Odisha will require an estimated ₹1.1 lakh crore in investment over the next decade to expand renewable energy capacity, develop energy storage and strengthen transmission infrastructure, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA). The report recommends a three-pronged financing strategy, including a dedicated transition fund, to mobilise capital for the state’s clean energy transition and improve long-term economic resilience.
The report, titled Sustainable Finance for a Just Transition in Odisha, estimates that the state will need ₹1,09,980 crore between FY2025-26 and FY2035-36 to meet its clean energy and infrastructure requirements. The projections are based on the Central Electricity Authority’s Resource Adequacy Report.
Odisha’s Renewable Energy and Storage Investment Requirements
Odisha is projected to add approximately 10.7 GW of renewable energy capacity during the period, alongside 2.7 GW of pumped storage capacity, 0.13 GW of battery energy storage capacity and upgrades to its intra-state transmission network.
Renewable energy generation accounts for 67% of the total estimated investment requirement, while energy storage represents 21% and grid infrastructure accounts for the remaining 12%. Annual investment needs are expected to peak at approximately ₹20,827 crore in FY2029-30, reflecting the planned timing of capacity additions.
According to Gaurav Upadhyay, Lead Energy Specialist – Transition Finance, South Asia, at IEEFA and author of the report, Odisha’s clean energy transition presents an opportunity to strengthen its long-term economic resilience. A coordinated financing approach could help align projects with suitable capital sources, attract private investment and support workers and communities affected by the shift away from fossil fuels.
Odisha’s Untapped Renewable Energy Potential
Odisha has significant renewable energy resources that remain largely undeveloped. The report estimates the state’s solar potential at 139.5 GW, of which approximately 0.82 GW has been installed. Its estimated wind energy potential stands at 12.13 GW, with no grid-connected wind capacity installed at the time covered by the report.
The state also has an estimated hydropower potential of 7.6 GW, of which approximately 2.2 GW has been developed.
Expanding renewable energy generation alongside storage and transmission infrastructure could enable Odisha to meet a larger share of its electricity requirements with clean power and potentially supply renewable electricity to other states.
Coal Dependence Creates a Need for Economic Diversification
Despite its renewable energy potential, Odisha’s power system and state finances remain closely linked to fossil fuels. In FY2024-25, the state received an estimated ₹14,148 crore from coal and petroleum resources, equivalent to 13.1% of its own tax and non-tax revenue. This share declined from 16.2% in FY2022-23.
The report attributes the decline not only to growth in alternative revenue sources but also to stagnating fossil-fuel revenues and a sharp fall in coal-related receipts. Fossil-fuel-linked sectors account for approximately one-third of Odisha’s gross value added, highlighting the economic implications of a transition away from coal.
The report notes that financing requirements extend beyond renewable electricity generation and grid infrastructure. Other priority areas include industrial decarbonisation, green hydrogen, electric mobility and energy-efficient buildings.
Funding will also be needed for just transition measures, including worker reskilling, mine closure, land restoration and economic diversification in coal-dependent districts.
IEEFA Proposes Three-Pronged Financing Strategy
To mobilise the investment required, IEEFA recommends a three-pronged approach to sustainable transition finance.
First, Odisha should assess the full cost of the transition across sectors, including the infrastructure, industrial and social measures needed to reduce dependence on fossil fuels.
Second, the state should develop a sustainable finance framework that matches projects with appropriate sources of capital, helping direct funding towards different clean energy and transition priorities.
Third, the report proposes establishing a dedicated transition fund to pool resources from government, multilateral institutions, climate finance providers and private investors. The fund could help reduce project risks, mobilise additional investment and support just transition priorities in communities dependent on coal-related activities.
The report concludes that aligning financing mechanisms with Odisha’s energy and economic development priorities will be important to accelerating renewable energy deployment, expanding storage and transmission capacity, and supporting a more diversified and resilient state economy.
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