Energy transition investments power up in India

Explore trends, sectors, and policies shaping green energy investments in India, from clean power to mobility, in this EY Energy Transition Dialogues episode.

Key takeaways

India aims for 500GW of renewable energy by 2070, which means 1 billion ton of CO2 in absolute terms.
80% of renewable energy investments are in e-mobility along with manufacturing in battery, electrolyzer, and green hydrogen manufacturing.
Hybrid models of solar plus batteries or solar plus wind plus battery storage are attracting investments.
Electric mobility, Energy-as-a-service or Battery-as-a-service are growing sectors attracting investments.
National policies such as National Green Hydrogen Mission, National Coal Gasification Mission and PLI scheme are boosting green hydrogen and battery manufacturing.
Green financing is increasingly recognized and accessible, attracting big-portfolio investors as well as climate tech startups.
Affordability has improved with lower cost of capital than internal rate of financing.
Companies are consolidating green investments through acquisitions.
Falling battery prices have enabled combinations of solar, wind and battery storage to round-the-clock power, matching plant load factor (PLF) of coal thermal.
Standardized policies, regulatory incentives and penalties are essential for effective implementation.

Many conglomerates as well as climate tech startups are looking at green financing to ensure that they are able to make a differentiated offering in the market.

Kapil Bansal

Partner, Energy Transition and Decarbonization, EY India

For your convenience, a full text transcript of this podcast is available on the link below:

Pallavi

Welcome to another episode of the EY India Insights podcast, part of our Energy Transition Dialogues series. I’m your host, Pallavi.

In today’s episode, we’re exploring how green investments are driving India’s energy transition in 2025. With record levels of capital flowing into clean energy, green hydrogen, electric mobility, and climate-resilient infrastructure, India is fast becoming a global hub for sustainable finance.

We’ll talk about the key sectors attracting investment, how policy and ESG frameworks are shaping decisions, and what more can be done to accelerate progress.

Joining me is Kapil Bansal, Partner, Energy Transition and Decarbonization, EY India, who leads EY’s energy transition and decarbonization practice and has recently authored the EY report “Energy transition investment trends in India”. He has been closely tracking the green finance landscape and brings deep insights into the trends and opportunities ahead.

Kapil, once again, welcome to our show.

Kapil Bansal

Thanks, Pallavi.

Pallavi

Kapil to start off, India has made significant green investments recently. So what are the key areas that are attracting the most capital?

Kapil Bansal

For India to transition as per the ambition laid down by the Prime Minister, to become net zero by 2070, we have to achieve 500GW of renewable energy.

We have to reduce our emissions by 50%. In absolute terms, 1 billion ton of CO2 has to be reduced. So those are some of the goals that have been laid down for 2030. And if I look at those goals, predominantly, the most attractive value proposition for any private player or public sector enterprise has been, historically, is in the space of renewable energy across the value chain, whether it is manufacturing of solar panels or it is the generation of renewable energy through solar, wind, or hybrid or solar plus wind. That has been the significant area lately, from last one year, with the battery prices going down.

The hybrid of solar plus batteries or solar plus wind plus battery storage is becoming a prominent investment through which both private and public investments are happening. That's one bucket of key investment.

The second bucket is on the consumer side, which is coming through. That is the transition towards electric mobility. And that's where you look at significant investments that have happened in the e-mobility space. Again, both in the manufacturing and the equipment services side, which is battery management systems or electric management systems. And then finally towards overall energy as a service or battery as a service… investment that has happened through infrastructure, charging infrastructure, batteries.

So, these are some of the big investment portfolios in the green energy space, where almost 70% to 75% of investments are done. But the inception of some of the national missions, such as the National Green Hydrogen Mission or the National Coal Gasification Mission, and a lot of the different production-linked incentives in this space — battery manufacturing, green hydrogen development, as well as electrolyzer manufacturing — have also seen significant investment, both from the public and the private space.

If I put it in a nutshell, 80% of green investments have been made recently in India on renewable energy, from manufacturing to its generation, e-mobility space (from manufacturing to its services), and then also on the different PLI schemes which have come on battery manufacturing to electrolyzer manufacturing as well as on the green hydrogen manufacturing side of the things.

Pallavi

Thank you, Kapil. Now, for our listeners, could you also highlight any specific trends or data points from our report that indicate how green finance is reshaping India's energy landscape in 2025?

Kapil Bansal

In our recent report, when we looked into the data set, we looked specifically on the private equity investment and venture capital investment. When I look at the overall green financing, there has been a significant development on three different parameters.

One, there is a big awareness of green financing in different forms and shapes by financial institutes. Second, there is an affordability towards green financing because it comes at a lower cost of capital than your internal rate of financing. Third, there is also accessibility to green financing. So, a lot of conglomerates as well as climate tech startups have started looking towards this side of financing to ensure that they are able to make a differentiated offering in the market.

And that's why, we have seen a significant trend towards green investment. To give an example from each of them, venture capitalists have started investing a lot on the newer technologies, for example, Lohum, which is converting black mass into rare earth and critical minerals that are used back in EVs and defense.

That itself is showing significant investment from different venture capitalists overseas. In growth investment, as an example, if you look in renewable sector, a lot of the big portfolio, big-bucket, bulge investment companies like Blackstone and I Squared Capital have invested in renewable generation, where we have seen bigger deals happening.

And finally, consolidation has already started taking place. Public sector companies like ONGC, Indian Oil, BPCL, NALCO, SAIL, have created their own portfolio of green investment subsidiaries through which they are investing, and they are going for M&A activities through which they have acquired a lot of companies. For example, ONGC has recently acquired Ayana (Renewable Power), JSW Energy has recently acquired O2 Power. So the consolidation has also started, happening in the space.

Pallavi

Thank you, Kapil. Now focusing on the investors ecosystem, how are private investors and international stakeholders responding to India's green transition efforts?

Kapil Bansal

As per our report, India has significantly shown an increase of investment in green transition funds, both from the international stakeholders as well as from domestic private investors. Among international investors, the big ones who are there have established their captive platforms. An example in case is KKR. It has invested in a platform called Serentica. It provides renewable energy to not only captive Vedanta group of companies but also the CNI customers.

Private investors are also looking towards growth in this space. Various private investors have looked into e-mobility significantly. And again there is growth and quality distribution. If I look from a Bangalore point of view, a lot of the players have invested in the e-mobility side of the space. When I look from Delhi region, a lot of the investment has been done on the renewable generation side of things. When I look from Mumbai region, investments have been done both by private and international players, on an equal mix of renewable generation, e-mobility space, as well as in Green Hydrogen space of newer, green investment portfolios.

Pallavi

Thank you, Kapil. Now pivoting towards the ESG frameworks. What is the role of the ESG frameworks in guiding these green investments? And how mature is the current ESG ecosystem in India?

Kapil Bansal

I think this is one of the most important developments which has transitioned us towards green financing. Sebi has regulated all the top 1,000 companies to report BRSR as a mandatory requirement.

Earlier, it had started with the top 250 by market cap, and then it's been expanded to top 1,000 companies. These frameworks of reporting their sustainability reports, their ESG KPIs as a part of their annual reporting beyond just investor and financial reporting, had led to awareness and willingness to invest in green investment. That's No.1.

No.2, a lot of companies have started looking towards ESG rating, beyond the financial ratings, to help in their investment portfolio. So, there are multiple ESG rating agencies now. On top of them is DGSI rating. This rating provides a company an understanding of how they are performing on all three parameters - environmental, social and governance - as against their peers to be defined as whether they can be in the main index of DGSI to secure lower cost of capital for their green investments.

That has become a significant value for a lot of our clients, to look at ESG framework, ESG reporting, as well as ESG rating, and working with some of these corporates.

In recent times, we have seen significant awareness at the boardroom and promoter level to emphasize on adopting all the parameters of ESG rating and achieving and higher and leapfrog growth in their ratings, so that all their key stakeholders, whether it is investors, their agencies through which they have been working, government bodies, thinktanks, customers, suppliers, everybody is conscious about how they are operating in an environmentally, socially and highly governed atmosphere.

In recent time, all three parameters have become crucial. If governance has been failed, the companies can go bankrupt and Social elements should not be eyewash. It has to bring all the different parameters into a single consolidated manner.

And obviously, finally, the most critical element is environmental consciousness so that we are reducing emissions, are water positive, as well as looking at biodiversity as a critical element in our day to day operation and together bringing carbon neutrality or a long-term net zero goals for which capital investments are needed, which are coming through the green instruments that we have identified in our report.

Pallavi

Thank you, Kapil. Now moving on to the technology aspect. Are there any emerging technologies or business models disrupting the renewable energy space in India today?

Kapil Bansal

I think that's an area that has been evolving very fast. Every quarter things are changing. I will break down this question into two parts. One is on emerging technologies, and the second part is on various business models, because this is what we work with at all the major companies in the renewables space.

Renewable has become a low hanging fruit, both from the cost reduction as well as emission reduction standpoint. And there is a clear awareness about this among clients. What's changing is in the technology space. As I mentioned earlier, people were looking purely at solar, rooftop, which is behind the meter. Then they started looking in a group captive manner for solar only. But nowadays, with the declining cost curves, solar plus wind = hybrid provides higher mix of renewable energy around the clock. And then as the battery prices have fallen significantly by 67% in the last six months, we observed that solar plus BESS (Battery Energy Storage System) or solar plus wind plus BESS is providing round the clock power at 80% level, which is equivalent to a PLF (Plant Load Factor) of any coal thermal power plant at the similar delivered cost basis.

So that's the magnitude of new technologies that are emerging in the renewable generation space. And the business models are also changing, with the customer-oriented regulations that are coming from the CRC and the government policies towards domestic manufacturing. People are looking towards building group captive open access, even as low as 100 kilowatt level, through which common users as well as business users can adopt renewable energies in their energy mix using the policy benefits that are there.

There are other policy benefits, like if you are using within the state or you are bringing from interstate, there are exemptions that are provided in order to utilize the benefit of India's extensive one-grid network. And finally, the business models are also evolving from various aspects of virtual power purchase agreements, where you can buy the power, which could be great, but you can sell the renewable energy certificates to someone who needs it.

So, it is transaction of power along with the green attributes which are bringing different business models and revenue generation mechanisms in the overall context of renewable energy space in India, which is far beyond any country that you observe in the global context.

Pallavi

Thank you, Kapil. And lastly, from a policy and regulatory standpoint, what more can be done to accelerate green investment flows in India?

Kapil Bansal

A lot has been done on the policy and regulatory standpoint to make sure green investments and green energy is adopted by users as well as businesses. What needs to be done is: One, the policy definitions should be standardized and harmonized so that there is a clear understanding of the words defined in the policy. For example, certain states have said, contracted demand to a maximum of 30%. People are confused if this is 30% of their demand or the 30% of the generation or 30% of the consumptions that they will do over the course of the year. So, clarity in the definition of policies is a must.

Second point in that itself is that it should be harmonized. What has been adopted at the central level should also be adopted at the various states’ level. For example, central has said 10% of energy should be stored from a renewable point of view to establish grid stability. If 10% has been established by the Centre, then all states should adopt that 10% norm. So that's the harmonization of it.

The third element is about the regulatory standpoint. If there are incentives, then incentives should be provided at the manufacturing level. At the same time, there should be some penalties that should get adopted if the mandates are being given to the consumer side. Recently, if the RCO, the Renewable Consumption Obligation is there for all the companies to adopt certain percentage of their renewable mix, and if they do not fulfill, then that penalty should be adopted by companies to ensure that they enforce and adopt such green energy transition within their organization. Otherwise, it is all on paper and nothing will translate into an actual ground level execution.

Pallavi

Thank you, Kapil. That brings us to the end of today's episode. As India accelerates its clean energy journey, green finance will remain a cornerstone of our collective success.

Thank you once again for joining us today and spending your time and sharing all these valuable insights on green investments.

Kapil Bansal

It was my pleasure to have our discussion. Thank you, Pallavi, for providing this opportunity.

Pallavi

Thank you so much, Kapil. And thank you to all our listeners for tuning in. Please don't forget to follow and subscribe to the EY India Insights Podcast for more expert conversation on sustainability and energy transition. Until next time, stay informed and stay inspired. And let's keep building a greener India.

Presenters

Kapil Bansal

Partner, Energy Transition and Decarbonization, EY India

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Episode 05

Duration

18m 21s

How India’s green investments are driving the energy transition in 2025

Explore India’s US$62 billion energy transition, focusing on renewables, electric vehicles, storage, green hydrogen, and 2025 trends for a cleaner future.

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Energy transition investments power up in India

Key takeaways

Pallavi

Kapil Bansal

Pallavi

Kapil Bansal

Pallavi

Kapil Bansal

Pallavi

Kapil Bansal

Pallavi

Kapil Bansal

Pallavi

Kapil Bansal

Pallavi

Kapil Bansal

Pallavi

Kapil Bansal

Pallavi

Presenters

Kapil Bansal

How India’s green investments are driving the energy transition in 2025

Explore India’s US$62 billion energy transition, focusing on renewables, electric vehicles, storage, green hydrogen, and 2025 trends for a cleaner future.

In this series

Presenters