Bhubaneswar: Odisha will require an estimated Rs 1.1 lakh crore over the next decade to expand renewable energy, build storage systems and modernise transmission infrastructure, according to a new study by the Institute for Energy Economics and Financial Analysis (IEEFA).
The report, titled “Sustainable Finance for a Just Transition in Odisha”, outlines the scale of investment needed between FY2025‑26 and FY2035‑36 to support the state’s shift away from fossil fuels.
It estimates that Odisha needs to add 10.7 GW of renewable energy capacity, 2.7 GW of pumped storage and 0.13 GW of battery energy storage capacity between FY2025-26 and FY2035-36. The investment requirement also includes intra-state transmission upgrades, based on the Central Electricity Authority’s Resource Adequacy Report.
Investment Picture
The total estimated investment stands at Rs 1,09,980 crore, with renewable energy accounting for 67% of the requirement, energy storage for 21% and grid infrastructure for the remaining 12%. Annual investment needs are projected to peak at approximately Rs 20,827 crore in FY2029-30.
“Odisha’s clean energy transition is both an investment challenge and an opportunity to strengthen the state’s long-term economic resilience. A coordinated financing approach can help match projects with appropriate sources of capital, mobilise private investment and support workers and communities affected by the shift away from fossil fuels,” said Gaurav Upadhyay, author of the report and a lead energy specialist at IEEFA.
Untapped Potential
As per the report, Odisha has vast renewable resources, but they remain under‑utilised. The state has an estimated solar power potential of 139.5 GW, of which approximately 0.82 GW has been installed, representing less than 1% of its potential.
Odisha also has 12.13 GW of wind energy potential, but no grid-connected wind capacity. Hydropower capacity stands at approximately 2.2 GW against an estimated potential of 7.6 GW.
The report suggests that investments in generation, storage and transmission could also enable Odisha to export clean electricity to other states.
Fossil Fuels
Despite the push for renewables, Odisha’s power system remain heavily dependent on coal, while its public finances continue to derive a significant share of revenue from fossil fuels.
In FY2024‑25, the state earned Rs 14,148 crore from coal and petroleum, accounting for 13.1% of its own revenue. This was a fall from 16.2% earnings in FY2022‑23, reflecting stagnation in fossil‑fuel receipts and growth in alternative sources.
Beyond the power sector, financing requirements extend to industrial decarbonisation, green hydrogen, electric mobility, energy-efficient buildings and just transition measures. These include worker reskilling, mine closure and land restoration, and economic diversification in coal-dependent districts.
Three-Pronged Strategy
To mobilise the required capital, the report recommends a three-pronged approach.
First, Odisha should assess the full cost of the transition across sectors. Second, it should develop a sustainable finance framework to match projects with appropriate sources of capital. Third, it should establish a dedicated transition fund that pools government, multilateral, climate and private finance to reduce project risks and support just transition priorities.
Blended and concessional finance, the report said, will be crucial to reduce risks and ensure Odisha’s clean energy shift is socially and economically inclusive.