This study investigates the financial impact of climate transition risks for Indian power companies, using a forward-looking, microeconomic climate transition risk model. The analysis utilizes firm-level financial and environmental data, supported by widely used modelling scenarios such as GCAM and REMIND, across different NGFS pathways (B2DS and NZ2050) and shock years (2025 and 2030).
Executive summary
India, as one of the world’s largest and fastest-growing economies, faces significant climate transition risks due to its heavy reliance on coal for power generation, which accounts for around 70% of its energy mix. As the country strives for Net Zero, coal-based power firms are increasingly vulnerable to rising carbon prices, potential regulatory changes, and stranded assets, which could lead to financial losses and higher operational costs. These risks extend to workers and communities dependent on the coal sector. Given India’s unique exposure to transition risks and its critical role in global emissions reduction, this study aims to examine the financial impact of these risks on India’s power companies, highlighting the potential challenges and opportunities.
We examine the financial implications of climate transition risks on Indian power companies using a forward looking, microeconomic climate transition risk model. We integrate firm-level financial and environmental data and employs modelling scenarios such as GCAM and REMIND across multiple NGFS pathways (B2DS and NZ2050) for shock years 2025 and 2030. We utilize an extensive dataset comprising 1,703 power companies across coal, gas, renewables, nuclear, hydro, and oil, to assess financial vulnerabilities and opportunities associated with India’s energy transition.
The study reveals that coal and gas companies in India face substantial NPV losses (85%-90%) across all scenarios, particularly under delayed transition shocks, with GCAM models indicating greater losses than REMIND. In contrast, renewable companies show consistent NPV gains (14%-30%), with GCAM reflecting higher variability and returns. Firm-level analysis of six major power firms confirms these trends, with renewable-focused firms like Adani Green Energy and ReNew Power experiencing gains, while fossil-heavy firms such as NTPC and Adani Power, along with mixed portfolio firms like JSW Energy and Tata Power, facing significant value declines.