Image Source: ChatGPT
Prime Minister Narendra Modi’s visit to Europe and the flurry of energy-related agreements signed over the past week come at a moment when energy security has sharply returned to the forefront of geopolitics. And rightly so. The war in Ukraine and the recent escalation in West Asia exposed the fragility of global energy flows. At the same time, competition over batteries, critical minerals, clean energy technologies, and industrial supply chains is intensifying.
Against this backdrop, India and European partners have advanced cooperation across clean energy, hydrogen, advanced manufacturing, critical technologies and industrial innovation. While these are important developments, they also expose a deeper challenge. The India-EU Clean Energy and Climate Partnership remains framed around the priorities of an earlier era — one defined by renewable deployment, technology transfer, and climate ambition. Yet India has already crossed 50 percent of installed non-fossil electricity capacity, ahead of its 2030 target. Its challenge today is no longer adding another megawatt of renewable energy; it is delivering the megawatt-hour.
As India and Europe prepare to deepen cooperation through new partnerships, investment commitments, and technology agreements, the more important question is what that cooperation should now be designed to achieve. The next phase must address a different set of challenges: Can India build an electricity system that reliably integrates large volumes of renewable energy? Will it be able to decarbonise without undermining its industrial competitiveness? And how can it reduce fossil-fuel dependence without creating new vulnerabilities — around critical minerals, clean-energy technologies, and access to capital?
Three forms of cooperation, in particular, deserve priority.
The first is System Resilience. India’s energy transition is increasingly constrained not by generation but by integration. Solar power peaks during the day while demand rises after sunset. Renewable-rich regions are often located far from industrial centres. The challenge is ensuring that electricity reaches consumers when and where it is needed. Between May and December 2025, India curtailed around 2.3 TWh of renewable electricity.
The next phase of cooperation should include partnerships between Indian grid operators and their European counterparts on renewable forecasting, ancillary services and balancing markets.
Addressing these bottlenecks requires a shift from building renewable capacity to building a power system capable of reliably absorbing, transporting, and balancing that capacity. Europe has spent decades developing many of these institutional capabilities. The next phase of cooperation should include partnerships between Indian grid operators and their European counterparts on renewable forecasting, ancillary services and balancing markets. Regulatory cooperation on storage-linked procurement and flexibility mechanisms would help create the market signals needed to scale investments in reliability. Joint demonstration projects in renewable-rich states such as Rajasthan and Gujarat could help test and operationalise new approaches to managing high-renewable grids under Indian conditions. Lessons from Europe’s experience in integrating variable power, managing congestion and maintaining system adequacy could prove as valuable for India as technology transfer itself.
The second is for enabling industrial competitiveness. India has ambitious plans for green hydrogen, low-carbon manufacturing and industrial decarbonisation. Yet cleaner production often remains more expensive than conventional alternatives. For sectors such as steel, cement, and fertilisers, the challenge is not simply adopting cleaner technologies but remaining competitive while doing so. The real constraint, in other words, is not technology but markets: companies will invest in low-carbon production only if demand exists for low-carbon products. This is where India-EU cooperation can be transformative.
The priority should be creating markets for low-carbon products rather than simply supporting their production. India and the EU could work towards interoperable certification systems for green hydrogen, low-carbon steel, and sustainable fuels; align public procurement standards to create early demand; and establish industrial decarbonisation corridors linking Indian manufacturing clusters with European buyers. Long-term offtake agreements, particularly in sectors such as green hydrogen and low-carbon steel, could provide the demand certainty required to unlock investment.
India and the EU could work towards interoperable certification systems for green hydrogen, low-carbon steel, and sustainable fuels; align public procurement standards to create early demand; and establish industrial decarbonisation corridors linking Indian manufacturing clusters with European buyers.
The third is cooperation for finance. India’s energy transition will require trillions of dollars of investment over the coming decades. Yet that investment continues to flow disproportionately towards renewable generation, while many of the systems needed to support the transition remain underfunded.
Storage illustrates the problem. As renewable penetration rises, storage becomes essential for reliability — but deployment lags behind future requirements, held back by uncertain revenue streams and high financing costs. Similar gaps affect transmission infrastructure, industrial retrofits, green hydrogen facilities, and coal-region transitions.
The issue is not a lack of capital but a lack of bankable projects. Many transition investments involve long payback periods, regulatory uncertainty and exposure to market risks. This is where Europe can make its most meaningful contribution. The value of European institutions lies not simply in the volume of finance they provide but in their ability to reduce risk through long-tenor lending, blended-finance structures, guarantees and currency-risk mitigation mechanisms.
The value of European institutions lies not simply in the volume of finance they provide but in their ability to reduce risk through long-tenor lending, blended-finance structures, guarantees and currency-risk mitigation mechanisms.
Rather than organising cooperation around individual projects, India and Europe should focus on creating investable transition platforms. This could include blended-finance facilities for grid-scale storage, dedicated transmission-financing windows for renewable-rich states, risk-sharing mechanisms for industrial decarbonisation projects, and transition-finance facilities for coal-dependent regions. European development finance institutions and the European Investment Bank (EIB) can play an important role in lowering the cost of capital through guarantees, first-loss capital and currency-risk mitigation instruments. Such an approach would help crowd private investment into the infrastructure and industries that will ultimately determine the success of India’s transition.
For India, cooperation with Europe should no longer be viewed principally as climate diplomacy. It should be seen as an instrument for strengthening India’s energy security, industrial competitiveness, and economic resilience.
The energy transition is entering a fundamentally different phase. The first decade was defined by deployment. The next will be defined by resilience. For India, cooperation with Europe should no longer be viewed principally as climate diplomacy. It should be seen as an instrument for strengthening India’s energy security, industrial competitiveness, and economic resilience. For Europe, engagement with India is not simply about supporting decarbonisation. It is about helping shape a diversified and resilient energy order in which the transition does not create a new generation of strategic dependencies. The future of energy security will not be determined by how quickly countries transition. It will be determined by how securely they do so.
Aparna Roy is a Fellow and Lead, Climate Change and Energy, at the Centre for New Economic Diplomacy, Observer Research Foundation.
The author acknowledges that an AI-assisted tool (ChatGPT) was used solely for editing and structuring the manuscript. The research, analysis, evidence base, arguments, and policy recommendations are the author’s original work.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.