India sees massive power generation growth, ranks behind only US, China

Driven by rising demand from residential, commercial, and industrial sectors, India expanded power generation across all sources, with a strong emphasis on renewables.

India has emerged as a country with the third-largest growth in power generation capacity globally over the past five years, according to the latest report by the International Energy Agency (IEA).

Only China and the United States surpassed India in power generation growth during this period.

It said "India has seen the third-largest growth in power generation capacity in the world after China and the United States".

The report highlighted that India's electricity demand has been rising sharply due to several factors. These include the expansion of commercial and residential spaces, increased ownership of air conditioners and other household appliances, and growing demand from industries.

To meet this growing demand, power generation in the country has expanded across all energy sources. The report mentioned that a major driver of this expansion has been the strong push towards renewable energy.

The report noted a significant increase in investments in clean energy, especially solar photovoltaic (PV) projects. In fact, solar PV alone accounted for more than half of the total non-fossil energy investment in India over the past five years. In 2024, as much as 83 per cent of power sector investment in the country went into clean energy initiatives.

India was also the largest recipient of development finance institution (DFI) funding for clean energy in 2024. The country received around USD 2.4 billion in project-specific funding aimed at boosting clean energy generation.

In terms of foreign investment, India has seen a steady rise in foreign direct investment (FDI) in the power sector. FDI reached USD 5 billion in 2023, nearly twice the level seen before the COVID-19 pandemic.

This growth is partly driven by government policies that allow 100 per cent FDI in all areas of electricity generation (except nuclear power) and transmission infrastructure.

However, the report also pointed out that foreign portfolio investment in India's energy sector has seen a decline in the past two years. This drop is attributed to a mix of macroeconomic and sector-specific challenges, though the long-term trend remains positive.

Overall, the IEA report outlined India's strong performance in power generation and its growing focus on clean energy investment.