स्तम्भ Stambh · Arthanīti
Thorium Is the Key. Build Everything Else Now.
India sits on the largest thorium reserves on earth and has just lit the reactor that leads to them. That is the long game. The short game is solar with storage, hydro, wind and the factories that make them, built fast enough to beat 2070 and to answer Europe’s carbon tax on our terms.
Nikhil Sharma · अर्थनीति Arthanīti · 23 October 2026 · 7 min read
On 6 April 2026, at 8.25 in the evening, a reactor at Kalpakkam went critical for the first time. Most of India did not notice. It may be the most important thing that happened to our energy future this decade.
The Prototype Fast Breeder Reactor is the second stage of a plan Homi Bhabha drew up in the 1950s. Stage one burns natural uranium. Stage two breeds new fuel. Stage three runs on thorium. India holds about 8.5 lakh tonnes of it, the largest identified resource of any country and roughly an eighth of the world’s. We have very little uranium. We have more thorium than anyone.
So my view is simple. Thorium is the key. It is also a long key. The third stage is decades away and no thorium demonstration reactor has started construction yet. A country cannot wait decades for its electricity. Meanwhile we must stabilise everything else and scale it hard.
Where we actually stand
India has 552 gigawatts of power capacity. Just over 300 GW of it is non-fossil: solar, wind, hydro, nuclear and bio-power. We crossed half in June 2025, five years ahead of the 2030 pledge. That is a real achievement and we should say so.
But capacity is not power. Last year clean sources gave only 29 per cent of the electricity we actually used. Coal still gave about two thirds. The sun sets and the wind drops. The wires and the batteries that would carry clean power into the night are behind the panels.
Demand will not wait for us. Peak demand hit a record 270.8 GW in May. An Indian still uses about 1,460 units of electricity a year, roughly a third of the world average. Every factory we want to build under Make in India needs more power, not less.
Nuclear: stabilise now, thorium next
Nuclear is 8.8 GW today, about 3 per cent of our electricity. The government wants 100 GW by 2047. Parliament passed the SHANTI Act in December 2025, which repealed the 1962 Atomic Energy Act and the 2010 liability law and lets private companies build and run plants under licence. The Budget set aside ₹20,000 crore for small modular reactors, with at least five Indian designs to run by 2033.
That is the stabilise part: pressurised heavy-water reactors we already know how to build, built on time, plus private capital and small reactors for industry. The breeder at Kalpakkam is the bridge to thorium. Fund the bridge and the destination together. A country that wants energy independence for a century should not under-fund the only fuel it has in abundance.
Solar and storage first
Solar is now 171 GW and in July to September it passed 10 per cent of our electricity for the first time. In October 2025 a SECI auction of solar with four hours of battery storage cleared at ₹2.86 a unit. Solar that keeps working after sunset now clears an auction below ₹3.
Storage is the bottleneck. India had about 9.3 gigawatt-hours of batteries installed by June 2026 and more than 67 GWh still at the tender stage. Under the viability gap funding schemes, letters of award cover about 35 GWh but only half a gigawatt-hour was running by July. Tenders do not store electricity. Commissioned batteries do.
Make the hardware here, for the world
India has 262 GW a year of solar module factories and about 37 GW of cell lines, and from June 2026 government-backed projects must use Indian cells. That is the start of what I have argued in Two Engines: AI and policy can make India one of the factories of the world.
The test is the rest of the chain. Wafers, polysilicon, battery cells and electrolysers are where the value and the leverage sit. The battery-cell incentive scheme awarded 40 GWh and had commissioned 1.4 GWh on time. America has just put duties of more than 100 per cent on Indian modules. We should read that as proof our factories compete, then go and win in Europe, Africa and West Asia.
Hydel is underrated
Large hydro is 52 GW and gets little attention. It should get more. Water held behind a dam is the best battery a grid has. Pumped storage does the same job on purpose: pump water uphill when solar is cheap and let it run down at night.
India runs about 7.4 GW of pumped storage, has about 16 GW under construction and, by the Central Electricity Authority’s count, about 267 GW of potential. The target is 100 GW by 2035-36. Most of that potential is off-river, away from the fragile Himalayan valleys where the Chamoli flood of 2021 and the Teesta dam break of 2023 showed what climate risk looks like. Build off-river first and build it fast.
Wind at sea, hydrogen for export
Onshore wind is 59 GW and last year added the most in nearly a decade. Offshore wind is still zero. In 2025 tenders for 4.5 GW off Gujarat and Tamil Nadu drew no bids. The target is 30 GW by 2030 with ₹7,453 crore of viability gap support behind the first gigawatt. Fix the tender until it clears. Our coast is an asset we have not yet used.
Green hydrogen is the export story. The National Green Hydrogen Mission aims at 5 million tonnes a year by 2030. Green ammonia cleared at ₹49.75 a kilogram in a 2025 auction, and in January 2026 Germany’s Uniper agreed to buy up to 5 lakh tonnes a year from a plant in Kakinada from 2028. India can sell sunshine to Europe in a ship.
Beat 2070
India has pledged net zero by 2070 and this year promised a 47 per cent cut in emissions intensity by 2035. Given where we start, that is fair. An Indian emits about 2.2 tonnes of carbon dioxide a year. A Chinese about 8.7. An American about 14.
Fair is not the same as wise. Solar with storage now clears auctions below ₹3 a unit. Every year of faster building lowers our import bill for coal, oil and gas and raises our own manufacturing. We should beat 2070 not because anyone asks us to but because it pays.
CBAM is a trade weapon
Europe’s Carbon Border Adjustment Mechanism began charging on 1 January 2026. Importers of steel, aluminium, cement, fertilisers, electricity and hydrogen will buy certificates from February 2027 for what they brought in this year. In 2023 about $7.4 billion of India’s exports in these sectors went to the EU, around a quarter of our steel and aluminium exports. The Global Trade Research Initiative estimates exporters may have to cut prices by 15 to 22 per cent. The India–EU trade deal concluded in January did not exempt us.
Call it what it is. A carbon tax at the border, levied by a continent that grew rich on two centuries of coal, on a country that emits a sixth of America per head, is protection in green clothes.
The answer is not to complain. It is to make the tax collect in India. The EU rules deduct a carbon price already paid in the country of origin. So make India’s own carbon market, which now covers about 490 companies in seven sectors, price carbon credibly and keep that money at home. Build green steel and aluminium at scale on cheap solar. Take the rest to the WTO and match like with like at the table. The country that makes the cleanest steel will not fear a carbon border.
The order of work
Thorium for the century. For this decade, stabilise and scale: reactors on time, batteries commissioned, hydro and pumped storage off-river, offshore wind tendered until it clears, hydrogen shipped, the whole chain made in India. Do that and 2070 becomes a date we pass early, and CBAM becomes Europe’s problem, not ours.
Thorium for the century. For this decade, stabilise and scale.
Gurugram, 23 October 2026.
Sources, checked 23 October 2026. Department of Atomic Energy, PFBR attains first criticality, 7 April 2026. USGS, Mineral Commodity Summaries 2025: thorium. Central Electricity Authority, installed capacity, July 2026. Enerdata, India added 55.3 GW of non-fossil capacity in FY2025-26, 13 April 2026. Argus, India posts first coal power output fall in five years, 15 January 2026. CREA, India energy snapshot Q3 2026, 12 October 2026. News on AIR, record peak demand of 270.82 GW and draft National Electricity Policy. Ember, Global Electricity Review 2026. PIB, nuclear energy factsheet, 7 April 2026. News on AIR, President assents to the SHANTI Bill. pv magazine, solar-plus-storage tender at ₹2.86, 16 October 2025. TaiyangNews, India H1 2026 battery storage; Mercom, tendered storage tops 105 GWh; PSU Watch, VGF battery storage status, 27 July 2026. pv magazine, India’s module and cell capacity, H1 2026 and US duties on Indian modules. IEEFA, battery cell PLI progress, 22 January 2026. Renewable Watch, CEA roadmap to 100 GW of pumped storage and wind revival and offshore tenders. CEA, pumped storage status. Energética India, green ammonia at ₹49.75/kg. Uniper, offtake agreement with AM Green, 12 January 2026. Carbon Brief, India’s new Paris pledge. Our World in Data, CO₂ per person for the United States and China. European Commission, CBAM. Outlook Business, India’s CBAM exposure. Maritime Gateway, GTRI on CBAM price cuts, 2 January 2026. Argus, EU–India FTA leaves CBAM untouched, 27 January 2026. ICAP, India’s carbon credit trading scheme, 30 March 2026.