Energy storage will be central to enable reliable, large-scale adoption of renewables to support India’s transition to a clean, secure, and resilient power system, the Economic Survey 2025–26 underlined. Large-scale integration of Battery Energy Storage Systems (BESS) and Pumped Storage Hydropower (PSP) are crucial to managing the variability of renewable energy, stabilising the grid, and meeting peak demand, it said.
India’s energy landscape, the survey noted, is undergoing a structural transformation, with renewable energy accounting for 49.83% of total installed power capacity as of November 2025. The country ranks third globally in overall renewable capacity and solar installations, and fourth in wind capacity.
Over the past decade, India’s renewable capacity has more than tripled, rising from 76.38 GW in March 2014 to 253.96 GW by November 2025. The Survey attributed this growth to supportive national renewable energy policies, large-scale project execution, and strong private sector participation.
However, the survey flagged high capital costs, delays in land acquisition, and constraints in grid availability as key challenges before India’s renewable energy momentum. To address these bottlenecks, it called for targeted policy instruments, innovative financing mechanisms, and optimised project execution.
Power sector growth
India’s overall installed power capacity also rose 11.6% year-on-year to 509.74 GW by November 2025, the survey noted. Between April and November this financial year, India added 40.9 GW of generation capacity, sharply higher than the 15 GW added during the same period last year. However, transmission line addition lagged, with 3,641 circuit kilometres (Ckms) added during the period, down from 5,117 Ckms a year earlier.
In last-mile electrification, the survey noted that 18,374 villages were electrified under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY). Similarly, 2.86 crore households gained electricity access under the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA).
It further highlighted that the country’s demand-supply gap in power has been reduced to nil by November 2025, from 4.2% in FY14.
On digital initiatives in India’s power sector, the survey highlighted the India Energy Stack (IES) as a key Digital Public Infrastructure for the power sector. IES is designed to enable the shift from a centrally managed system to one that is distributed, digital, and participatory, with households, farmers, and MSMEs emerging as active energy participants, it noted.
According to the survey, IES aims to address the issues of fragmented digital foundations, siloed data, and costly bespoke integrations that currently limit consumer choice, stifle innovation, and prevent distributed energy assets from generating reliable income streams.
“By standardising identity, data exchange, measurement, and settlement, IES will help create a power ecosystem that is interoperable, competitive, consumer-centric and capable of converting participation into economic value,” the survey added.
Power distribution sector challenges in India
The survey also drew attention to the continued financial stress in the distribution sector and said the proposed Electricity (Amendment) Bill, 2026 is intended to address long-standing structural issues.
Between 2020-21 and 2024-25, accumulated losses of India’s distribution utilities rose from Rs 5.5 lakh crore to Rs 6.47 lakh crore, with outstanding debt increasing to Rs 7.26 lakh crore. The economic survey attributed this to non-cost-reflective tariffs, delayed state subsidies payment, and high Aggregate Technical and Commercial (AT&C) losses.
Despite these challenges, it noted that distribution utilities recorded a positive Profit After Tax of Rs 2,701 crore in FY25 for the first time, reflecting the impact of recent reform measures.“This improvement has been accompanied by a sustained reduction in Aggregate Technical and Commercial (AT&C) losses, from 22.62% in FY14 to 15.04% in FY25,” it added.
Wind mills at Chitradurga in Karnataka. India ranks fourth globally in wind capacity. (Express photo) 
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