India needs to reduce its dependence on oil and gas and accelerate its transition to renewable energy as energy security gains importance amid changing global conditions, Pankaj Agarwal, Secretary, Ministry of Power, said at the FICCI Indian Power Sector Conference in New Delhi. He said recent developments around the Strait of Hormuz had reinforced the need to reduce reliance on hydrocarbons wherever possible.

Agarwal said solar, wind, biomass, nuclear power and coal would all remain part of the energy mix, but renewable energy had become central to India’s energy security. He added that the rising share of variable renewable generation would require greater flexibility on both the supply and demand sides of the electricity system.

The economics and underlying assumptions of the power sector have changed significantly over the past three years, Agarwal said, noting that battery storage costs had declined from about Rs. 10 per unit in 2023 to Rs. 4 per unit currently. India is also preparing a roadmap for 100 GW of nuclear capacity by 2047, while pumped storage projects with a combined capacity of about 16,000 MW are under implementation.

Agarwal identified the geographical concentration of renewable generation as a challenge for grid stability, with substantial solar and wind capacity located in Rajasthan and Gujarat. The government is considering storage, transmission expansion, time-of-day tariffs and market-based mechanisms to manage fluctuations in generation.

The forthcoming National Electricity Policy is expected to include flexibility mandates for large consumers, including data centres and green hydrogen projects, whose electricity demand can fluctuate considerably. Agarwal also highlighted investment opportunities in battery and pumped storage, particularly in renewable-rich states, saying these assets could reduce curtailment, support the grid and enable energy arbitrage. He said India should use the grid-stability challenge to develop and manufacture power-electronics equipment and other solutions domestically.