India will need to mobilise nearly $145 billion in annual investment across its energy sector to reconcile rapid economic growth with its long-term climate commitments, according to Wood Mackenzie. Speaking at India Energy Week 2026, Joshua Ngu, Vice Chairman, Asia Pacific at Wood Mackenzie, said the coming decade will be critical in determining whether India can secure its energy needs while building a low-carbon economy. 

Ngu said the required capital must be strategically deployed across power generation, energy storage and large-scale grid modernisation. “India’s next decade is decisive,” he noted, adding that the country faces a dual challenge of de-risking near-term energy security while simultaneously laying the foundation for a low-carbon industrial system. “Today’s investment choices will determine whether India locks in carbon-intensive infrastructure or leads in low-carbon industrialisation,” he said. 

Power sector at the heart of the transition 

The power sector remains India’s largest source of emissions but is also central to the energy transition. Wood Mackenzie noted that India has already crossed a structural inflection point, with non-fossil installed capacity exceeding fossil capacity. Going forward, the transition will be driven by the rapid scale-up of renewables, enhanced grid flexibility and energy storage, while new coal capacity will largely be restricted to reliability and peak-balancing requirements rather than incremental demand growth. 

However, the pace of decarbonisation is creating system-level integration challenges. Rashika Gupta, Vice President, Power and Renewables Research at Wood Mackenzie, said the projected $1.5-trillion investment between 2026 and 2035 for the energy transition is as much about grid infrastructure as generation capacity. She highlighted the importance of market reforms, including the Electricity Amendment Bill, to improve distribution-sector competition and provide clear investment signals for private capital to flow into grid modernisation. 

Fossil fuels still critical for near-term stability 

Despite accelerating clean energy deployment, Wood Mackenzie said hydrocarbon fuels will remain central to near-term energy security. India is on track to meet its 1.5-billion-tonne coal production target by 2030, with greater focus on coal gasification to diversify the energy mix. 

At the same time, crude oil dependence poses a growing risk, with import reliance projected to rise to 87% by 2035. To address this, Ngu said India must revitalise its upstream sector and attract international oil companies back into domestic exploration and production. “This is no longer optional; it is a security imperative,” he said. 

Natural gas presents both a challenge and an opportunity. National gas demand is expected to nearly double from 72 bcm in 2024 to over 140 bcm by 2050, driven primarily by industry. Industrial consumption is expected to account for more than two-thirds of gas demand through 2030 and remain above 55% until mid-century. LNG imports are projected to grow at a 4.8% CAGR, peaking at 90 mtpa by 2050, although Wood Mackenzie cautioned that sustained growth will depend on gas remaining price-competitive with alternative fuels. 

Supply-chain gaps in solar and batteries 

Wood Mackenzie noted the need to strengthen domestic low-carbon supply chains to reduce import dependence. While India has become the world’s second-largest solar module manufacturer, gaps remain in vertical integration, particularly in cells and wafers. Domestic content requirements for cells from June 2026 could create near-term supply constraints until around 24 GW of new capacity comes online later this year. 

The battery sector faces even steeper challenges. Of more than 200 GWh of announced battery manufacturing plans, only about 100 GWh is likely to materialise by 2030, according to Wood Mackenzie.  

Hydrogen and CCUS face reality check 

India’s ambition to produce 5 million tonnes per annum of green hydrogen by 2030 is also facing headwinds, with most projects still at early feasibility stages. Similarly, carbon capture, utilisation and storage remains nascent, with policy development outpacing industrial-scale deployment. 

Hetal Gandhi, Lead – CCUS, Asia Pacific at Wood Mackenzie, said the planned 2026 launch of the Carbon Credit Trading Scheme (CCTS) marks a significant shift in India’s climate policy. By moving from energy-efficiency targets under the PAT scheme to mandatory emissions caps, the framework could help decouple industrial growth from emissions intensity and provide regulatory certainty for low-carbon investments. 

Despite near-term challenges, Wood Mackenzie said India is well placed to emerge as a credible large-scale alternative to Chinese solar and battery supply chains, as global markets seek to diversify sourcing. “India is at a crossroads, but its long-term trajectory is undeniably bright,” Ngu added.