Faster Deployment of clean power such as solar, wind and EVs can enable India to peak emissions before 2030

India’s transition to a net-zero economy by 2050 presents an investment opportunity that amounts to at least $12.7 trillion, according to the New Energy Outlook: India report, published today by research company BloombergNEF. The report details two scenarios for India’s energy system and the implications of the country’s transition opportunities and challenges. The base case Economic Transition Scenario, or ETS, describes an economics-led transition, consistent with a global temperature rise of 2.6 degrees Celsius by 2050. Under this scenario, the country makes significant progress toward energy independence and decarbonization but does not achieve either goal by 2050. The second, the Net Zero Scenario (NZS), envisages enhanced government support and private-sector investment. It is consistent with net-zero emissions by 2050 with no reliance on unproven technologies. It also enables India to achieve its mid-century energy independence goal at the lowest cost.

India is already making progress on power sector decarbonization

India, in part due to its world-leading clean energy auction programs, added 53 gigawatts of solar and wind between 2018 and 2022, of which 16 gigawatts of utility-scale solar was installed in 2022 alone. Yet, solar and wind still account for less than a quarter of the power generation capacity, with coal dominating the rest. As a result, India’s electricity generation remains the country’s largest source of emissions. BNEF’s analysis finds that maximizing deployment of solar and wind, supplemented by additions of nuclear, energy storage and carbon capture and storage (CCS) for thermal power plants, is the cheapest way for India to increase electricity access while decarbonizing its power supply.

New wind and solar power plants in India have already achieved a lower levelized cost of electricity generation than new thermal power plants. The cost of electricity generation from new solar and wind power plants will become cheaper than the running cost of existing coal plants by mid-2030s.

In the NZS, the total installed capacity of wind and solar power undergoes a 30-fold expansion, from 99 gigawatts in 2021 to 2,998 gigawatts by 2050. Together, wind and solar generation account for 80% of electricity supplied in 2050, while nuclear provides 9%. The remainder is met by hydro, biomass, hydrogen-fired thermal plants, and thermal power plants equipped with CCS. Even under the ETS, BNEF’s baseline scenario, least-cost power system modelling shows that solar and wind become the dominant source of electricity supply, accounting for 67% of electricity generated in 2050.

"India needs to double down on increasing flexibility in the grid to integrate the large capacities of variable wind and solar,” said Rohit Gadre, India Research Senior Associate at BNEF. “Our modelling shows that multiple solutions can co-exist, including batteries, pumped hydro storage, and peaker gas plants."

India’s transition to a net-zero economy is an investment opportunity amounting to at least $12.7 trillion

Under the ETS, investment in energy supply and demand reaches $7.6 trillion over 2022-2050, an annual average of $262 billion. To stay on track for net zero, according to BNEF’s NZS, investment levels are 1.7 times higher, for an annual average of $438 billion (equal to about 5% of expected gross domestic product) and a total of $12.7 trillion to 2050. Total investment in fossil-fuel power drops from $317 billion in the ETS to $142 billion in the NZS. To abate emissions from the remaining use of fossil fuels in the NZS, India needs $870 billion in investment for CCS. Electric vehicle sales account for the largest share of investment for energy demand in both scenarios. In the NZS, $3.9 trillion is spent deploying EVs.

“Transitioning to a zero-emission vehicle fleet by 2050 will require bold policy efforts by the state and national governments. Falling battery costs are set to accelerate EV adoption post-2030 which will also spur local manufacturing from automobile and battery makers,” said Komal Kareer, India Research Associate at BNEF.

“India can all but eliminate dependence on fossil fuel imports by 2047, its centennial,” said Shantanu Jaiswal, Head of India Research at BNEF. “By accelerating deployment of mature clean technologies such as solar, wind and electric vehicles, India could create more domestic economic opportunities while reducing emissions and strengthening its energy security.”