India’s Union Budget sharpened its focus on the energy sector on Friday, underlining the government’s strategy to expand power infrastructure, accelerate renewable capacity addition and strengthen energy security while supporting its long-term net-zero commitments.
The Budget for 2026-2027, earmarked ₹1,09,029 crore for the energy sector as part of a broader strategy to ensure long-term energy security and stability. The budget prioritizes an aggressive transition toward green technologies while significantly expanding the nation’s nuclear and renewable energy frameworks to meet the demands of a growing economy.
Power & Transmission Infrastructure
- The government reaffirmed its commitment to expanding power transmission capacity to support the rapid growth of renewable energy.
- Budget allocations prioritize strengthening inter-state transmission systems and grid modernization to ensure stable evacuation of power from solar and wind-rich regions.
- Officials said transmission investments are aimed at reducing congestion, improving reliability and enabling round-the-clock renewable energy supply, a critical requirement as non-fossil fuel capacity scales up.
- Grid upgrades are also intended to support the expansion of battery storage and pumped hydro projects.
Renewable Energy & Storage
- Renewable energy remains a key pillar of the budget’s energy agenda, with continued policy support for solar, wind and hybrid projects.
- The budget emphasized the need for large-scale storage solutions to address intermittency, signaling sustained backing for battery energy storage systems and pumped storage hydropower.
- The government reiterated its target of achieving 500 gigawatts of non-fossil fuel capacity by 2030, with budgetary support aligned to enable faster project execution, land availability and transmission connectivity.
Green Hydrogen & Clean Fuels
- Green hydrogen featured prominently as a strategic priority under the government’s energy transition framework. Budget provisions reinforced support for domestic manufacturing of electrolyzers, pilot projects for green hydrogen production and its use in refineries, fertilizers and heavy industry.
- The government said scaling up green hydrogen is central to reducing dependence on imported fossil fuels and positioning India as a global supplier of clean energy solutions over the long term.
Energy Efficiency & Demand Management
- The budget also highlighted energy efficiency as a cost-effective tool to manage rising power demand. Continued support for energy-efficient appliances, industrial efficiency programs and smart metering was outlined to reduce peak demand pressures and improve system efficiency.
- Smart meters are expected to play a larger role in reducing distribution losses and improving the financial health of power distribution companies, a long-standing challenge for the sector.
Energy Security & Domestic Production
- To enhance energy security, the budget reaffirmed measures to encourage domestic energy production, including cleaner thermal power technologies and diversified fuel sources. While renewables dominate new capacity additions, the government acknowledged the need for a balanced energy mix to ensure reliability during the transition period.
Outlook
Analysts said the budget’s energy measures signal policy continuity, with public investment aimed at crowding in private capital across renewables, transmission and storage. Execution and timely project clearances will be key to translating allocations into capacity on the ground. With electricity demand expected to grow at one of the fastest rates globally, the government’s energy-focused budget underscores the sector’s central role in India’s economic growth and climate strategy.