Power

This industry exists because electricity, unlike almost every other commodity on this site, cannot be economically stored at grid scale. Oil can sit in a tank for months; a barrel of crude does not care when it is used. Electricity, until batteries began changing this only very recently, has to be generated in the same instant it is consumed. That single physical fact is why this industry is built entirely around real-time balance, not inventory, and why grid operators treat any mismatch between supply and demand as an emergency rather than an inconvenience.

The second reason is that almost nothing else in a modern economy works without it. Every other industry on this site, from a semiconductor fab to a hospital to a bank's data centre, is itself a customer of this one, which is exactly why reliable power is treated as basic infrastructure rather than an ordinary product.

Imagine the journey from a lump of coal or a beam of sunlight to the light switch on your wall. Generation is where electricity is actually made, at coal, gas, hydro, nuclear, solar or wind plants. Transmission is the high-voltage grid that carries that power, often hundreds of kilometres, from where it is generated to where it is needed. Distribution is the final, local network, run by a DISCOM, that steps that power down and delivers it to homes, shops and factories, and bills them for it.

India's power story over the last decade is genuinely unusual: a country that struggled with routine blackouts a generation ago now has the world's third largest installed renewable energy capacity, even as coal still generates the majority of the electricity Indians actually use.

Every part of India's power grid runs at a shared frequency, 50 Hertz, and that number has to stay within an extremely narrow band at every instant. Frequency rises when there is more supply on the grid than demand, and falls when demand outpaces supply, functioning as a live, continuous signal of whether the entire national grid is in balance. If frequency drifts too far in either direction for too long, protective systems can trip, and in the worst case entire regions can black out, as happened in India's 2012 grid collapse.

Keeping frequency stable is a constant, active job, not a one-time engineering setting. Grid operators use Ancillary Services, essentially paying certain flexible generators to stand ready to ramp output up or down within minutes, and an Availability Based Tariff structure that financially rewards generators for actually being available when the grid needs them, and penalises deviation. Every new gigawatt of solar or wind capacity, whose output cannot be commanded the way a coal plant's can, makes this balancing act measurably harder, which is precisely why battery storage and grid flexibility have become such urgent policy priorities.

One number gets quoted constantly, and it is genuinely misleading on its own: renewables now make up roughly 40-57% of India's installed power capacity, depending on the exact month cited. That sounds like renewables are close to half of India's actual electricity. They are not.

The gap is a Capacity Utilisation Factor problem. A coal plant typically runs at 55-70% of its rated capacity around the clock; a solar plant only generates when the sun is out, typically running at just 18-22% of its rated capacity over a full year, and wind is similarly limited. So even though renewables now approach half of installed capacity, coal alone still generated roughly 68% of the actual electricity India used in FY2025, with solar contributing only around 9% and wind roughly 6%. Installed capacity is a story about investment; generation is a story about what the country actually runs on, and right now those are very different stories.

Unlike oil, India does not import electricity itself at meaningful scale, beyond limited cross-border trade with Nepal, Bhutan and Bangladesh. But underneath its renewable success story, India has built a different, no less real import dependency: the equipment. Nearly all of India's polysilicon requirement is imported, and wafers remain overwhelmingly sourced from China, even as India's own module manufacturing capacity grew from just 2.3 GW in 2014 to over 200 GW annually by mid-2026.

The same pattern shows up in batteries. Roughly 75% of the lithium-ion cells powering India's electric vehicles are sourced from China, and India's import bill for lithium-ion cells surged from $384 million in 2019 to over $3 billion by FY2025, an eightfold rise in six years, even as domestic battery pack assembly capacity reached around 60 GWh against barely 1 GWh of actual domestic cell manufacturing.

This is a recognised problem, not a hidden one. The PLI scheme for solar and battery manufacturing, import protection through Basic Customs Duty, and the Approved List of Models and Manufacturers (ALMM) built India's module base; the March 2026 expansion of ALMM to cover ingots and wafers, and the 2025 National Critical Mineral Mission, are direct attempts to close the remaining, deeper layers of this same dependency.

Generators typically earn through a two-part tariff under a long-term Power Purchase Agreement: a capacity charge paid simply for being available, and an energy charge paid per unit actually supplied, or alternatively sell power on the merchant market or a power exchange at prevailing prices.

Transmission companies like Power Grid Corporation earn a regulated return on the assets they build, essentially a toll for using their wires, largely insulated from demand swings.

Distribution, the DISCOM layer, earns the margin between what it pays generators and transmission companies and what it charges end consumers, and this is exactly where most of India's power sector financial stress has concentrated for decades.

Renewable generation genuinely fits the upfront-cost story often told about capital-intensive industries: building a solar or wind farm is expensive, but once built, the fuel is free, sunlight and wind cost nothing, so the ongoing running cost is minimal and highly predictable for the next 20-25 years.

Coal and gas generation is the opposite. Construction cost per megawatt is often lower than renewables, but fuel, coal or gas, is a large, recurring cost that moves with commodity prices and coal linkage quality, which is exactly why a plant with poor linkage or expensive imported coal can turn unprofitable even with steady electricity demand.

This is why comparing a solar tariff and a coal tariff is not really comparing like with like: one is almost entirely a bet on construction cost and financing rates, the other is a continuing bet on fuel cost for decades.

Over the next five years, expect renewable capacity to keep climbing toward the government's 500 GW target for 2030, battery storage to scale up meaningfully from today's small base, and DISCOM reform to remain a slow, state-by-state grind rather than a single fix.

The real test is whether the generation mix, not just the capacity mix, actually shifts, coal's roughly 68% share of real electricity output is the number that will show whether India's renewable buildout is translating into less coal actually being burned, not just more solar panels being installed.