Greater Noida: On Day 3 of India Energy Week 2026 in Goa, expert commentaries underscored that India’s energy
transition is moving decisively from capacity build-out to system-level execution, where grid stability, credible carbon pricing and regulatory reform will define outcomes. As power demand accelerates and solar additions remain robust, clearer rules on captive power, stronger renewable compliance and large-scale storage deployment are beginning to convert policy intent into operational reality. At the same time, the launch trajectory of India’s emissions trading system and the passage of the SHANTI Act 2025 signal a structural shift in how emissions are valued and how nuclear power, industrial decarbonisation and clean technologies such as green hydrogen are financed, marking 2026 as a pivotal year in aligning energy security with climate ambition and global competitiveness.
Gauri Jauhar, Executive Director for Energy Transition Consulting, S&P Global Energy said, “India’s power sector is expected to make substantial progress in 2026 by converting recent reforms into tangible results, especially in baseload, corporate renewables and digital infrastructure. Enhanced clarity on captive power is set to further support renewables projects. Changes in civil nuclear liability are opening the door for private investment and new nuclear initiatives. Improved enforcement of renewable consumption obligations should increase compliance, but significant impact may take time as tracking systems develop. India is maintaining strong momentum in solar PV additions by 30 GW in 2026, although slightly below 2025 levels. After years of rapid solar growth, widespread
curtailments are beginning to limit further solar expansion. In 2026, curtailment risks are expected to fall below 0.5%, thanks to slower solar growth and robust power demand increasing by 6.0%-6.5%.
While this is a positive development, it also signals a more cautious investment environment and ongoing grid integration challenges that stakeholders need to watch.”
“India’s solar manufacturing story is entering a more complicated phase: the country has scaled module production rapidly, but upstream cell supply is tightening just as policy pivots toward dispatchable, grid-integrated renewables and stricter domestic content expectations. The next five years will be shaped by how quickly India can rebalance its supply chain and adapt to tougher export conditions. India has built a large module industry in a decade, growing from about 2.5 GW of module capacity in 2015 to about 116-123 GW nameplate today (80-90 GW production), but the market now faces a mismatch between abundant modules and insufficient domestic cell supply.”
“Policy has been the core driver of this scale-up, using protective and incentive measures to reshape market economics and give manufacturers confidence in sustained local demand. Export pathways are narrowing; India leaned heavily on the US market (over 90% of module exports in 2024), but about 50% of new US tariffs are slowing shipments, while Europe remains hard to penetrate, and new opportunities in the Middle East and Africa come with rising local competition. India’s energy storage market reached a turning point in 2025, with a record-breaking 35 GWh of tenders awarded — setting the stage for large-scale rollout in 2026. This increase is primarily driven by system flexibility needs, further bolstered by Viability Gap Funding covering up to 30% of capital expenditure. In 2026, stand-alone storage tenders are expected to scale up significantly and drive BESS deployment in India, reinforcing the trend toward greater storage integration in the power sector. India continues to rely on coal-fired power to meet rising electricity demand and ensure system adequacy, with 6 GW of additions expected in 2026,” she added.
“In South Asia, India has emerged as a regional power hub, enabling hydropower exports from Nepal and Bhutan and facilitating Nepal’s first electricity exports to Bangladesh via Indian transmission lines, supported by new 400-kV interconnections under development. In 2026, trade between India, Nepal and Bhutan is expected to grow with the development of new transmission lines and power projects (3 GW under construction). However, trade between India and Bangladesh is expected to shrink due to recent geopolitical frictions. Further, trade talks between Nepal and Bangladesh for the import of 400 MW of hydropower from Nepal are also dependent on the wheeling of electricity through the Indian grid and may face delays.”
“India’s nuclear sector is undergoing a pivotal transformation with the introduction of the SHANTI Act 2025. This landmark legislation consolidates and modernizes the country’s nuclear legal framework, facilitating a structured expansion of nuclear power capacity. Notably, it provides statutory recognition to the Atomic Energy Regulatory Board, thereby strengthening regulatory independence and oversight. The Act aligns with India’s ambitious clean energy transition, supporting the government’s declared objective to achieve 100 GW of nuclear energy capacity by 2047 — a significant leap from the current 8.78 GW installed and the projected 22.38 GW by 2031–32. The SHANTI Act permits limited private participation under strict regulatory oversight — allowing involvement in plant operations, power generation, equipment manufacturing and certain fuel fabrication steps while keeping strategic activities such as enrichment, core fuel-cycle management and high-level waste handling under central control. It also establishes a graded liability framework and a Nuclear Damage Claims Commission. In this emerging landscape, NTPC Ltd. has signed nondisclosure agreements with State Atomic Energy Corp. Rosatom and Electricité de France SA to explore large, pressurized water reactor projects across the design, construction, operations and
maintenance phases.
Meanwhile, Holtec International has received US authorization to transfer unclassified small modular reactor (SMR) technology to Holtec Asia Pvt. Ltd., Tata Consulting Engineers Ltd. and Larsen & Toubro Ltd., enabling future SMR deployment pathways. Additionally, NTPC is pursuing a minority equity partnership with US-based Clean Core Thorium Energy Inc. to advance thorium-based fuel development for India’s pressurized heavy water reactor fleet. These reforms come at a crucial juncture as India ramps up indigenous SMR initiatives, backed by a $2.3 billion (₹20,000 crore) allocation announced in the Union Budget 2025–26. The Act provides a modern regulatory foundation for nonpower applications of nuclear technology across the healthcare, agriculture and industrial sectors while reinforcing safety, security and strategic autonomy. For energy sector leaders and institutional investors, the SHANTI Act 2025 marks a new era of opportunity and stability in India’s nuclear landscape, with a clear policy direction that supports both innovation and robust governance,” said Jauhar.
According to Agamoni Ghosh, Manager, Energy Transition, Price Reporting, S&P Global Energy, “India is slated to launch its emissions trading system in 2026, opening the world’s third-largest emitter, after China and the US, to formal carbon pricing for the first time. While India’s net-zero target is set for 2070, the introduction of a domestic carbon market marks a structural shift in how emissions are measured, valued, and managed across the energy and industrial economy.”
“Both compliance and voluntary carbon markets are expected to play a decisive role in mobilizing climate finance, shaping industrial investment decisions, and linking India more closely to global carbon frameworks.”
“India’s Carbon Credit Trading Scheme (CCTS) is expected to begin trading in October 2026, with initial issuance of domestic carbon credits anticipated earlier in the year. Unlike cap-and-trade systems seen in Europe or South Korea, India’s framework is intensity-based, setting facility-level baselines rather than absolute emissions caps.
The scheme initially covers nine industrial sectors, including steel, cement, aluminium, petroleum refining, fertilisers, chlor-alkali and textiles—segments that account for a large share of India’s industrial emissions.
The compliance market is widely expected to emerge as one of the largest globally by volume. While pricing has not yet been formally established, early market expectations point to relatively modest opening price levels compared with mature markets, reflecting India’s development priorities and gradual tightening approach.
Over time, the scheme is expected to create a clearer economic signal for efficiency upgrades, fuel switching, and technology adoption across heavy industry.
Alongside the compliance market, India remains a major player in the voluntary carbon market.
Recent price signals illustrate a bifurcation in demand. Avoidance-based renewable energy credits have fallen to historic lows at 50 cents/mtCO2e as per Platts data, reflecting structural oversupply and weakening corporate demand. In contrast, removal credits—particularly biochar and other technology-based carbon dioxide removal projects—have traded at a significant premium, with India based biochar credits recently assessed in the low- to mid-$100s per metric ton of CO₂ as per Platts data, but below comparable global removal prices.
Afforestation and reforestation credits occupy a middle ground, with forward-delivery pricing typically heard in the $20–$40/mtCO₂e range as per Platts data depending on methodology, issuance certainty, and project risk. These voluntary markets are expected to remain an important source of early climate finance, particularly ahead of full compliance market maturity,” she added.
“International cooperation is set to play a critical role in shaping India’s carbon market evolution.
India has signed a Mutual Recognition Agreement with Japan under the Joint Crediting Mechanism (JCM), focusing on industrial efficiency, waste heat recovery, advanced manufacturing processes, and fuel switching. These technology-led methodologies align closely with India’s industrial decarbonisation priorities and Japan’s emphasis on measurable emissions reductions and technology transfer.
Article 6.2 pathways position India as a potential exporter of high-integrity credits into international compliance markets. However, the value of such credits will hinge on corresponding adjustment authorisation, registry clarity, and policy alignment between domestic and international frameworks.
Early market indications suggest that JCM credits to be hosted in India are being projected at a premium to conventional voluntary credits, reflecting their compliance-adjacent nature, bilateral government backing, and implicit corresponding adjustment alignment. Market participants indicate that credits from capital-intensive projects such as renewable energy with storage, industrial electrification, or hydrogen-linked systems are likely to clear in the upper voluntary market range, with pricing discussions commonly referenced above standard avoidance credits and closer to technology-based abatement values.”
“A stronger carbon policy and price will be critical for India to manage the impact of CBAM, particularly on metals such as steel and aluminum, which account for the bulk of India’s emissions intensive exports.
Without a credible domestic carbon price, Indian producers face higher effective costs at the EU border as embedded emissions are taxed externally. A functioning carbon market can help internalize these costs, improve emissions accounting, and incentivize efficiency and fuel switching, reducing long-term exposure and protecting the competitiveness of India’s metals sector.
While there is renewed government focus on scaling green hydrogen in India, project economics remain constrained without stronger carbon pricing signals and reliable returns on decarbonization investments.
High capital costs, power and storage requirements, and limited offtake certainty continue to weigh on margins, making green hydrogen uncompetitive against fossil-based alternatives on a purely cost basis. Effective carbon pricing—through India’s domestic market or international mechanisms such as the Japan Joint Crediting Mechanism—can materially improve returns by monetizing emissions reductions and rewarding technology-led abatement. Without these price signals and crediting pathways, green hydrogen risks remaining policy-supported but commercially marginal, underscoring why carbon markets will be critical for unlocking scalable investment and long-term viability,” said Ghosh.
Vipul Garg, Energy Transition Price Reporting, S&P Global Energy said, “Several Indian hydrogen developers have agreed binding offtake agreements for renewable hydrogen with refineries and fertilizer producers, who are interested in substituting conventional hydrogen with renewable hydrogen. AM Green’s renewable ammonia binding overseas deal with Germany’s Uniper is an example of India’s interest in Europe as a target market.”
Platts assessed the India renewable hydrogen term contract weekly price at Rupees 309/kg, close to $3.4/kg on Jan. 22, down 4% since its launch on Dec. 11. This is a result of the competitive bidding in the refinery tenders. For renewable ammonia, the fertilizer tenders close to $600/mt is also very low compared to previously concluded tenders such as Germany’s H2Global tender price of Eur1000/mt ($1185/mt).”
“Although, a low price is good news for the buyers, some Indian projects have highlighted the challenges such as state electricity charges and lower returns while competing with these low prices.
There is interest in expanding demand for renewable hydrogen from new markets in India, such as steel, heavy-duty transportation and other hard-to-abate sectors, both domestically and in the European market. The upcoming Carbon Credit Trading Mechanism (CCTS) in India and Carbon Border Adjustment Mechanism (CBAM) in Europe, combined with technology adoption, can help reduce the gap between renewable hydrogen and existing fossil fuels,” he added.
