India will need to mobilise about $145 billion a year in energy investment to sustain economic growth while meeting climate targets over the next decade, energy consultancy firm Wood Mackenzie said on Tuesday.
Speaking at India Energy Week 2026 in Goa, Joshua Ngu, vice chairman for Asia Pacific at Wood Mackenzie, said investment would need to be concentrated in power generation, energy storage and grid infrastructure to support growth of around 6% a year through 2035.
India faces a dual challenge of meeting rising energy demand from industrialisation and urbanisation while limiting emissions growth, particularly from power sector, which remains the country’s largest source of carbon output.
The consultancy firm said the power system has already begun to shift structurally, with non-fossil fuel capacity now exceeding fossil-based capacity. Future additions are expected to be dominated by renewables, supported by storage and grid flexibility, while new coal plants are likely to be built mainly to manage reliability and peak demand rather than drive overall capacity growth.
However, the pace of renewable deployment is placing pressure on transmission networks and distribution systems, making grid investment a central constraint on the transition.
Rashika Gupta, vice president for power and renewables research at Wood Mackenzie, said the projected $1.5 trillion energy transition investment between 2026 and 2035 would depend heavily on reforms that improve competition and investment signals in the power distribution sector.
Fossil fuels would continue to play a stabilising role
Despite the push towards cleaner energy, Wood Mackenzie said fossil fuels would continue to play a stabilising role in the near term. India is on track to reach a coal production target of 1.5 billion tonnes by 2030, with growing emphasis on coal gasification as part of efforts to diversify fuel use.
Oil imports, however, remain a vulnerability. Import dependence is projected to rise to 87% by 2035, according to the consultancy, increasing exposure to global price volatility and supply risks.
Ngu said attracting international oil companies back into India’s upstream exploration and production sector would be critical to managing that risk, as domestic output has struggled to keep pace with demand.
Natural gas demand is also expected to rise sharply, driven largely by industry. Wood Mackenzie forecasts gas consumption will double from about 72 billion cubic metres in 2024 to more than 140 bcm by 2050, with imports of liquefied natural gas expanding steadily as domestic supply declines.
The consultancy said gas adoption would remain sensitive to price competitiveness, particularly as industries compare it with coal and other alternatives.
On manufacturing, Wood Mackenzie said India has emerged as the world’s second-largest solar module producer but continues to rely heavily on imports for cells and wafers. New domestic content rules taking effect from mid-2026 could create short-term supply pressures until additional capacity becomes operational.
Battery manufacturing faces similar challenges. While more than 200 gigawatt-hours of capacity has been announced, Wood Mackenzie estimates only about half is likely to be delivered by 2030 due to execution risks and weaknesses in the current incentive framework.
India’s ambitions in green hydrogen and carbon capture also face delays. Most hydrogen projects remain at early feasibility stages, while carbon capture deployment has so far focused on policy development rather than large-scale industrial use.
Hetal Gandhi, who leads carbon capture research for Asia Pacific at Wood Mackenzie, said the planned launch of India’s carbon credit trading scheme in 2026 would mark a shift from efficiency-based approaches to emissions caps, potentially changing how industrial growth is managed.
Despite near-term constraints, the consultancy said India could emerge as a major alternative manufacturing base for clean energy supply chains as global companies seek to diversify away from China.
Ngu said policy continuity and execution would determine whether India could meet its 500 gigawatt renewable capacity target and position itself as a central player in global energy markets.
