— Enhanced storage and flexibility, as the RE share increases beyond technologies both have great

where total storage could increase 60 percent, intermittent RE sources potential to enhance grid reliability.
from its current operational may require longer-duration storage If initial support is provided by
capacity of 3.3 GW to 30 GW by technologies, such as hydrogen, for the government in the form of
2030, reaching 600 GW by 2050:74 seasonal storage. feed-in tariffs or viability gap
Until the mid-2030s, pumped funding, offshore wind and new
— Nuclear power: To maintain grid
hydro (6–24 hours of capacity) nuclear technology could become
reliability as coal is phased out,
would continue to be the dominant cost competitive and help India
we have assumed that nuclear will
storage technology as lithium-ion decarbonise even sooner.
increase from its current levels of
batteries (less than six hours of
around 7 GW to at least 15 GW by The above capacity mix projection for
capacity) continue to scale. These
2030 and around 20 GW by 2050; the LoS scenario is also in line with
existing storage technologies with
and offshore wind will increase to a India’s NDC commitment of achieving
technological improvements that
minimum of 5 GW in 2030, 15 GW in 50 percent of installed power capacity
could reduce Capex and increase
2040 and 30 GW by 2050. India’s from non-fossil fuel by 2030.
efficiency would be sufficient to
huge thorium reserves and long
meet the sector’s needs for the
coastline mean that nuclear and
next two decades. From 2040,
offshore-wind power-generation

74
CEA, Mecromindia.

Exhibit 14

In the LoS scenario, non-fossil capacity is expected to reach 400 GW by 2030 with
a 40–45% share in generation mix.

Coal Other fossil1 Solar and wind Other non-fossil1 Storage2 Wind Solar

Capacity mix Total Generation, Generation Share

GW TWh, %

2,675 1,380 2,427 3,918 6,846

5 1
6
11
611 12 16

9
27

60
1,325 79
170 1,372

74
680
576 55
30
390 204
247 394 28
40 39 91
14
210 240 214 194
2020 2030 2040 2050 2020 2030 2040 2050

1. Other fossil includes gas and oil; other non-fossil includes hydro, biomass and nuclear
2. Storage includes battery, pumped hydro, LDES 8–24h, LDES 24h+ and hydrogen

Source: McKinsey Power Model

56 Decarbonising India: Charting a pathway for sustainable growth

The Accelerated scenario
Given the rapid innovations in RE and
acceleration in capital deployment,
India has a unique opportunity to
achieve net-zero emissions by 2050.
This could be made possible by
accelerating interventions to address
industry challenges and instituting
key market reforms to encourage
further investment. Relative to the
LoS scenario, net-zero emissions by
2050 could prevent about 16 GtCO₂e
— Solar and wind capacity increasing
of cumulative emissions by 2070, while
only marginally increasing generation
costs.75 In the Accelerated scenario,
emissions could peak in the mid-
2020s at 1.3 GtCO₂e, following the
coal-generation trajectory. Emission
intensity would rapidly decrease to
0.37 kgCO₂e/kWh by 2030. This would
be enabled by:
75
McKinsey power model and analysis.
Decarbonising India: Charting a pathway for sustainable growth
— High-cost coal capacity becoming
increasingly uneconomical in
comparison to the declining costs of
solar or wind hybrids. Assuming no
new coal plant would come online
beyond current capacity, existing
efficient low-cost coal plants may
continue to generate power (PLFs
of 60–65 percent) into the mid-
2040s. By 2050, the entire current
coal fleet could expect to be retired.
to 480 GW by 2030—a 45 percent
share of all power generation
(Exhibit 15). This would need an
acceleration in the annual build-
out to 40–50 GW (compared to
10–12 GW per year over the past
five years) till 2030. By 2050, India
may likely need 2,700 GW of solar
and wind, representing a 95 percent
share of the generation mix.
— Enhanced storage, which, along
with hydro and coal reutilised as
flexible generation sources, would
be needed to balance the higher
RE share. The amount of required
storage would be 65 GW by 2030
and 1,200 GW by 2050. Until mid-
2030, pumped hydro would be the
key storage technology (for short-
to medium-term storage) supported
by lithium-ion batteries to provide
baseload power—but from the
late 2030s onward, long-duration
energy storage technologies
(including hydrogen) would be
needed as seasonal storage.
— Generation from nuclear, which
is assumed to increase to around
25 GW by 2030, remaining at this
level until 2050. As with the LoS
scenario, the share of offshore wind
is assumed to gradually increase to
reach 30 GW by 2050.
57
Exhibit 15

In the Accelerated scenario, non-fossil capacity is expected to reach 600 GW by 2030

with 50–60% share in the generation mix.

Coal Other fossil1 Solar and wind Other non-fossil1 Storage2 Wind Solar

Capacity mix Total Generation, Generation Share

GW TWh, %

4,019 1,380 2,572 4,916 8,920

5 4 1 6
11
12 14
1,181
9

44
1,939 74
300 94
2,172
74

886 983
65 38
390 376
40 39 107 401 566 14
210 190 120
2020 2030 2040 2050 2020 2030 2040 2050

1. Other fossil includes gas and oil; other non-fossil includes hydro, biomass and nuclear
2. Storage includes battery, pumped hydro, LDES 8–24h, LDES 24h+ and hydrogen

Source: McKinsey Power Model

Achieving this scenario would require
more intense and rapid efforts across
four areas:
1. Accelerating India’s RE capacity:
India would need to add 40–50
GW of RE annually over the
next decade and 130–140 GW
annually from 2040 to 2050.76
Associated challenges involving
land acquisition, grid connectivity
and counterparty risks (such as
problems with PPA adoption,
renegotiation and payment) would
also have to be addressed. These
issues are expected to multiply
as RE scales up. For example, the
2050 solar capacity of 2,000 GW is ten percent; there is no ancillary
expected to require 1.3 percent of services market; incentives for
India’s land surface (about a quarter peak-load plants are inadequate;
of India’s wasteland). and time-of-day tariffs are limited.77
As most of this RE capacity is likely
2. Ensuring grid reliability and
to be in the south and west, the
market reforms: India has limited
country will likely need to increase
flexible generation capacity
interconnection capacity. Finally,
compared to many other countries.
RE addition must be complemented
Already, RE integration issues are
by either 60–65 GW of storage
emerging, leading to solar power
(short and long duration) by
curtailment and a slowing down
2030 and 1,200 GW by 2050 or
in terms of signing new PPAs. For
alternative flexibility mechanisms
grid reliability with 90 percent RE,
will need to be found.
massive reforms are required in
the power market. Currently, the
wholesale market share is under

76
McKinsey power model and analysis.
77
“Report on the short-term power market in India: 2020–21”, Economics Division, Central Electricity Regulatory Commission, Government of India.

58 Decarbonising India: Charting a pathway for sustainable growth

3. Ensuring financial viability of the Implications of the transition
distribution sector: Most public to net zero for the power
DISCOMs in India are lossmaking, sector
leading to increased financial stress
Emissions: In the LoS scenario, power-
on power generators and reluctance
sector emissions are expected to peak
to promote open access RE for
by the early 2030s. In the Accelerated
commercial and industrial (C&I)
scenario, the peak could be reached
customers. The financial health of
by the mid-2020s (Exhibit 16). If India’s
DISCOMs would need to improve to
power-sector targets the Accelerated
be able to attract low-cost capital
scenario instead of the LoS scenario,
for the transition.
it could abate around 10 GtCO₂e
4. Streamlining governance, policy emissions by 2050 and around
making and planning: Multiple 16 GtCO₂e by 2070.78
ministries are needed to enable the
transition, and they may need to
be aligned fully with this transition.
Furthermore, coordination and
policy cohesion between federal
and state governments would be
needed.

78
McKinsey power model and analysis.

Exhibit 16

In the Accelerated scenario, power emissions could peak a decade sooner than in the
LoS scenario.
Accelerated scenario LoS scenario
Absolute emissions
MtCO 2e Emissions abated in the Accelerated
1,330 scenario vs. the LoS scenario until
1,273 2050 will be ~10GtCO 2e

1,268 931 Additional 6GtCO2e can be

1,125 abated between 2050–70 in
793
955 the Accelerated scenario
616 ` 332

2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070

Emissions intensity
tCO 2e/MWh
0.77
0.65
0.52
0.63

0.37 0.24
0.12
0.04
0.13
2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070

Source: McKinsey Power Model

Decarbonising India: Charting a pathway for sustainable growth 59

Investments: An investment of
$1.3 trillion through to 2050 would be
required for the LoS scenario to build
RE, storage and distribution capacity.
This represents an annual investment
between $12 and $14 billion through
to 2030, rising thereafter to between
$70 and $80 billion per annum. This is
realistic but challenging, considering
that in 2021 India’s RE sector attracted
$12–$15 billion in investment.79
In addition, expanding and upgrading
the transmission and distribution (T&D)
infrastructure would need another
$1.2 trillion.
79
Vibhuti Garg, “India saw record investment in renewables last financial year—so what next for green power in the country?” Institute for Energy Economics and
Financial Analysis, July 15, 2022.
80
Agencies include Postdam Institute For Climate Impact Research, IEA and NGFS
60
For the Accelerated scenario, an
additional cumulative Capex investment
of $750 billion would be needed for RE
and storage capacity, and $550 billion
for the transmission and distribution
infrastructure through 2050 vis-à-vis
the LoS scenario. The investments in
RE and storage factor in reasonable
improvements in the cost and efficiency
expected over the next few years.
Decarbonising India: Charting a pathway for sustainable growth
Storage considers multiple
technologies – lithium-ion, pumped
hydro storage, other long duration
energy storage technologies and
hydrogen – based on the duration
needed for storage. Investments in T&D
infrastructure have been estimated
based on their correlation with capacity
additions and peak demand growth.
These numbers have also been
triangulated with forecasts by other
agencies. 80