India’s ambitions are creating an electricity demand of a different scale and complexity. The challenge now is to build an energy system that can keep pace with factories, data centres, AI, EVs, and a rapidly electrifying economy.
Every new factory, data centre, electric vehicle, and digital service eventually runs into the same fundamental question: where will the power come from?
For Pankaj Jha, CFO, Vedanta Power Limited, India’s economic ambition is already visible in its electricity demand. Peak demand has reached around 271 GW, while emerging industries are creating a new kind of requirement – reliable, round-the-clock power, delivered where and when it is needed.
The challenge, therefore, extends well beyond adding generation capacity. India will need stronger grids, greater flexibility, storage, transmission, and financially resilient utilities, while navigating the complicated transition towards cleaner energy. The next decade may determine whether India’s power infrastructure can match its economic confidence.
India is becoming increasingly confident about what it wants to build, be it factories, data centres, infrastructure, cities, and new industries. From your vantage point in the power sector, what does that ambition look like on the ground?
From the power sector, you can see India’s growth ambition translating directly into electricity demand. We have already seen peak demand reach around 271 GW, and the Power Minister has indicated that it could approach 300 GW[1] next year, driven by data centres, AI, EVs and broader electrification. What is particularly interesting is that the quality of demand is changing. New industries require reliable, round-the-clock power, not simply incremental generation capacity. At Vedanta Power, we currently have around 4.2 GW of operating capacity, with a roadmap to reach approximately 4.8 GW and a longer-term ambition of around 12 GW by FY33. For us, that is a direct reflection of the opportunity we see in India’s next phase of economic growth.
There is a lot of discussion about India’s energy transition, but businesses also need reliable and affordable power today. How do you think India can balance the urgency of the transition with the realities of a rapidly growing economy?
I think the key is to recognize that India’s energy transition will be a process of building the next system while strengthening the one that powers the economy today. With power demand rising rapidly, reliability and affordability cannot be compromised. At the same time, the transition has to be economically sustainable. Thermal power will continue to play an important role because it provides dependable generation, particularly when renewable output is intermittent.
At Vedanta Power, nearly 85% of our capacity is backed by long-term domestic coal linkages, giving us greater visibility on fuel availability and costs. Alongside this, we are improving the environmental performance of existing assets through measures such as biomass co-firing and greater operational efficiency. In parallel, we need to accelerate renewables, storage and other low-carbon technologies. The objective is a transition that is reliable, affordable and progressively cleaner.
You have spent much of your career looking at businesses through the lens of capital allocation and financial discipline. As India enters a major investment cycle, what separates the investments that genuinely create long-term value from those that simply look exciting on paper?
For me, it ultimately comes down to whether the underlying demand is durable and whether the project has a credible path to generating cash flows through the cycle. A large capacity number can look attractive on paper, but what matters is the quality of the asset, fuel security, offtake, execution capability and the cost of capital. That is how we look at our own portfolio as well. Around 74% of our capacity is tied up through PPAs, while approximately 85% has long-term domestic coal linkage, giving us greater visibility on revenues and fuel availability. Financially, we are also focused on converting growth into stronger cash generation, with EBITDA projected to increase from about Rs1,500 crore in FY26 to Rs3,300 crore by FY29, while free cash flow from core operations is expected to move from negative Rs350 crore in FY25 to Rs2,300 crore by FY29.
If we look ahead to 2035, what will need to have changed in India’s energy system for you to say that the country’s infrastructure has finally caught up with its economic confidence?
By 2035, I would expect India’s power infrastructure to become much more responsive and efficient, rather than simply larger. The real measure of progress will be how effectively the system can move electricity to where it is needed, manage increasingly complex demand patterns and integrate different sources of generation without compromising reliability. We will also need stronger transmission and distribution networks, better forecasting, greater grid flexibility and storage that can respond economically to changing demand.
Equally important will be the financial health of the power value chain, because sustainable infrastructure requires utilities and developers to have the balance sheets to keep investing. If India can create a system where capacity is planned ahead of demand, projects are executed efficiently and electricity reaches consumers reliably. I would consider that a power infrastructure system aligned with the country’s economic aspirations.
Power projects are inherently long-term investments, with significant upfront capital requirements and returns spread over decades. How does Vedanta Power evaluate the risks around tariffs, fuel costs, interest rates and demand when making large investment decisions?
We treat risk assessment as part of the investment thesis, rather than something that comes after it. At the project level, we examine the tariff mechanism, fuel sourcing, logistics, evacuation infrastructure, operating assumptions and financing structure. We then test the economics against changes in key variables such as interest rates, fuel prices, generation levels and power-market conditions. Fuel security is particularly important for thermal assets, which is why the availability of long-term domestic linkages is an important consideration in our portfolio.
We also pay close attention to the timing of capital deployment. A project should not only be economically viable at completion; its funding requirements and cash-generation profile need to remain manageable throughout construction and ramp-up. This discipline becomes even more important as projects become larger and capital requirements increase
India’s growth story will increasingly depend on sectors such as data centres, AI, advanced manufacturing and electric mobility, all of which can create significant and often unpredictable power demand. Is the power sector prepared for this new pattern of consumption?
The power sector is preparing for this shift, but the bigger change is in the quality of demand. Data centres and AI infrastructure, for instance, require reliable, uninterrupted power. India currently has around 1.25 GW of data-centre capacity, with another 800 MW under development, and demand from the sector is expected to grow at a CAGR of around 21% up to 2030[2].
At the same time, overall electricity demand is expected to increase by more than 30% by 2030, driven by electrification, mobility and emerging industries. That puts the focus not only on adding generation, but also on building transmission, storage and grid flexibility. The power sector therefore has to plan ahead of demand. For us, the opportunity is to build reliable capacity while ensuring that investments remain economically viable as the consumption profile evolves.
7. Vedanta Power is looking at a diversified energy portfolio, including thermal power, renewables and emerging opportunities such as nuclear energy. How do you see these different sources fitting together in building the company’s long-term growth strategy?
We see India’s energy requirement as large enough to support multiple technologies, rather than this being a choice between thermal and clean energy. For Vedanta Power, our immediate focus is on scaling our existing platform, leveraging our 4.2 GW operating base, long-term PPAs, fuel security and established infrastructure. A significant part of our growth can come through brownfield expansion, allowing us to build on assets and capabilities we already have.
Over the longer term, renewables and nuclear will become increasingly important. We are particularly evaluating nuclear because of its potential to provide reliable, clean, 24×7 power. Our ambition is to build towards a 20 GW portfolio and emerge as one of India’s leading power producers.[3]
