The power sector in India is on the brink of a significant transformation, with investment opportunities estimated at over US$ 478.58 billion (Rs. 40 trillion) in the next decade, according to a comprehensive report by brokerage firm Motilal Oswal. This projected investment comprises around US$ 406.80 billion (Rs. 34 trillion) earmarked for capital expenditure, with the remaining allocation focused on optionality.

The breakdown of this investment indicates that approximately 86% will be directed towards generation, 10% towards transmission, and 4% towards smart metering. The report identifies several key factors driving this substantial investment surge, including a higher compounded annual growth rate (CAGR) in power demand, the pressing need to upgrade and replace outdated infrastructure, and a strategic transition towards cleaner energy sources.

Motilal Oswal highlights India's unique positioning with strong real GDP and per capita growth, alongside technological advancements and enhanced electrification as pivotal elements that could sustain increasing power demand for years to come. The brokerage projects that power consumption in India could compound at over 7% in the next decade, bolstered by robust GDP growth and emerging demand drivers such as electric vehicles (EVs) and data centres. These sectors are expected to contribute one-third of power demand growth by 2035, despite currently accounting for a negligible share of total power demand in India.

The report draws a parallel between India’s current energy consumption trends and those of China in the early 2000s, signaling a potential inflection point for Indian power consumption. It is anticipated that power demand will grow by 6.5-7% over the next decade, significantly surpassing the 5% CAGR observed in the past two decades.

Furthermore, India has made substantial commitments to renewable energy and sustainability. At the COP26 summit in 2021, India launched a comprehensive 5-part "Panchamrit" pledge, which includes ambitious goals such as achieving 500 GW of non-fossil electricity capacity, generating 50% of its energy requirements from renewable sources, and reducing emissions by 1 billion tonnes by 2030. Additionally, India aims to lower the emissions intensity of its GDP by 45% and achieve net-zero emissions by 2070.

To capitalize on these opportunities, stakeholders in the power sector must focus on strategic investments, technology adoption, and infrastructure improvements to support the country's energy ambitions.

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