IEW 2026 INTERVIEW: EVs, data centers add to India’s power demand boom, challenge sustainability

Rising electrification across sectors is expected to further strain India's rapidly increasing power demand, intensifying pressure on sustainability in the highest CO2-emitting sector, Rajnath Ram, advisor – energy at NITI Aayog, a key policy planning body, told Platts, part of S&P Global Energy.

India generated about 1,830 TWh of electricity in fiscal year 2024-25 (April-March), up 5% year over year, to meet the growing demand of a growing economy. Looking ahead, initiatives for energy transition and digitalization are expected to drive a surge in demand, requiring non-fossil fuel capacities to grow faster, Ram said.

"We are seeing electric vehicle penetration going up and demand coming up for data centers in a big way," Ram said ahead of the Jan. 27-30 India Energy Week in Goa, adding, "This will ultimately lead to higher penetration of electricity into the system."

India seeks to attain a 30% share of electric vehicles in the total vehicles sold by 2030, as sales of EVs rose from 50,000 units in 2016 to 2.08 million units in 2024, a Niti Aayog report said in August 2025.

By 2047, primary energy requirements will be roughly more than three times higher, while electricity requirements may go up by four times, Ram said, implying India has to put in place large-scale new energy sources now.

Nuclear, batteries in focus

According to Ram, the pressures on energy demand, combined with the need for sustainability, have led policymakers to consider supporting multiple clean energy solutions, with a special focus on nuclear power and battery storage.

"Renewables will need long-duration storage to fill in for intermittency, but the industry can't wait for that as it needs a constant baseload power," Ram said. "So, the cleanest source of energy remains nuclear."

He said India could have a nuclear power capacity of 23 GW-24 GW by 2031-32 as against 6.78 GW currently. In addition, the government plans to build up to five indigenous small modular reactors by 2033, following the passage of the SHANTI Bill in December 2025.

The other critical aspect of energy transition policies is providing incentives to create energy storage, Ram said. For this purpose, the government already has a production-linked incentive scheme for advanced chemistry cell manufacturing and may consider offering a similar scheme for pumped hydro projects.

Hydrogen for industries

Hydrogen offers the only viable pathway to reduce emissions in sectors dependent on high-temperature industrial processes and chemical reactions that cannot be electrified, such as cement, steel and fertilizers, Ram said.

"Hydrogen will address only a small part of the energy transition agenda," Ram said, adding, "Some of the hydrogen is targeting only the hard-to-abate sectors. And these are certain sectors which are very difficult to abate because their electricity penetration is difficult to achieve."

The Rupees 194.44 billion ($2.37 billion) National Green Hydrogen Mission has allocated most funds to developers through auctions over the last two years, awarding projects totaling 0.4-0.5 million mt of annual capacity toward the 2030 target of 5 million mt of production, Ram said.

The government is not planning additional subsidies beyond current allocations until the winning bidders' targets are achieved, he said.

"Hydrogen is slowly picking up because the demand will be there for refineries, the shipping sector and the fertilizer sector," he said, noting, "Consumption mandates were initially thought of, but it is still under discussion with the ministries."

Platts assessed the India renewable hydrogen term contract at $3.37/kg on Jan. 22, down 5.60% from Dec. 11, when the assessment was launched.

Renewable challenges

Renewable energy curtailment in India stems from grid stability requirements and transmission bottlenecks rather than competition from thermal plants, as the country rolls out rapid capacity additions amid limited storage deployment, Ram said.

"The issue of curtailment is not because of thermal power," Ram said. "Curtailment is happening because we have to keep the grid stable. Excess power can distort the grid and the market as well."

India has around 266.78 GW of non-fossil fuel-based power capacity, representing about 50% of total power capacity, and it is expected this share will rise to 60% by 2030 as solar, wind, nuclear and hydro additions continue, he said.

The government is addressing constraints on evacuation and storage to support further renewable deployment.

Despite the clean energy build-out, India plans to add around 97 GW of coal capacity by 2037-2040 to meet surging baseload power demand as manufacturing expands and electricity consumption rises, he said.

"Fossil will remain in our system. Till 2040, we are going to add thermal power capacity."