Economic Survey 2025-26 Calls for Holistic Energy Strategy Focusing on Reliable Power and Grid Stability
India must pursue a holistic energy strategy focused on reliable dispatchable power, grid stability, energy storage, and renewed emphasis on hydro and nuclear, rather than treating climate action in isolation, the Economic Survey 2025–26 emphasised.
January 31, 2026. By Mrinmoy Dey
“As renewable penetration rises, the cost of maintaining dispatchable thermal capacity increases, even as utilisation declines, while grid stability challenges intensify. India must, therefore, approach the coming decade not as a climate policy problem in isolation, but as a broader energy system strategy — one that sequences the transition in line with growth, security, and institutional preparedness,” noted the Survey.
It also acknowledged that while renewable energy will play a growing role, capacity additions alone are insufficient to ensure dependable power. “India is adopting a multifaceted approach to mitigate global warming by diversifying its energy sources and enhancing access while also increasing the share of non-fossil fuels, improving energy efficiency, and promoting stability across its energy system,” it said.
The Economic Survey have highlighted some examples from European countries such as the Netherlands, Germany, Spain, etc. to show the risks associated with transitions that outpace investments in baseload generation, transmission, and system flexibility.
India’s strategy must prioritise pragmatism over signalling: maintaining sufficient dispatchable power capacity to support industrialisation and social development even as renewables scale; strengthening transmission and distribution; investing in storage and grid-management technologies; and restoring emphasis on hydro and nuclear as long-horizon anchors for low-carbon development, asserted the Survey.
India’s energy transition is being pursued through a combination of initiatives across various sectors, including nuclear, solar, and wind energy, green hydrogen, battery storage, and critical minerals, which help address both energy security and transition imperatives simultaneously, noted the Survey.
India has already surpassed the goal of 50 percent installed power capacity from non-fossil fuel sources, which stood at 51.93 percent at the end of December 2025. Despite the progress in expanding non-fossil fuel energy, challenges remain. The Survey identifies material and storage requirements as two roadblocks to greater utilisation of these energy sources.
The Economic Survey says that the global energy transition is no longer solely determined by technology; it is increasingly constrained by who controls critical minerals. Metals like Lithium, cobalt, nickel, copper, and rare earth elements have become the new strategic chokepoints in shaping the contours of a low-carbon economy. As demand accelerates, advanced economies are responding by promoting standards-based critical mineral markets, emphasising sustainability, traceability, and governance.
The Economic Survey highlighted that climate finance remains inadequate for developing countries, with a global funding gap of about USD 4 trillion and nearly 80 percent of flows driven by domestic sources, while in India, funding is concentrated in mature sectors like solar and wind, leaving adaptation, MSMEs and hard-to-abate industries underfunded.
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