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Energy transition India
Green Energy Corridors: How India aims to unite growth and climate action
India’s economy has been growing dynamically for years. In 2023 alone, the gross domestic product increased by 7.6%, in 2024 by around 6.5% – the International Monetary Fund expects similar growth rates in the coming years as well. This development has lifted many people out of poverty, but it is also a strain on the climate. Because as the economy grows, the demand for electricity grows. Experts predict that this will triple by 2047. The problem is that India still obtains a significant share of its electricity from burning coal.
If India’s growth is not to be accompanied by higher emissions of climate-damaging greenhouse gases, it will have to reduce its coal-fired power generation and further expand the share of renewable energy in the energy mix. Accordingly, the Indian government has set itself the goal of making the country climate neutral by 2070 and generating half of its installed electricity capacity from non-fossil fuels by 2030 – the latter could already be achieved by 2025. At the same time, coal's share of actual electricity generation fell to 68% in the first half of 2025, down from 72% in the previous year. This is an encouraging sign, especially as total electricity generation rose by 1% during this period. Meanwhile, more and more solar and wind projects are being put out to tender in combination with large battery storage facilities, some of which have already been implemented. The electricity generation costs of such combined power plants have recently fallen to levels below those of new coal-fired power plants. This could significantly advance the energy transition in India – progress that was hardly imaginable just a few years ago.
One major challenge directly related to the expansion of renewables is the expansion of India’s electricity grids throughout the country. For example, the regions that are suitable for producing solar and wind energy in India are often far from the economic centres. In order to transport clean electricity from often remote parts of the country to its customers in urban centres of consumption, high-capacity transmission lines need to be built and the distribution network strengthened. Only if both – more green energy and more grid infrastructure needed for it – succeed can India’s transformation be a lasting success.
KfW is committed to this success on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ). With low-interest loans of more than EUR 1.4 billion, KfW is financing around 50% of the total cost of an ambitious infrastructure project of the Indian Government entitled "Green Energy Corridors (GEC)".
As part of the project, many kilometres of new power lines and numerous substations will be built. The latter not only connect the decentralised energy systems to the general power grid, but also improve grid stability.
As a co-financier, KfW has concluded loan agreements with the national grid operator "Power Grid Corporation of India" as well as with regional grid operators from a total of nine Indian states. The commitment has paid off: together with its project partners, KfW has so far enabled the construction of 7,800 kilometres of power lines and 97 substations, with further facilities in preparation or under construction.
In this way, KfW and its partners have ensured that up to 40 gigawatts of sustainably generated electricity flow into the Indian grid. The electricity transported via the GEC networks meets the needs of around 60 million people and results in savings of almost 900,000 tons of CO2 per year. The operation of the substations will also create around 1,500 new jobs.
The construction of green power lines also poses challenges. Thus, the shortest route is usually the most economical for the construction of the plants. But KfW and its partners want to keep the impact on people and nature as low as possible. That is why KfW had extensive environmental and social studies carried out in order to be able to determine the route that is most environmentally friendly for people and nature.
At the same time, the analyses showed where compensatory measures were needed to counteract the environmental risks, which were never entirely avoidable. An example of this is bird protection. In some cases, birds and their breeding areas were affected by the routes. In order to protect the animals, the GEC partners installed 17,000 "bird protection markers" on the power lines. They increase the visibility of the power lines for birds so that they can evade in time.
The GEC projects, which have been co-financed by KfW since 2014, thus unite a multitude of goals: They enable and accelerate India’s energy transition, thereby making a major contribution to climate protection and improving the supply of clean electricity to many people and companies. They also create much-needed jobs and ensure high social and environmental standards. With these priorities in mind, the project launched its second phase at the end of 2022: by 2026, a further 2,800 kilometres of green corridors and 35 substations are to be built in India – also co-financed by KfW.
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