India’s energy sector requires approximately $145 billion every year to bridge the gap between its economic growth and net-zero objectives, focusing on investments in power generation, storage, and grid modernization, as per a report by Wood Mackenzie. The report indicates that India is on course to achieve its 1.5 billion tonnes coal production target by 2030, with a rising emphasis on coal gasification for energy mix diversification. Wood Mackenzie forecasts a doubling of natural gas demand in India from 72 billion cubic meters in 2024 to over 140 billion cubic meters by 2050, with industries driving over two-thirds of the demand by 2030 and more than 55% until 2050.
The report highlights several disparities between India’s growth and climate goals but suggests that India has the potential to emerge as a significant alternative to China in the solar and battery supply chain on a large scale. With global markets looking to diversify sourcing, India’s growing manufacturing ecosystem provides a competitive advantage. Joshua Ngu, Vice Chairman, Asia Pacific at Wood Mackenzie, stresses the need for India to secure its energy supply while simultaneously developing a low-carbon framework essential for a robust global economy. Rashika Gupta, Vice President, Power and Renewables Research at Wood Mackenzie, emphasizes that the $1.5 trillion investment for energy transition between 2026 and 2035 is not just about adding capacity but also about enhancing infrastructure.
Market reforms, particularly the Electricity Amendment Bill aimed at enhancing distribution competition and offering clear investment signals for grid modernization, are crucial for success, according to Gupta. Despite the energy transition gaining momentum, the report underscores the continued importance of hydrocarbon fuels for short-term stability. Wood Mackenzie projects that India’s crude oil import dependence could rise to 87% by 2035, advocating for the revitalization of the upstream sector and attracting international oil companies for exploration and production (E&P).
