India’s PSUs can boost energy security by shifting to clean energy: IISD

Mumbai: India’s nine largest state-owned energy companies could progressively shift a portion of their annual capital expenditure—over Rs 2 trillion—from fossil fuels to clean and reliable energy, according to a new analysis by new analysis by the International Institute for Sustainable Development (IISD).

This opportunity rests on the scale of investment these firms already command, said the IISD study titled analysis - Mapping India’s Energy Transition: A Data Dive into the Strategic Role of State-Owned Enterprises in the Energy Sector.

In fiscal year (FY) 2025, the nine public sector undertakings (PSUs) invested Rs 2.6 trillion across fossil fuels and clean energy, giving them exceptional capacity to influence long-term, strategic priorities through changes in capital allocation. Of this, Rs 2.3 trillion in FY 2025 was directed to fossil fuels, compared to about Rs 0.3 trillion in clean energy.

Progressively redirecting a share of this existing investment mix could free up close to Rs 2 trillion a year for clean energy, helping bridge the gap between short-term capital expenditure (CapEx) plans and India’s long‑term net‑zero ambitions, while aligning with the growing role of renewables and electrification in global energy security.

“While a significant share of PSUs’ current fossil fuel CapEx is tied to ongoing projects, new and incremental investments can be progressively rebalanced toward clean energy,” said Deepak Sharma, a consultant at the IISD said in a press statement.

“By prioritizing firm and dispatchable renewables, storage, critical minerals, and electrification, India’s state energy firms can reduce exposure to volatile global fuel markets while cutting emissions and strengthening long-term energy security,” he added.

“Nine major PSUs do more than run operations—they help shape and drive the entire energy system,” Sharma added.

“India’s public sector energy companies are foundational to both the economy and the energy system. Their scale, institutional reach, and public ownership give them a level of influence no other group of actors can match. With a clear mandate to deliver a share of national clean energy targets, they can turn economic strength into a decisive force for delivering India’s energy transition at speed and scale, addressing the security risks of a fossil-intensive energy system,” he added.

India’s energy PSUs have the financial strength, access to low-cost financing, and system-wide influence needed to scale clean and reliable energy, the report added.