In 2025, energy went from a “cost line item” to a board-level cost optimization issue for manufacturers, especially for energy cost sensitive verticals (cement, steel, textile etc) in India. Three patterns stood out: Grid prices stayed uncomfortable, renewables and contracts became more strategic, and AI quietly moved from pilots into operations.
1. Is Energy cheaper than 2022? Definitely not for “All”.
For Indian manufacturers, 2025 didn’t feel like a relief year; it felt like a new normal.
- The IEA’s mid-year update notes that India’s wholesale electricity prices fell ~15% year-on-year in H1 2025 to about INR 4500/MWh, but still remained above pre-2022 levels. Overall rate drops due to increase in Renewable inclusion, however benefit is available to only those who are using renewable more than 50% in their energy mix in real time. For all others the prices are between INR 8000 to 9000 / MWh. to increase in contribution of Renewables from 29% to 46% since 2015 in total energy mix.
- At the same time, India’s latest consumption data shows that industry accounts for ~41% of national electricity use, underscoring how exposed manufacturers remain to tariff and market movements with more threats to those who are dependent only on Grid.
- In some states, effective high-voltage industrial tariffs (including charges and duties) are now in the ₹10–11+/kWh range; for example, Chhattisgarh’s regulator reports a weighted average HV tariff of ₹11.50/kWh for FY 2024-25.
On top of this, India’s short-term power market is maturing fast. Analysis of exchange data shows the short-term market reached ~15.2% of total supply in FY 2025, with ~144 BU traded and ~26% CAGR in volumes since 2009 – alongside a documented rise in price volatility as renewables scale. Organizations with predictable one week forecast can use this effectively.
Implication for CXOs: Budgeting for 2026 cannot assume “mean reversion” to the pre-crisis world. Energy cost is now structurally more volatile and more market – linked.
2. Renewables and PPAs shifted from “good to have” to “risk management”
On the supply side, 2024–25 was the moment within which clean power became the default marginal capacity.
- Globally, renewable power capacity grew by about 585 GW in 2024, making up ~92.5% of all new power capacity, and pushing renewables’ share of installed capacity to ~46%.
- In India, the Ministry of New and Renewable Energy and CEA report over 212 GW of renewable capacity out of ~ 466 GW total installed capacity as of January 2025 , roughly 45% of the grid.
- Private demand is reinforcing this trend. Bloomberg NEF data shows global corporate clean-power PPAs hit a record 46 GW in 2023, up 12% year-on-year, representing nearly 10% of global capacity additions once you include only solar and wind.
Within India, analysts now describe open access green power and ToD tariffs as central to how commercial and industrial users stay competitive in a reforming market. CEEW
Implication for CXOs: In 2026, the core question isn’t “Should we buy green power?” It’s how much of your load should be locked in via PPAs vs left flexible on exchanges, and how that mix interacts with your capacity expansions, EVs and data-center plans.
3. Efficiency and PAT proved that “small percentage gains” are big money
India’s long-running Perform, Achieve and Trade (PAT) scheme quietly showed how much structured efficiency can deliver:
- PAT Cycle I achieved 8.67 MTOE of savings, about 30% above its 6.686 MTOE target, cutting roughly 1.25% of India’s total primary energy supply and avoiding around 31 million tonnes of CO₂.
- Independent assessments indicate participating firms improved baseline energy consumption by around 5%, overshooting the original 4.05% reduction target.
For an energy-intensive plant, a 3–5% reduction in specific energy consumption often pays back capex in months, not years. PAT data, plus multiple firm-level studies, confirmed that structured efficiency programmes consistently generate this order of magnitude. However, at plant level these Energy guzzlers can still improve with real time, meaningful data collection and use of AI driven actionables derived from this data.
Implication for CXOs: In 2026, efficiency is no longer “nice ESG”. It is proven, regulated, and monetisable through schemes like PAT and ESCerts, and should sit alongside PPAs and tariff strategy in your energy plan.
4. AI moved from pilots to the production line, but unevenly
2025 was the year AI in manufacturing energy shifted from talking to doing, even if maturity is patchy.
- An OECD 2025 survey finds that among AI-using firms, the single most common use case (44%) is process control, automation and production optimisation, including predictive maintenance and real-time scheduling. Another 28% use AI for defect and anomaly detection.
- The World Economic Forum’s work on AI in manufacturing highlights that factories still struggle with scaling beyond pilots due to fragmented data, legacy OT, and unclear ROI ownership, even as AI is recognised as a key lever to handle supply-chain shocks and energy volatility.
In India, this is colliding with tariff reform, PAT obligations and RE integration: plant managers are increasingly using AI-driven forecasting, dispatch recommendations and anomaly detection to decide when to draw from grid vs captive vs PPA, and where to target energy audits.
Online meaning full data collection is getting access to energy inputs and related outputs from utility equipment as well as processes – enabling tracking KPIs in real time. Increasing interest is seen across manufacturing Industry to track nonelectrical energy inputs, water, gas and the outputs like temperature, flow, pressure etc.
Implication for CXOs: The competitive gap in 2026 will not be “AI vs no AI”; it will be who has codified their plant-level energy logic into repeatable AI workflows across sites, versus who is still running Excel plus intuition.
5. Regulation made energy data a board responsibility
Two regulatory threads made 2025 a turning point:
- In India, BRSR and BRSR Core now require the top 1,000 listed entities to disclose detailed ESG metrics, with the value chain and limited assurance requirements being phased in from FY 2023-24 onwards.
- Globally, the EU’s Corporate Sustainability Reporting Directive (CSRD) is forcing thousands of manufacturers – including many Indian exporters with EU exposure – to report standardised climate and energy data, even as 2025 proposals look to narrow the scope and adjust thresholds.
Implication for CXOs: By 2026, energy data quality, auditability, traceability, reduction in YOY figures will be as important as the savings themselves. Plants that cannot produce defensible, meter-level data will struggle with both compliance and access to green finance.
What this means for your 2026 energy plan
Taken together, 2025 showed that manufacturers who outperformed on energy did three things well:
- Treated energy as a portfolio – blending tariffs, markets, PPAs, and on-site assets instead of buying passively.
- Embedded efficiency as a continuous programme – PAT-style discipline, not one-off audits.
- Operationalised AI on top of solid data – using AI for forecasting, optimisation and anomaly detection where data and controls already exist.
For 2026, the question isn’t “Will energy management be a problem?” It’s whether your organisation will treat it as a controllable, optimisable system, or remain exposed to a market and regulatory environment that has clearly moved on.
References
(All non-consulting, publicly available sources)
- Electricity Mid-Year Update 2025 https://www.iea.org/reports/electricity-mid-year-update-2025
- MINISTRY OF NEW AND RENEWABLE ENERGY https://mnre.gov.in/en/physical-progress/
- BUREAU OF ENERGY EFFICIENCY, Government of India, Ministry of Power https://beeindia.gov.in/perform-achieve-and-trade-pat.php
- BRSR Core – Framework for assurance and ESG disclosures for value chain https://www.sebi.gov.in/legal/circulars/jul-2023/brsr-core-framework-for-assurance-and-esg-disclosures-for-value-chain_73854.html
