In a recent interview with Power Line, Parminder Chopra, Chairman and Managing Director, Power Finance Corporation Limited (PFC), shared her views on the current state of the power sector and the future outlook. She also spoke about the company’s operational highlights and future plans. Edited excerpts…
What is your perspective on the current state and future outlook of the power sector?
The power sector today is buzzing with activity and transformation. Having spent over 35 years in this field, I have witnessed incredible growth from when India had just around 50 GW of installed capacity to nearly 480 GW now. That was one phase of growth, and today, we are transitioning to another one defined by ambitious targets, innovative technologies and a strong push towards sustainability. Now, the focus is on making renewable energy a round-the-clock source of power to ensure grid stability and reliability.
Energy storage solutions, such as battery and pumped storage, have become key enablers in this transition. The recent extension of viability gap funding for battery storage reflects the government’s continued support for making clean energy viable at scale.
While renewables lead the way, there remains a strategic emphasis on thermal and nuclear power to ensure energy security and meet peak demand. The sector is also embracing digitalisation and smart grid technologies to improve operational efficiency and resilience.
Looking ahead, the next five years are crucial. PFC has been at the forefront of financing India’s renewable journey. We were among the first to finance renewable energy projects, and over the years, we have supported nearly 60 GW, which is more than 25 per cent of India’s total installed renewable capacity. This makes us the largest renewable energy financier in the country. A decade ago, our funding was largely towards conventional generation. But today, on the generation side, we are financing new technologies like renewables integrated with storage, bioethanol, and more. PFC remains deeply committed to supporting India’s energy transition journey.
On the technology front, it is an exciting phase for the power sector. New innovations such as green hydrogen are coming in, and it will also be interesting to see how developments like carbon markets and electricity futures take shape in the coming years.
How well we can improve grid flexibility, ramp up energy storage and improve infrastructure readiness will define our progress towards a sustainable, secure power future. The challenges are real, but so are the opportunities, and I am confident that India is well-positioned to lead in the global clean energy transition.
What have been the key achievements in the power sector over the past few years?
Over the past few years, the Indian power sector has charted a remarkable journey, from an era of power shortages and limited access to a stage where we have achieved near-universal electrification and become a power-surplus country.
A major achievement has been the rapid expansion of generation capacity, especially from renewable energy sources. In the last financial year itself (2024-25), the country added a record 30 GW of renewable capacity, reflecting the strong momentum in the sector. Today, renewables account for nearly 50 per cent of the country’s total installed capacity, marking a clear shift in the structure of our energy mix. This shift has been supported by parallel developments in grid infrastructure, including the strengthening of transmission lines and the roll-out of smart metering under the Revamped Distribution Sector Scheme (RDSS).
Alongside renewable projects, India is ensuring that clean energy reaches every household. The PM Surya Ghar: Muft Bijli Yojana is a shining example – the world’s largest domestic rooftop solar initiative, which has already crossed a historic milestone with more than 10,00,000 homes now solar-powered. Another milestone in the solar space is reaching 100 GW of solar PV module manufacturing capacity from around 2 GW in 2014.
On the distribution side, there have been notable improvements in discom performance, particularly in reducing aggregate technical and commercial losses from approximately 23 per cent to 16 per cent over the past decade. The reduction in legacy dues under the Late Payment Surcharge (LPS) scheme has also eased financial stress across the value chain.
Recently, in June 2025, India inaugurated its first energy-efficient micro substation with a power voltage transformer, supported by PFC in collaboration with NEDO, Japan – a major step towards a smarter, more energy-efficient power future.
What, according to you, are the main issues impeding the growth of the power sector? How can these be overcome in the short and long term?
While India’s power sector is progressing steadily, there are a few challenges that need to be addressed. One is the gap between the pace of renewable energy capacity additions and the readiness of the supporting infrastructure. As the share of renewable capacity in the total installed capacity mix increases, there is a need to augment transmission and distribution networks, strengthen storage, and build the wider ecosystem to integrate this capacity addition smoothly. The government is actively working to address these issues.
Earlier, the sector relied largely on long-term fixed PPAs, but today, with evolving structures such as FDRE and the introduction of electricity derivatives, a shift is happening towards more flexible, market-driven mechanisms. So, the need is to further strengthen the derivatives and futures market for better price discovery.
In addition, global uncertainties have highlighted the importance of supply chain resilience. Whether in solar modules, batteries or other critical inputs, building a strong domestic manufacturing ecosystem is essential for ensuring long-term energy security.
The Indian power sector is evolving rapidly and is in a transformative phase. Challenges are part and parcel of this journey, but with continued government support and a conducive policy ecosystem, I believe that we are on the right path towards the next chapter of growth in the power sector.
What have been the business highlights for PFC in the past twelve months?
PFC remains India’s largest non-banking financial company. Its consolidated balance sheet has crossed Rs 11 trillion, reinforcing its leading role in power and infrastructure financing. On a standalone basis, we recorded our highest ever annual profit of Rs 173.52 billion in 2024-25, representing a 21 per cent year-on-year growth. With this, PFC continues to maintain its position as the highest profit-making NBFC in India. The gross non-performing assets have declined to 1.94 per cent in 2024-25, compared to 3.34 per cent in the previous year, reflecting continued improvement in the asset quality. Our loan asset book has also grown steadily, reaching Rs 5,431.2 billion as of March 2025, representing a 12.81 per cent year-on-year increase.
Beyond the numbers, PFC continues to play a crucial role in implementing government schemes that are central to India’s power sector reforms. As the nodal agency of the RDSS and the LPS scheme, we have driven a tangible impact on the ground. We have imparted over 51,000 man-days of training to discom personnel across the country, enhancing their skills and strengthening their operational capacity.
Through the LPS mechanism, PFC has disbursed Rs 451.8 billion to date to liquidate legacy dues. This has led to a 70 per cent reduction in dues from peak levels of Rs 1.4 trillion. More importantly, current dues are now being settled on time, ensuring timely payments to generators and maintaining liquidity in the power ecosystem.
This year, we also focused on strengthening our ESG practices. In our second ESG report released recently, we aligned the disclosures with the Global Reporting Initiative (GRI) Universal Standards 2021, reinforcing our commitment to transparency, accountability and global best practices.
These developments reflect PFC’s dual focus on financial performance and sectoral support, reinforcing our role as a trusted partner in India’s power and infrastructure growth story.
What are your biggest priorities and key focus areas for PFC?
At PFC, our priorities are closely aligned with the evolving needs of the power sector. As a financing institution, our primary focus is to continue facilitating large-scale financing at competitive rates and channelise these funds into the power sector. The cost of capital is a key factor affecting the overall cost of power. For this, we are focusing on expanding multilateral partnerships, viewing it as a low-cost funding avenue. Recently, PFC signed a loan agreement of JPY 60 billion with the Japan Bank for International Cooperation under its GREEN operations to fund India’s first-of-its-kind bamboo-based bio-ethanol project, a significant step in sustainable energy innovation.
In 2023, the government gave us the mandate to fund non-power infrastructure as well, and we are working to enhance our capabilities to support initiatives in this area. Recently, we established PFC Infra Finance IFSC Limited, the International Financial Services Centre’s first finance company dedicated to power and infrastructure lending. With approval received to commence operations, our focus now is on kickstarting this subsidiary, which will open up new business opportunities and help establish our global presence.