How Power Demand and Climate Adaptation are Reshaping Energy Investment in India

We’re standing at a pivotal juncture where two predominant forces—soaring energy demand and increasing weather volatility—are converging to redefine how nations, especially India, consider infrastructure, power protection and long-term resilience. This isn’t just a shift in strategy, it’s a systemic overhaul.

In markets like the US and Europe, power demand is spiking because of AI, data centres and industrial reshoring. India, meanwhile, is dealing with its very own model of this acceleration—one that’s uniquely complex and intensely pressing. With an ambitious renewable energy target of 500GW of non-fossil fuel capacity by 2030 and electricity demand expected to triple by 2040, we can no longer afford to construct for the past. We ought to invest for the future.

Meeting Power Demand

One of the most important shifts underway is the digital revolution sweeping across India’s cities and industries. From data facilities to electric powered vehicles to growing manufacturing clusters, each facet of the economy is being electrified. This means one thing: unprecedented energy demand.

But the solution isn’t simply to add more capacity. It’s about making that capacity smarter and more reliable. We’re seeing this occur via grid modernisation, AI-driven energy forecasting and a growing focus on hybrid and decentralised energy systems which can adapt in real-time. AI will not just be the driver of power demand—it will also be the key to managing it.

Adapting to a Changing Climate

At the same time, climate adaptation is turning into a non-negotiable part of energy planning. India is among the most climate-vulnerable nations and events like floods, heatwaves and cyclones have depicted the fragility of our infrastructure.

Our coal plants face growing water stress. Urban centres are increasing faster than infrastructure can keep up. And power outages because of weather disruptions are not uncommon—they're a recurring reality. That’s why resilient infrastructure—underground cabling, microgrids, energy storage and smart water systems—must be prioritised as mainstream investments, not niche solutions.

Green Capex Is the Way Forward

The encouraging news is that governments and corporations are moving in the right direction. We’re witnessing a surge in “green capex”—investments in sustainable infrastructure such as solar, wind, green hydrogen, pumped storage and battery energy storage solutions. India’s production-linked incentive (PLI) schemes are encouraging domestic production of clean tech, but to truly lead globally, we need to ensure policy stability, predictable regulatory frameworks and deeper integration of innovation into these incentives.

We believe this isn’t just about energy—this is about national competitiveness. Clean energy is now a geopolitical and economic lever. India has the opportunity to not only be self-reliant but to emerge as a global clean energy exporter.

AI and Automation

The next big jump for India’s energy sector will come from digitalisation. Predictive analytics, AI-enabled grid management and automation are no longer futuristic buzzwords, their immediate needs. Smart meters and intelligent energy trading platforms are gaining ground and their impact on reliability, cost-efficiency and scalability is transformative.

Just as vital, however, is the human element. A digital energy economy calls for a digitally trained staff. From technicians to engineers to policymakers, reskilling and capacity building could be key to unlocking the subsequent phase of India’s energy journey.

As we digitise and decarbonise, we must also democratise. Energy access must remain equitable and affordable. Rural electrification and decentralised solar power must be supported through public-private mechanisms that ensure no community is left behind.

Additionally, the clean energy sector has a long way to go in terms of gender diversity. Women remain underrepresented in technical, leadership and field roles across the value chain. This is not just a social issue—it’s an economic opportunity. Research consistently shows that inclusive companies perform better.

India’s Moment of Opportunity

This is India’s moment to lead—not just in energy generation but in energy intelligence. From smart grids and clean fuels to climate-resilient infrastructure and inclusive workforce models, we have the roadmap. What we need is urgency.

Let’s be clear: the next five years will determine whether India becomes a global clean energy leader or misses the window. We must prioritise investments that meet rising demand while building climate resilience, we need to reward innovation, not just scale and we must ensure every citizen benefits from the energy transition.

We believe with the right vision, policy support and partnerships, India can—and will—set the benchmark for how the world transitions to a smarter, more sustainable energy future.

The author is chairman, Avaada Group