Page 37 - Policy Economic Report - September 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

cent of actual electricity generation, underscoring the importance of storage, transmission infrastructure
and flexible generation capacity for greater renewable integration.

Investment activity in the storage segment is already gaining momentum. Standalone energy-storage
tenders increased sharply to around 21 GW in FY2025–26 from 7 GW in FY2024–25, indicating growing
procurement activity for grid-scale storage solutions. Battery Energy Storage Systems (BESS) and Pumped
Storage Plants (PSPs) are expected to play complementary roles, with battery systems providing flexibility
and rapid response while pumped storage can support longer-duration energy balancing.

The scale of investment indicated by the CareEdge report is broadly consistent with the Government's
projections. According to the Ministry of Power, the National Electricity Plan envisages 236 GWh of BESS
and 175 GWh of PSP storage by 2031–32, with estimated investments of around ?3.49 lakh crore and
?1.29 lakh crore, respectively. This implies a combined investment requirement of approximately ?4.78
lakh crore for these two storage technologies.

The expansion of storage will also need to be accompanied by substantial investment in the transmission
network. CareEdge estimates around ?5.19 lakh crore of transmission-sector capital expenditure during
FY2026–27 to FY2030–31. However, execution challenges, including right-of-way constraints, forest
clearances and coordination requirements, could influence the pace at which transmission capacity is
added.

The transition is therefore expected to involve parallel investment in renewable generation, energy
storage, transmission and flexible conventional capacity rather than an immediate replacement of
thermal generation. CareEdge notes that well-contracted coal-based thermal power assets are likely to
retain relevance in meeting rising electricity demand and providing flexibility as renewable penetration
increases.

8. Coal Drives Growth in India’s Core Industries Despite Decline in Crude Oil Production

India’s eight core industries recorded 3.8 per cent growth in December 2023, supported primarily by a
strong increase in coal production, according to data reported by the Ministry of Commerce and Industry.
The eight core industries—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and
electricity—together account for 40.27 per cent of the weight of items included in the Index of Industrial
Production (IIP), making their performance an important indicator of underlying industrial activity.

Coal emerged as the strongest-performing sector during the month, with production increasing by 10.6
per cent year-on-year in December 2023. The coal index rose to 204.0 points from 184.4 points a year
earlier, while coal production increased to approximately 92.9 million tonnes, reflecting continued
strength in domestic coal output. The sector had also recorded double-digit growth in the preceding
months, contributing significantly to the overall expansion of core industries.

The broader performance of the core sector remained positive, although growth was uneven across
industries. Steel production increased by 5.9 per cent, while natural gas and fertiliser production grew

September 2026 Page | 36