Redefining India-EU Energy Cooperation
Prime Minister Narendra Modi’s visit to Europe comes amid evolving energy security and clean energy priorities for India and the EU.
By Aparna Roy
Published : June 26, 2026 at 6:08 PM IST
Prime Minister Narendra Modi's visit to Europe comes at a moment when energy security has returned to the geopolitical foreground. The war in Ukraine exposed Europe's dependence on imported fuels. The recent escalation in West Asia has once again highlighted the fragility of global energy flows. At the same time, competition over batteries, critical minerals and clean- energy supply chains is intensifying.
For both India and Europe, the energy transition is no longer simply a climate project. It has become a question of economic security, industrial competitiveness and geopolitical resilience. Yet much of the India-EU Clean Energy and Climate Partnership remains framed around the priorities of an earlier era: renewable deployment, technology transfer and climate ambition.
Those objectives remain important. But neither side's principal challenge today is adding another gigawatt of renewable energy. The challenge is what comes after. Can India build an electricity system capable of reliably integrating large volumes of renewable energy? Can Europe decarbonise without undermining industrial competitiveness?
Can both reduce fossil-fuel dependence without creating new strategic dependencies around critical minerals, technologies and capital? These questions should define the next phase of India-EU cooperation.
The first priority 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. Between May and December 2025, India curtailed around 2.3 TWh of renewable electricity, highlighting growing bottlenecks in moving and balancing clean power across the system.
The challenge is no longer producing renewable electricity. It is ensuring that electricity reaches consumers when and where it is needed. This requires capabilities such as advanced grid management, forecasting systems, balancing markets, storage integration and demand- response mechanisms.
Europe has spent decades developing many of these institutional capabilities. The next phase of cooperation should therefore move beyond renewable deployment towards power-system transformation. This could 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; and joint demonstration projects in renewable-rich states such as Rajasthan and Gujarat.
As India moves towards a high-renewable electricity system, lessons from Europe's experience in integrating variable power, managing congestion and maintaining system adequacy could prove as valuable as technology transfer itself.
The second priority is industrial competitiveness.
The energy transition is increasingly being shaped by industrial policy. Europe's post-Ukraine energy strategy has been driven as much by concerns over competitiveness and strategic autonomy as by climate objectives. The Carbon Border Adjustment Mechanism reflects this reality.
India faces a similar challenge. The country 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 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.
The third priority is finance.
India's energy transition will require trillions of dollars in investment over the coming decades. Yet investment continues to flow disproportionately towards renewable generation while many of the systems required to support the transition remain underfunded. Storage illustrates the problem. As renewable penetration rises, storage becomes essential for eliability. Yet deployment remains below future requirements because revenue streams remain uncertain and financing costs remain high. Similar challenges 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.
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 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.
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 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 Fellow and Lead, Climate Change and Energy, at the Observer Research Foundation.)
(DISCLAIMER: The opinions and facts expressed in this article are those of the writer and do not reflect the views of ETV Bharat.)
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