India’s clean energy push hinges on debt market structure.

About 80% of India’s power sector debt still relies on bank loans.

India’s plan to reach 500 GW of renewable energy capacity by 2030 and a 60% non-fossil fuel mix by 2035 will depend heavily on how its debt markets finance the transition, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report said that India’s continued reliance on imported fossil fuels, particularly crude oil and liquefied natural gas (LNG), leaves the economy exposed to geopolitical shocks and supply disruptions, strengthening the case for a faster energy transition.

The analysis covers eight major power generators — Adani Green Energy Limited, Adani Power, JSW Energy Limited, ReNew Power, NLC India Limited, NTPC Limited, SJVN Limited, and Tata Power — which together account for roughly one-third of India’s installed electricity capacity.

Annual investments in renewable energy, storage, and transmission are estimated to rise from about $68bb (INR6.18t) to nearly $145b (INR13.19t) by 2035.

IEEFA noted that since renewable energy assets are capital-intensive with long operating lifespans, long-tenor amortising debt will be critical in determining the speed and scale of India’s transition.

“In this context, transition planning is, fundamentally, a question of debt market planning,” said Kevin Leung, sustainable finance analyst, Debt Markets, IEEFA – Europe, and a contributing author of the report. The availability, tenor and cost of debt will decide how fast capacity can be added — and who gets left behind.”

According to the report, a clear divergence is emerging between renewable and thermal power financing.

Renewable-focused utilities are benefiting from stronger margins due to zero fuel costs, improved access to international capital, and rising participation from global institutional investors. In contrast, thermal-linked assets are increasingly being excluded from offshore capital markets.

All outstanding USD-denominated bonds issued by Indian power utilities are now linked to renewable or hydro assets, with Tata Power’s 2021 offshore bond repayment marking a turning point in thermal credit’s exit from that financing channel.

Within the same corporate groups, Adani Green Energy Limited has consistently delivered stronger EBITDA margins than Adani Power. Similarly, green subsidiaries of NTPC Limited are outperforming its legacy thermal operations.

“They reflect a structural shift in the economics of power generation that will compound over time as renewable portfolios mature and generate stable, contracted cash flows,” said co-author Soni Tiwari, Energy Finance Analyst, India, IEEFA.

The report also highlighted uneven exposure to transition risks across the sector. Financially weaker players face both constrained balance sheets and reduced access to capital markets, whilst state-owned enterprises such as NTPC Limited and SJVN Limited benefit from implicit government backing that improves refinancing flexibility.

Despite annual corporate bond issuances exceeding $500b (INR 47 lakh crore), India’s bond market remains shallow, with around 80% of debt funding in the power sector still reliant on bank loans.

IEEFA noted that the limited role of bond markets represents a missed opportunity for long-term infrastructure financing.

It also cautioned that overdependence on foreign capital could expose India’s transition investments to volatility during periods of geopolitical stress. The report recommended building a stronger domestic investor base, led by pension funds, insurers, and provident funds, to improve financial stability.

Amongst all utilities, NTPC Limited is identified as central to enabling India’s clean energy transition.

As the country’s largest integrated power utility, it accounts for around 17% of installed capacity and has a government stake of 51.1%, with credit ratings aligned closely to sovereign debt.

IEEFA estimated NTPC’s capital expenditure plan of $80b (INR 7t) through FY2032 makes it the most influential capital allocator in the sector.

“If NTPC can demonstrate credible transition to a clean energy company, it would facilitate broader capital flows via a coherent transition finance agenda alongside other catalytic efforts,” said contributing author Saurabh Trivedi, lead specialist, sustainable finance & carbon markets, IEEFA - South Asia.