Paris Alignment of Power Sector Finance Flows in India: Challenges, Opportunities and Innovative Solutions

This brief, by examining the current financing landscape of the Indian power sector, and its alignment with India’s Nationally Determined Contributions (NDCs), aims to identify the challenges and opportunities in financing the country’s ambitious renewable energy targets to facilitate a smooth energy transition.

Key findings

• India has made significant progress in achieving its Nationally Determined Contributions under the Paris Agreement and is expected to meet the targets set before 2030.
• However, fossil fuels, especially coal, continue to be the mainstay of India’s electricity generation mix (74 percent) in the cost optimal capacity mix.
• Continued financing of coal-fired power projects is keeping India’s carbon intensity well above the levels required to align with a global mean temperature rise of <1.8°C, consistent with the Paris Agreement-aligned IEA Sustainable Development Scenario (SDS).
• There is a need to not only continue to ramp up zero-carbon power investments, but also to act swiftly to accelerate the decommissioning and replacement of existing high-carbon capacity.