India’s energy sector is entering a pivotal period in which rising demand and energy transition are progressing simultaneously, according to an analysis by Gaurav Moda of Ernst & Young.

Rather than replacing conventional fuels outright, the country is expanding core energy sources, developing new energy solutions and embedding advanced technologies across the value chain.

Growing geopolitical uncertainty has increased the importance of energy security, diversified sourcing and resilient supply chains. As a result, conventional energy is expected to remain fundamental even as renewable energy, low-carbon solutions and digital innovation accelerate.

A useful way to understand this shift is through the interaction of three major consumption sectors, transport, electricity and manufacturing, with three strategic lenses: core energy, new energy and new technology. This demand-led perspective highlights where infrastructure, investment, customer behaviour and operating models are evolving at the same time.

In transport, liquid fuels are expected to remain the backbone of mobility, particularly for heavy-duty applications. However, electric vehicles, natural gas, hydrogen and biofuels are steadily broadening the range of energy pathways available to consumers and businesses.

The opportunity for energy companies extends far beyond fuel sales. Service stations are increasingly positioned to become integrated mobility hubs offering conventional fuels, EV charging, CNG, convenience retail, fleet services and digital payment solutions. Artificial intelligence can further enhance route optimisation, predictive maintenance, demand forecasting and customer engagement.

Electricity is becoming the central platform linking transport electrification, industrial decarbonisation and expanding digital infrastructure. Coal-based and thermal generation are expected to continue providing dependable capacity, even as renewable power scales rapidly.

The priority is coexistence rather than substitution. Improving the flexibility and efficiency of thermal assets while accelerating solar, wind, hydro, storage and nuclear capacity is likely to be essential for meeting India's growing power requirements.

The next phase of renewable growth is expected to depend increasingly on system integration rather than capacity additions alone. Transmission upgrades, battery energy storage systems, pumped hydro, forecasting technologies and flexible dispatch capabilities will be critical for managing intermittency and maintaining grid stability.

Smart meters, digital grids and AI-enabled asset monitoring can improve operational visibility, reduce network losses and strengthen reliability. As power systems become more interconnected, cybersecurity and remote monitoring are also expected to become increasingly important resilience measures.

Manufacturing faces a different set of priorities. Energy-intensive industries require dependable and competitive energy supplies today while simultaneously preparing for lower-carbon production pathways.

Captive power generation, thermal energy and petrochemicals are likely to remain integral to industrial expansion. Alongside these, green hydrogen, renewable energy procurement, bioenergy, energy storage and carbon capture technologies can support decarbonisation efforts, particularly in hard-to-abate sectors.

Reliable access to fuels, feedstocks and logistics networks remains closely linked to industrial competitiveness. Strengthening supply-chain resilience is therefore expected to be a key strategic priority.

Technology can help manufacturers balance growth and sustainability objectives. AI, digital twins, industrial sensors and automation systems can improve energy efficiency, optimise yields, increase throughput and enhance maintenance performance across complex operations.

Digital tools can also strengthen supply-chain mapping, inventory planning and scenario modelling during periods of disruption. As more global manufacturers expand engineering and digital capabilities in India, the country is increasingly positioned as both a manufacturing centre and an industrial innovation hub.

Broader market trends further reinforce this outlook. Investment in renewable energy, electric mobility, battery storage and green hydrogen continues to gather momentum, while grid modernisation and storage solutions are emerging as critical enablers of long-term energy reliability and flexibility.

Across transport, electricity and manufacturing, the key strategic challenge is not choosing between conventional and emerging energy systems. Both must grow together, with technology acting as the connective layer that improves efficiency, resilience and value creation.

Leading organisations are likely to succeed by optimising existing assets, strengthening operational resilience, building credible new energy businesses and embedding digital capabilities throughout their operations.

Those able to combine these priorities effectively will be best placed to capture future growth while supporting affordability, energy security and decarbonisation across India’s evolving energy landscape.

EY Report