As India moves toward a greener energy future, the pathway is filled with significant challenges and potential rewards. The India Energy Week (IEW) serves as a key platform for discussing the future of the country’s energy sector, particularly in terms of renewable energy, green hydrogen, and decarbonization.
Experts have pointed out that while India has made progress, it still faces barriers related to finance, technology, and competition, particularly from global players like China and the United States.
Ahead of the third edition of India Energy Week — IEW 2025 — Connected to India’s Sudipto Maity sat down for a chat with energy expert Hemant Mallya, a fellow at New Delhi-based Council on Energy, Environment and Water (CEEW).
India’s green energy strengths
India’s renewable energy potential is enormous. “We have more than 20,000 gigawatts of solar potential and more than 4,000 gigawatts of wind potential,” said Mallya, who leads the CEEW team on four broad areas — energy transition and industrial decarbonisation; carbon management through carbon pricing and carbon capture utilisation and sequestration; ESG and circular economy; and innovation and R&D.
In case you’re wondering what’s a gigawatt (GW), here’s an easy explanation: A watt is a measure of power and there are 1 billion (1,000,000,000) watts in 1 GW. One GW of power can light up 100 Million (100,000,000) LED bulbs, as a typical LED light bulb uses about 10 watts of power.
“So that potential definitely exists which means it is up to us to be able to translate that into real-world opportunities.” This massive potential positions India to be a significant player in global energy markets, provided the country can fully exploit these resources.
The country’s progress over the past decade has seen it become one of the lowest-cost producers of renewable energy globally. “We have some of the lowest renewable power generation costs in the world,” Mallya added, noting that India’s generation cost is between 2 to 3 cents per unit of power. In comparison, countries like the United States or European nations often see higher generation costs due to different economic structures and less aggressive deployment.
Moreover, India is tapping into its coastline to further develop green hydrogen, a vital energy source of the future. Countries like Japan and Singapore are looking toward India to supply green hydrogen, as India’s renewable energy capacity can easily support this growth. Additionally, India is focusing on biofuels and leveraging agricultural and industrial waste for energy production, a sector that holds immense potential but requires more technological development.
The weaknesses hindering progress
Despite its strengths, India faces several weaknesses that could impede its energy transition. The cost of capital is one of the significant challenges. “The weighted average cost of capital for Indian companies is roughly in the 10-12 percent range, whereas in developed countries like the Middle East or the U.S., it’s around 4-5 percent,” Mallya said.
Explaining the concept of cost of capital, Himanshu Verma, Founder and CEO, Connected to India, said, “Cost of Capital is the return a company must make to satisfy its investors. These investments can be a mix of equity and debt. Higher cost of capital means companies in India will have to make more money than their counterparts in the Middle East or the USA.”
This higher cost of capital makes renewable energy projects more expensive to finance, reducing their competitiveness globally.
Another hurdle is the lack of a robust ecosystem for the green energy sector. While India has set ambitious renewable energy and green hydrogen targets, the necessary infrastructure and support systems are still in the early stages.
Unlike countries such as China, where the government heavily supports green energy initiatives, India has less available capital for public funding.
As Mallya noted, India doesn’t have the luxury of pumping large amounts of money into green energy projects like China or the European Union. “The ecosystem needs to be developed to a certain extent by the government but also through building consortia through partnerships,” he said.
China: A dominant competitor
China’s dominance in the green energy space has been a topic of significant concern for India. The country has been investing heavily in green technologies for more than a decade, positioning itself as a global leader in renewable energy manufacturing, including solar panels, wind turbines, and electric vehicles.
As Mallya pointed out, “China is way ahead. It’s literally a decade and a half ahead because they started planning their economy as a green economy post the 2008 financial crisis.”
This early investment has allowed China to capture about 70-80 percent of the global market share in critical minerals, batteries, and solar modules, according to the expert.
For India, competing with China in these sectors could prove challenging due to the sheer scale and time advantage that China has built up. “We cannot beat them in technologies or capacity where it’s legacy,” Mallya noted. “But it’s about leapfrogging. How can we look at sodium-ion batteries or other emerging technologies?”
While China’s success in renewable energy manufacturing is clear, India has an opportunity to carve out its niche by focusing on emerging technologies. The development of sodium-ion batteries, still in its early stages, offers one such opportunity for India to innovate and leapfrog China in certain areas.
However, as Mallya emphasised, “If we don’t act very soon, we will have missed it by the end of this decade. Nobody will allow any country to grow without competition.” India must focus on capturing the green energy market before the window of opportunity closes.
The United States conundrum and further leadership opportunities
The US decision to withdraw from the Paris Climate Agreement just hours after Donald Trump took oath as the 47th President of the country on January 20, 2025, will have a far-reaching impact on global climate negotiations. The withdrawal sent a signal to other countries that there might be a shift in climate leadership. As Mallya observed, “What the Americans do will have a significant impact globally on how corporates behave.”
“Several companies that did make tall commitments to transition have actually now reneged and backtracking on their commitments,” he warned.
Still waiting for the "science" predictions that never occur. Trump just saved the US $1 trillion annually…
— Camus (@newstart_2024) January 21, 2025
Trump Takes US Out of Paris Climate Agreement With New Executive Orders
Source: Bloomberg Television pic.twitter.com/KmhEblD81Z
While the Biden administration had rejoined the Paris Agreement and pledged to take significant action on climate change — after Trump withdrew during his previous tenure — the uncertainty created by the current administration has left global energy markets in flux.
With the US no longer as committed to climate action, there is a potential opportunity for India to step up and become a global leader in renewable energy. “The US has decided to step out of the Paris climate agreement. So then the question is: ‘Does India have it in itself to take a leadership role?’,” Mallya asked.
India has a unique opportunity to work with developed countries that are still committed to climate action. As Mallya pointed out, “India needs to leverage that with the Americans and see if we can wean ourselves out of coal and crude oil into gas. For us, then the transition to green hydrogen and electrification becomes that much easier.”
By aligning itself with countries favourable toward India, such as those in Europe or Japan, India can ensure a seat at the table in shaping the future of global energy. However, the key challenge remains ensuring that India has the necessary technological and financial infrastructure to compete on the global stage.
India’s green hydrogen roadmap
Green hydrogen is often touted as the fuel of the future, and India has ambitious plans to become a leader in this space. Mallya highlighted the importance of India’s coastline, which makes it an ideal candidate for green hydrogen production. There is already some momentum in the industry, with companies looking to deploy green ammonia production capacity in the country for export.
However, the challenge lies in scaling up production and bringing down the costs of green hydrogen, which currently remains significantly more expensive than fossil fuel-based alternatives.
“The green hydrogen premium gap is significant, anywhere between 50 to 100 percent,” Mallya noted. “How do we establish the offtake? How do we ensure that once the molecules are produced, someone is actually buying them?”
The success of green hydrogen in India will depend on developing a strong ecosystem that includes not just production but also the demand side. Creating demand will be just as important as building the supply chain. Industries such as steel, transportation, and fertilizers will need to adapt to using green hydrogen, and companies must invest in technological developments to facilitate this shift.
Addressing climate change and resilience
While India is making significant strides in reducing its carbon emissions, it is already feeling the effects of climate change. From increasingly frequent cyclones to intense heatwaves, India’s vulnerability to climate risks is rising. Mallya stressed the importance of focusing on resilience and adaptation, noting that India faces both mitigation and adaptation challenges. “I think we are at a point where many are debating whether the 1.5 degree mark has already been hit and we have missed that boat. From an India perspective we do need to focus on mitigation. I don’t think it’s really an option, but we do need to focus more on resilience and adaptation,” he said.
“We actually are facing the brunt on many fronts… But I think the key is to keep it positive and look at all of these as opportunities. Can we build solutions for example that will help not just India but also other parts of the world… So, how do we create solutions not just for us but also for others and take a leadership position. I think that’s going to be the key mindset change that we require,” Mallya added.
“We cannot control what other 100 odd countries in the world do, but we can control what we do,” Mallya noted.
‘Need more partnerships’
Asked to rate the incumbent Indian government’s performance pertaining to their green energy initiatives, Mallya lauded it for its progressive initiatives towards a greener future, highlighting the significant efforts both at the central and state levels.
“From an initiative perspective, I would rate them highly,” Mallya said, pointing to the proactive stance taken by several states such as Rajasthan, Odisha, Maharashtra, and Gujarat in rolling out their own green hydrogen policies. These states have also committed significantly in financial resources to the cause, marking a step towards the right direction in India’s green transition.
However, Mallya stressed that while policies are in place, the challenge now lies in effective implementation, which requires coordination between state and central governments.
While the central government sets the framework and provides funding, states have the power to approve projects and manage critical aspects like skilled labour. The collaboration between these two levels of government is crucial for India to meet its green energy goals. Mallya noted that, despite the strong policy framework, the country still faces challenges in building necessary infrastructure and technical capacity, including developing laboratory standards and fostering innovation in green hydrogen technologies.
He also urged the corporate sector to take more responsibility in driving India’s green transition. While the government has made strides with policies like carbon pricing and green hydrogen subsidies, Mallya said that corporations must step up with clear roadmaps for transitioning to greener energy sources.
He also highlighted the need for sectoral collaboration to ensure that companies remain competitive as they adopt new technologies. “The corporates need to come together at a sectoral level and say what is it that they can do so that everybody is on the same playing field,” he concluded, underscoring the importance of a collective effort to push India towards a greener future.
