India has emerged as the world’s third-fastest growing country in terms of power generation capacity over the past five years, only after China and the United States, according to a recent report by the International Energy Agency (IEA). The report highlighted a surge in electricity demand across India, fuelled by rapid urban expansion, increased use of air conditioners and household appliances, and greater energy needs from industries. To fulfil this surging demand, power generation has expanded across all energy sources in the country, including renewable.A major contributor to this expansion has been India’s ambitious clean energy agenda. The IEA noted a particularly strong rise in investments in renewable energy, especially solar photovoltaic (PV) projects. Solar PV alone made up more than half of India’s total non-fossil energy investments over the last five years.In 2024, a striking 83% of the country’s total power sector investment was directed towards clean energy initiatives.India also emerged as the world’s largest recipient of development finance institution (DFI) funding for clean energy projects last year, receiving around $2.4 billion in project-specific support. Foreign direct investment (FDI) into the power sector has also seen a significant boost, reaching $5 billion in 2023 — nearly double the pre-pandemic levels.This upswing has been enabled by government policies allowing 100% FDI in electricity generation (excluding nuclear) and transmission infrastructure.However, the report flagged a decline in foreign portfolio investment in the energy sector over the past two years, citing broader macroeconomic and sectoral headwinds. Despite this dip, the long-term outlook remains optimistic.The IEA’s findings highlighted India’s growing role in the global energy transition and its increasing focus on the clean energy investment.
