Investing in India’s Green Future

Apr 22, 2024

India’s energy transformation could offer compelling investment opportunities in power generation, transmission and distribution, renewables and other green technologies.

Candy Chao
Analyst, Emerging Markets Equity Team
Eric Carlson
Head of Sustainability and Portfolio Manager, Emerging Markets Equity Team

Key Takeaways

  • India is experiencing the fastest electricity demand growth rate compared to other major economies globally.1  

  • India is simultaneously undergoing a green energy transformation that could offer compelling investing opportunities.  

  • Investors can find potential opportunities in power generation, grid transmission and distribution, and renewables and other green technologies. 

India has some of the most daunting pollution problems in the world. The country’s expanding population and 7% annual growth rate in GDP over the past decade have pushed it up to third place among the world’s largest emitters of carbon dioxide (CO2), after the U.S. and China.   


But the country also has a unique path toward a greener future. Understanding how this transformation may unfold, and what is distinct to India’s situation, will be key to capturing investment opportunities related to the country’s progress in electrification and power demand growth. 

India’s Green Energy Transformation 

The buildout of clean energy infrastructure is coming fast. The country is committed to commissioning 500 GW of renewable energy capacity by 2030, accounting for more than 40% of its incremental electricity generation. By the end of the decade, renewable energy including hydro power may reach 30% of the total electricity generation mix. India already has quadrupled its renewable energy capacity in the last eight years, to a combined installed capacity of 190 GW today.  


India can’t afford to wait, as relentless growth in power demand increases the risk of electricity shortfalls if supply doesn’t keep pace. Peak electricity demand was about 130 GW in 2013 and has doubled in the decade since, potentially reaching 370 GW by 2030. To address the demand, India is adding to its electricity generation capacity, with renewable energy meeting the majority of incremental power demand. In order to ensure a reliable and stable power supply, the country is also expanding its grid.  


All of these elements of India’s distinct green energy journey involve major investments in the next decade. We see potential opportunities in three main areas. 


1. Power transmission and distribution: Grid connection backlogs are a big issue globally, delaying renewable energy projects and posing a major bottleneck to decarbonization efforts. In India, though, grid expansion is proceeding. The country has added 180,000 kilometers of new transmission lines over the past decade, a 60% increase. The government has prioritized rapid deployment of new grid infrastructure to improve the reliability of the power supply, and it plans to spend $30 billion on this by 2030.


Investors can consider companies that provide technology and equipment for national transmission and distribution projects. Over the next decade, India will need to more than double its current installed power capacity, as the country meets rising demand.


2. Renewables and storage: While India today is dependent on coal-based thermal generation, it will meet a large portion of incremental energy demand through renewables, particularly solar. Along with alleviating environmental concerns, this could help improve the country’s energy security and trade balances by reducing India’s net energy import bill, which is about 3% of GDP. What’s more, India plans to boost its domestic supply chain for solar power through manufacturing subsidies and import taxes, shifting away from China, which has been its leading supplier of solar modules.


The country has already installed 67 GW of solar capacity and is expected to install another 13 GW of solar this year. It also already has the world’s fourth-largest installed wind generation capacity, at about 45 GW, and more is planned. Wind power capacity is expected to grow by 60% to 71 GW by 2030. More grid storage is needed to take full advantage of all this renewable capacity and boost reliability. As the economics of battery storage improve, the way solar did about a decade ago, India could ramp up its storage projects and drive even higher load factors.


3. Electric transportation.  India is currently the world’s largest two-wheeler market. Electrification of road transport in India is still in early stages with penetration of electric two-wheelers growing from 1.2% in 2021 to 5.2% today, helped by favorable total cost of ownership and government support. We believe structural factors such as rising disposable incomes, expanding charging infrastructure and improving affordability will continue to support India’s EV market despite slowing global demand and phasing out of subsidies.  


Overall, the collective commitment of the government, the private sector and the people of India are steering the country to a more sustainable path. The country’s unique combination of environmental challenges, development goals and rapid growth create a set of clean energy goals and investment opportunities seen in no other emerging market. 

Read the Full Report

Learn more in "Weaving India’s Future: A Tapestry of Green and Grey Energy."