India Needs $145 Bn Annually to Power Its Renewables, Grids & Storage Push: Study

India’s power sector remains the country’s largest source of emissions—but it has also become the central engine of its energy transition. With non-fossil installed capacity now exceeding fossil fuels, India has reached a structural inflection point. A Wood Mackenzie report estimates the country must mobilise about $145 billion annually to align rapid economic growth with its net-zero ambitions.

Looking ahead, Wood Mackenzie said the transition will be driven increasingly by the scale-up of renewables, grid flexibility and energy storage, while coal additions will be largely limited to reliability and peak-balancing needs rather than capacity growth. Rapid decarbonisation, however, is creating binding challenges around system integration, the report added.

Speaking at the India Energy Week 2026, Joshua Ngu, Vice Chairman, Asia Pacific at Wood Mackenzie, stated that this capital must be strategically concentrated in power generation, storage, and the urgent modernisation of grid infrastructure. 

Power sector transformation 

“India's next decade is decisive,” said Ngu. “The challenge is a dual mandate: India must de-risk its immediate energy security while simultaneously building the low-carbon architecture required to support a top-tier global economy. Today’s investment choices will determine whether the country locks in carbon-intensive infrastructure or leads the world in low-carbon industrialisation”. 

“The US$1.5 trillion investment between 2026 and 2035 for energy transition is not just about adding megawatts; it is about the wires,” Rashika Gupta, Vice President, Power and Renewables Research at Wood Mackenzie noted. “Success hinges on the pace of market reforms, specifically the Electricity Amendment Bill to improve distribution competition and provide the transparent investment signals needed to unlock private capital for grid modernisation.” 

Supply chain: closing the wafer and battery gap 

A central pillar of India’s growth strategy is the indigenisation of low-carbon supply chains to reduce import dependency. While India is now the world’s second-largest solar module manufacturer, a critical gap remains in vertical integration for cells and wafers. The domestic content requirements for cells starting in June 2026 will likely create short-term supply pressure until an estimated 24 GW of new capacity comes online later this year, Wood Mackenzie noted. 

The battery sector faces even steeper hurdles. Despite over 200 GWh of announced capacity plans, Wood Mackenzie forecasts that only about 100 GWh (half of the target) will likely come on stream by 2030. This gap is attributed to execution challenges and stumbles in the Advanced Chemistry Cell (ACC) battery Production Linked Incentive (PLI) scheme, which currently requires a significant re-haul. Despite these hurdles, India is uniquely positioned to become one of the world’s most credible, large-scale alternative to the Chinese solar and battery supply chain.  

Balancing fossil fuel stability and energy transition

Despite the acceleration of the energy transition, Wood Mackenzie notes that hydrocarbon fuels remain fundamental to near-term stability. India remains on track to hit its 1.5-billion-tonne coal production target by 2030, with increasing emphasis on coal gasification to diversify the energy mix. 

In contrast, the crude oil sector presents a growing dependency risk, with import reliance projected to hit 87% by 2035. “To mitigate this, India must revitalise its upstream sector,” Ngu suggested. “Attracting International Oil Companies (IOCs) back to Indian exploration and production (E&P) is no longer optional. It is a security imperative.” 

Meanwhile, the natural gas landscape offers a parallel challenge and opportunity. National gas demand is expected to double from 72 bcm in 2024 to over 140 bcm by 2050, largely driven by the industrial sector. This industrial appetite will account for more than two-thirds of gas demand through 2030, remaining above 55% until 2050. 

On the other hand, other relativly new technologies faces challenge. For instance. India’s 5 Mtpa green hydrogen target for 2030 faces a widening reality gap. Most announced projects remain in early feasibility stages, lacking the project maturity needed for near-term scale. Similarly, CCUS deployment is at a nascent stage, focused primarily on refining policy rather than industrial-scale application.

Together, these constraints underline a central reality of India’s energy transition: ambition is no longer the bottleneck—execution is. Whether India can convert record investment needs into grid-ready capacity, resilient supply chains and scalable new technologies will determine if it emerges as a global low-carbon leader or remains constrained by legacy systems.