Author: sachin nandha, trustee and director
Introduction
The global energy paradigm is shifting at an unprecedented pace. Countries that take decisive action today will shape the future economic and geopolitical order. Renewable energy, electrification, and sustainable industries are no longer just climate necessities but have become economic imperatives.
Brazil’s recent announcement of a $6 trillion investment in energy transition by 2050 signals the emergence of a new global economic hierarchy, one where clean energy is a foundation of economic power. India, with its rapid economic growth, rising energy demand, and global leadership aspirations, cannot afford to lag.
India has made remarkable progress, achieving over 220 GW of renewable energy capacity in a relatively short space of time, and leads international initiatives like the International Solar Alliance (ISA). However, the pace of transformation must accelerate. The transition to clean energy is not simply a goal, but a prerequisite for economic stability, energy security, and industrial competitiveness in the 21st century.
This article explores the strategic imperative of India’s energy transition, focusing on the roles of renewables: how the cost of green hydrogen needs to be brought down; Nuclear energy: by introducing Small Modular Reactors into the mix; Securing critical minerals: by accelerating domestic mining projects; and Climate finance: how India can attract the $10 trillion it needs: by expanding the Green bond market and establishing a carbon exchange market. It outlines policy measures, investment strategies, and private-public partnerships necessary for positioning India as a global leader in clean energy innovation.
The Growing Energy Demand and the Need for Transition
India’s energy demand is projected to double by 2050, driven by urbanisation, industrialisation, and population growth. The country is currently the third-largest consumer of energy and is heavily dependent on fossil fuel imports, which account for over 80% of crude oil consumption.
Comparison to Top Consumers
It is particularly worth noting that the average Chinese citizen consumes almost three times as much as the average Indian. This is largely due to India’s significantly smaller industrial base, as well as relatively smaller income per capita. As of 2023, India’s per capita income was a trifling $2,500, and even adjusted for Purchasing Power Parity, only $9,000. The PPP figure broadly correlates with China’s income per capita being almost three times as much.
India’s demand for energy
Without swift intervention, India will be at risk from rising energy costs, increasing trade deficits, and exposed to high inflation. India’s heavy reliance on imported fossil fuels – with over 80% of its crude oil, and 50% of its natural gas coming from foreign sources – makes it highly vulnerable to global energy price fluctuations. Any surge in oil prices directly impacts India’s trade deficit, increasing the cost of imports and leading to inflationary pressures across industries and households. This dependence also weakens energy security, since geopolitical tensions, such as conflicts in the Middle East or OPEC production cuts, can disrupt supply chains and cause price volatility. Without a swift transition to a domestic mix of renewable and nuclear energy sources, India will continue to face economic instability, and fiscal strain on its national economy. Investing in clean energy is not just an environmental necessity but a strategic economic imperative to ensure long-term stability and energy independence.
The urgency to transition is further reinforced by the escalating impact of climate change. In 2023 alone, India experienced extreme climate events, including record-breaking heatwaves, devastating floods, and prolonged droughts, all of which underscore the urgent need for a resilient and sustainable energy ecosystem. The country recorded its hottest February in 122 years, impacting agriculture and water availability. In June, catastrophic floods in Assam displaced over 5 million people, while Mumbai saw its heaviest July rainfall in four decades, disrupting transportation and economic activity. Meanwhile, the rest of Maharashtra, and states like Karnataka, and Tamil Nadu faced severe drought conditions, with over 200 reservoirs running critically low, affecting irrigation and drinking water supplies. These climate-induced disasters resulted in economic losses exceeding $18 billion, emphasising the high cost of inaction. Without a rapid transition to clean energy, India will continue to face rising climate risks, economic damage, and environmental instability, threatening both human and economic security.
The Role of Nuclear Energy in India’s Clean Energy Future
While solar and wind power are critical, they are intermittent energy sources and require backup solutions. Nuclear power provides stable, zero-carbon electricity and is essential for ensuring a secure, 24/7 power supply.
India’s nuclear capacity currently stands at 7 GW, contributing only 2% of total electricity generation. The government has set ambitious targets to increase nuclear capacity to 22 GW by 2030 and 50 GW by 2050.
India has a unique advantage in nuclear energy: vast thorium reserves. Unlike uranium, thorium is more abundant and safer as a fuel source. India has already initiated a three-stage nuclear program that prioritises the use of pressurised heavy water reactors (PHWRs), fast breeder reactors (FBRs), and advanced thorium reactors.
India has been actively collaborating with global partners to accelerate nuclear infrastructure development, regulatory modernisation, and advanced reactor deployment. Two of the most significant partnerships in this domain are with France and the United States, both of which aim to enhance India’s nuclear capacity and technological capabilities.
Signed Agreement: The deal between EDF (Électricité de France) and NPCIL (Nuclear Power Corporation of India Limited) was reaffirmed in 2023, advancing technical studies and financial negotiations.
Strategic Benefits: Jaitapur will provide carbon-free electricity for 70 million homes.
Technology Transfer & Fuel Supply: France has also committed to long-term nuclear fuel supply and technology transfer, helping India advance its nuclear expertise.
India-France Nuclear Agreement
India and France have been long-term nuclear partners, and their collaboration has deepened under India’s civil nuclear program. The most notable agreement involves the construction of six European Pressurised Reactors (EPRs) in Jaitapur, Maharashtra, which, once operational, will generate 9.6 GW of nuclear power, making it the largest nuclear power project in the world.
India-USA Civil Nuclear Cooperation & Small Modular Reactors (SMRs)
The India-US nuclear partnership dates to the 2008 Civil Nuclear Agreement, which ended India’s nuclear isolation and allowed it to access global nuclear technology.
In recent years, India and the United States have expanded their collaboration in advanced nuclear technologies, including Small Modular Reactors (SMRs). The U.S. Department of Energy (DOE) and India’s Department of Atomic Energy (DAE) have recently launched feasibility studies on deploying SMRs in India, which offer lower cost, faster deployment, and enhanced safety features.
Westinghouse Nuclear Reactors: Discussions are underway for the deployment of six Westinghouse AP1000 reactors in Kovvada, Andhra Pradesh, which will generate 6 GW of clean nuclear energy.
Regulatory Support: The United States Nuclear Regulatory Commission (NRC) and India’s Atomic Energy Regulatory Board (AERB) are collaborating on regulatory frameworks to streamline approvals and enhance nuclear safety standards.
These agreements with France and the USA are pivotal for India’s nuclear ambitions. Jaitapur and Kovvada combined could add 15 GW of nuclear power, significantly boosting India’s share of clean, baseload electricity. Additionally, SMRs will enable India to deploy nuclear energy in remote and industrial regions, ensuring greater energy accessibility and security.
As India targets 50 GW of nuclear capacity by 2050, international partnerships will be critical in financing, technology transfer, and regulatory modernisation.
The Green Hydrogen Revolution: Decarbonising India’s Economy
Green hydrogen is a process of extracting hydrogen using renewable electricity. Electrolysis, the process of splitting water into hydrogen and oxygen using electricity, has become a game-changer for energy security and industrial decarbonisation by enabling the production of green hydrogen using renewable energy sources. India’s National Green Hydrogen Mission aims to:
1. Produce 5 million metric tons of green hydrogen annually by 2030.
2. Reduce hydrogen production costs from $5/kg to below $1/kg.
3. Develop large-scale hydrogen hubs and refuelling infrastructure.
Green hydrogen is crucial for decarbonising heavy industries like steel, cement, and petrochemicals, which contribute nearly 30% of India’s carbon emissions. Furthermore, it enhances energy security by reducing dependency on imported natural gas and coal.
India’s abundant solar and wind resources give it a competitive advantage in producing low-cost green hydrogen, positioning the country as a leading global supplier. With Europe targeting 10 million metric tons of imported hydrogen by 2030, and Japan and South Korea investing heavily in hydrogen infrastructure, India can establish long-term export agreements, build dedicated hydrogen shipping corridors, and attract foreign investments to become a major player in the $1 trillion global hydrogen economy by 2050.
To realise this vision, the Indian government must introduce targeted subsidies for electrolyser manufacturing, hydrogen storage infrastructure, and renewable-powered hydrogen production, reducing the high initial costs that currently limit large-scale adoption. Additionally, tax incentives and a stable regulatory framework, including hydrogen purchase obligations (HPOs) for industries, carbon pricing mechanisms, and streamlined project approvals, will be essential to attract domestic and foreign private sector investments, ensuring rapid expansion of India’s green hydrogen ecosystem.
Securing Critical Minerals for Clean Technology Manufacturing
One of the biggest hurdles to India’s clean energy transition is the shortage of critical minerals required for manufacturing solar panels, wind turbines, batteries, and nuclear reactors. India imports nearly 90% of its lithium requirements, with over 50% of the global lithium supply controlled by Australia, and significant reserves held by Chile and Argentina, making India highly dependent on foreign sources for battery production. Similarly, China dominates over 60% of the global supply chain for cobalt, nickel, and rare earth elements (REEs), and with India’s EV market projected to require 2 million metric tons of lithium-ion batteries by 2030, securing a stable and diversified mineral supply is critical for energy independence and clean technology manufacturing.
To mitigate supply chain vulnerabilities, India must:
1. India must accelerate domestic mining exploration in Karnataka, Rajasthan, and Andhra Pradesh, where recent geological surveys have identified potential lithium, cobalt, and rare earth element (REE) deposits, enabling the country to reduce import dependency, support local industries, and strengthen its clean energy supply chain.
2. India must strengthen bilateral trade agreements and strategic partnerships with lithium-rich nations like Argentina and Chile, which together account for over 55% of global lithium reserves, to ensure a steady supply of raw materials for battery manufacturing, reduce import reliance on China, and support the growth of India’s electric vehicle and renewable energy sectors.
3. India must accelerate investments in battery recycling infrastructure and circular economy initiatives to recover lithium, cobalt, and nickel from discarded electronics and used batteries, which could potentially meet 25-30% of the country’s future lithium demand by 2030, reduce reliance on costly imports, and support a sustainable, self-sufficient clean energy ecosystem.
India must also diversify its battery technology by investing in sodium-ion and solid-state batteries, which offer an alternative to lithium-based systems.
Climate Finance and India’s $10 Trillion Investment Challenge
Achieving India’s clean energy transition will require $10 trillion in investment by 2050. India must:
1. Expand its Green Bond market to attract institutional investors, leveraging its growing clean energy sector to raise low-cost capital for renewable energy projects, green hydrogen infrastructure, and electric mobility, while aligning with the global $2 trillion sustainable finance market to accelerate its net-zero transition.
2. Establish a robust carbon market that incentivizes industries to reduce emissions through carbon credits and trading mechanisms. Thus, ensuring that high-emission sectors like steel, cement, and power generation invest in clean technologies, while also enabling Indian companies to participate in the growing global carbon trading market, projected to exceed $100 billion by 2030.
3. India must foster strong public-private partnerships (PPPs) to de-risk large-scale clean energy projects by offering government-backed guarantees, viability gap funding, and risk-sharing mechanisms, which will attract private capital into renewable energy, hydrogen production, and grid modernisation, ensuring that the country meets its $10 trillion clean energy investment goal by 2050 while enhancing energy security and industrial competitiveness.
The India Energy Transition Fund, with support from global investors, can provide long-term financing for renewables, green hydrogen, and industrial decarbonisation.
A Call for Decisive Action
India’s energy transition is not just about sustainability: it is a strategic necessity for economic growth, energy security, and industrial leadership. With bold investments in nuclear power, green hydrogen, and critical minerals, India can position itself as a global clean energy superpower.
The choices made today will define India’s economic trajectory for generations to come. The time for decisive action is now. The world is watching—India must lead.
Bibliography and References
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