India Needs US$145 Billion in Annual Energy Investments to Balance 6% GDP Growth and Net-Zero Transition by 2035

India will need to mobilise nearly US$145 billion in annual energy investments to balance its economic growth ambitions with climate commitments, according to global energy consultancy Wood Mackenzie. The insights were shared during India Energy Week 2026, outlining a strategic roadmap for the country to maintain 6% GDP growth through 2035 while advancing its energy transition.

Speaking at the event, Joshua Ngu, Vice Chairman – Asia Pacific, Wood Mackenzie, said the investments must focus on power generation, energy storage, and grid modernisation to ensure energy security while building a low-carbon economy. He stressed that the coming decade will be pivotal in determining whether India locks into carbon-intensive infrastructure or emerges as a global leader in low-carbon industrialisation.

“India’s next decade is decisive. The challenge is a dual mandate — securing near-term energy needs while simultaneously building a future-ready low-carbon energy system. Today’s investment choices will shape the country’s long-term economic and climate trajectory,” Ngu said.

Power Sector to Lead Energy Transition

The power sector, currently the largest contributor to India’s emissions, is expected to remain the primary engine of decarbonisation. Wood Mackenzie noted that non-fossil fuel capacity has already surpassed fossil-based installations, signalling a structural shift in India’s power mix.

Going forward, the transition will be driven by renewable energy expansion, grid flexibility, and energy storage deployment, while coal additions will be largely restricted to system reliability and peak demand management. However, rapid renewable integration is creating significant grid challenges.

Highlighting the urgency of grid upgrades, Rashika Gupta, Vice President – Power and Renewables Research, Wood Mackenzie, said that nearly US$1.5 trillion will be required between 2026 and 2035 to enable system integration. She emphasised that reforms under the Electricity Amendment Bill will be critical in improving distribution competition and attracting private investment into grid infrastructure.

Balancing Fossil Fuels and Energy Security

Despite accelerating renewable adoption, fossil fuels will continue to play a crucial role in ensuring short-term energy stability. India is projected to reach 1.5 billion tonnes of coal production by 2030, with increasing focus on coal gasification to diversify energy applications.

However, crude oil dependency remains a growing concern, with import reliance expected to rise to 87% by 2035. To mitigate risks, Wood Mackenzie called for renewed efforts to revitalise India’s upstream oil and gas sector and attract International Oil Companies (IOCs) back into exploration and production.

Natural gas is also expected to witness significant growth, with national demand projected to double from 72 bcm in 2024 to over 140 bcm by 2050, driven largely by industrial consumption. LNG imports are forecast to grow at a 4.8% CAGR, peaking at 90 mtpa by 2050, contingent on maintaining price competitiveness.

Domestic Manufacturing: Solar and Battery Supply Chains

India’s push for energy independence hinges on strengthening domestic manufacturing. While the country has become the world’s second-largest solar module producer, gaps persist in cell and wafer manufacturing. Wood Mackenzie cautioned that domestic content mandates for solar cells starting June 2026 could create short-term supply constraints until 24 GW of new capacity becomes operational.

The battery manufacturing sector faces steeper challenges. Despite over 200 GWh of announced projects, only 100 GWh is expected to materialise by 2030, primarily due to execution delays and limitations within the Advanced Chemistry Cell (ACC) PLI scheme, which the consultancy said requires significant restructuring.

Hydrogen and Carbon Capture Face Commercial Barriers

India’s target of 5 million tonnes per annum (Mtpa) of green hydrogen by 2030 is increasingly seen as ambitious, with most projects still in early development stages. Similarly, carbon capture, utilisation and storage (CCUS) deployment remains limited, focused mainly on policy development rather than industrial-scale implementation.

Commenting on regulatory developments, Hetal Gandhi, Lead – CCUS, Asia Pacific, Wood Mackenzie, said the launch of the Carbon Credit Trading Scheme (CCTS) in 2026 will be a crucial step in decoupling industrial growth from emissions, providing regulatory certainty and accelerating adoption of low-carbon technologies.

India Poised as Global Manufacturing Alternative

Despite challenges, Wood Mackenzie believes India is well-positioned to emerge as a credible global alternative to China in solar and battery manufacturing, supported by growing domestic capabilities and strong policy backing.

“India stands at a defining crossroads. With sustained investment, manufacturing scale-up, and policy continuity, the country can achieve its 500 GW renewable energy target and play a central role in shaping the global clean energy economy,” Ngu concluded.