As COP29 negotiations play out in the shadow of Donald Trump’s win in the US and conflicts in West Asia, one thing is clear: India will have to decarbonise equitably without slowing down its economy while also attracting climate finance to drive investments. India must consider seven fundamental shifts to build a strong economy that stands on the shoulders of a clean, resilient and robust energy system. People must form the core of this green economy.
India’s power demand will nearly double by the end of this decade, with peak demand set to reach nearly 370 GW by 2031-32. That means every few years, we will need inflexion points in how energy investments are flowing, infrastructure is being built, and new business models are emerging. Rather than matching just current supply and demand, we would need to track metrics that facilitate and enable these inflexion points in a warming world. These shifts are crucial to trigger change.
First, shift from centralised to decentralised energy systems. Distributed renewable energy (DRE) sources can be a critical pillar of building energy systems at scale. India has already shown ambition with its rooftop solar push that plans to solarise 10 million households, which could add 30 GW of clean power. However, the price for rooftop solar is too high for most consumers in the lower economic slabs who consume less power. A Council on Energy, Environment and Water (CEEW) study found that ~30 per cent of the country’s technical rooftop solar potential lies in the 0-1 kW category, a category still expensive for many after subsidies. New kinds of market-driven interventions and business models, such as community solar or community partners, can tackle this.
Second, shift the narrative from capital expenditure (capex) to operational expenditure (opex). We have often thought of energy systems as a capex story. For the clean energy transition, we have to start thinking about pricing energy better through an opex model. For instance, every consumer does not need to buy a solar panel. The utility can set it up for a community for a price and charge on a pay-as-you-go basis. We can use similar opex models to provide energy efficiency as a service, set up distributed renewables, enable district cooling instead of every individual buying ACs, and sustainable mobility (paying for clean transportation service per kilometre rather than the capex of an electric bus). It is all about the final use of energy and pricing it right.
Third, shift from short-term financial risk to climate-resilient clean energy and business investments. It is comparatively risky to invest in emerging markets, but much of that has to do with perceived risks than real ones. We also cannot ignore the shocks we are already facing at 1.4 degrees of warming. A CEEW study found that more than 80 per cent of India now lives in climate-vulnerable districts. Investment in making our energy systems resilient and climate-proofing them is perhaps the least risky approach compared to the macroeconomic consequences of climate change. The country’s hard infrastructure must be insured against non-linear climate risks and businesses must undertake granular climate-risk assessments. Our thinking should go from how much it will cost to how much investments in resilience can save us from future shocks.
Fourth, rather than fixating on industrial policy, think of plugging into supply chains. Beyond a point, India cannot currently afford protectionist sustainability-linked industrial policies like those of the US or the EU. These policies need not be the most efficient route of trying to make the whole economy a vertically integrated firm. We can position ourselves in global clean energy supply chains by adding value and collaborating on strengths with other countries. Where can India step into the solar PV and green hydrogen supply chains? And how can it help create a global rules-based architecture for the fuels of the future? Energy security is critical, but via a route that privileges interdependence and rules, versus protectionist and unilateral policies.
Fifth, bring together the decarbonisation and digitalisation revolutions by shifting focus from hardware to software. India is undergoing two fast-paced revolutions — the country now has over 820 million active internet users, with more than half coming from rural areas, and is decarbonising its power systems at the same time. How can the electrons and bytes talk to each other? Energy is not just about building the hardware; we also have to invest in the software, the AI systems, the smart appliances, and the smart meters. The rollout of millions of prepaid smart meters is just the start of the story — it then helps power distribution companies optimise how and when electrons flow. This makes energy systems more resilient and interoperable with renewables. Digitally managed electrons could be the new business model rather than just building hard power infrastructure.
Sixth, move from a linear to a circular economy. This not only helps energy systems, but also enhances our critical mineral security. A recent CEEW study found that cumulative waste from India’s existing and new solar energy capacity could reach up to 600 kilotonnes by 2030 — equivalent to filling up 720 Olympic-size swimming pools. Management of this waste and salvaging the minerals — such as silicon, tellurium and cadmium — in it is an environmental and strategic necessity. It is a priority of the government to develop India as a hub for the circular economy of minerals, but also water and agricultural waste. It could help with air quality, urban sanitation, water availability and energy security.
Finally, bring people to the centre of the energy transition. There is a need to shift from financing power developers to financing end-use consumers. We think constantly about big capex and the hundreds of billions of dollars that can flow into clean energy. But where is the financing for the end-use consumer wanting to buy an electric two-wheeler, or wanting to deploy solar panels on their roof, or wanting more efficient bricks for their new house? Individually, one consumer may be too small a bet, but when we create a portfolio, it becomes a market giant opportunity.
This is a critical decade for India’s energy transition. The path forward is not merely about transitioning from one energy source to another; it’s a paradigm shift and an opportunity to redefine our relationship with energy, economics, and the environment. And, bring people back at the centre of policies.
The writer is CEO, Council on Energy, Environment and Water (CEEW). Views are personal
