable, large-scale adoption of renewable energy.