Energy investment in India is set to reach a record high of $170 billion this year, driven by spending on solar installations and expansion of oil refining capacity, the International Energy Agency (IEA) said in its new World Energy Investment 2026 report out on Thursday.
Over the past five years, India’s energy investment has increased by 11% on average, with solar PV investment up by 25% in this period, and investment in oil refining jumping by 23%.
Together, these two sectors have contributed to one-fourth of India’s energy investment growth.
The increase in oil refining investments has put India on track for a 15% increase in refining capacity by 2030, the IEA said.
Despite the surge in solar PV investments and installations, coal remains the bedrock of India’s power generation and industrial energy needs, the agency noted. Investment in coal is further set to grow and reach $13 billion this year as the government plans to boost coal mining and domestic production.
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Sharp rises in solar PV and wind investments have taken their share to over 50% of installed capacity in India. The increase in variable renewable electricity has necessitated power sector infrastructure upgrades to avoid curtailment, the IEA noted.
India is also boosting investment in hydropower, tripling these in the last five years, while hybrid tenders, nuclear power, and pumped storage are expanding, supported by policy reforms and new market mechanisms.
Yet, “Grid upgrades remain another major priority, with rising investment in transmission and distribution aimed at connecting renewable-rich regions and reducing curtailment,” the agency said.
India’s electricity grid is expanding at a slower pace than the boom in renewable energy installations, leading to increased share of clean energy curtailments and threatening to slow the solar and wind boom in the world’s most populous country, clean energy think tank Ember said in a report earlier this month.
Grid and transmission constraints accounted for nearly two-thirds of all renewable energy curtailment at 300 gigawatt-hours (GWh) in the first quarter of the year, according to Ember’s estimates.
By Charles Kennedy for Oilprice.com
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