India's energy investment is set to reach a record $170 billion in 2026, driven by rapid expansion in solar power and oil refining as the country accelerates efforts to meet rising energy demand and strengthen infrastructure for its clean energy transition. According to the International Energy Agency's World Energy Investment 2026 report, energy investment in India has grown at an average annual rate of 11 per cent over the past five years, with solar photovoltaic investment rising 25 per cent annually and oil refining investment growing 23 per cent over the same period. Together, these two sectors accounted for roughly a quarter of the increase in overall energy spending, highlighting their pivotal role in India's energy transformation. The surge in refining investment has put India on track to expand refining capacity by nearly 15 per cent by 2030, even as the country remains heavily dependent on imported crude oil.
The surge in refining investment has put India on track to expand refining capacity by nearly 15 per cent by 2030, even as the country remains heavily dependent on imported crude oil. Upstream oil and gas investment, however, has contracted by an average of 7 per cent annually since 2020, prompting the government to introduce a new licensing regime aimed at attracting fresh capital into exploration and production. India is the second-largest investor in coal supply, with investments having tripled over the last decade. Coal supply investment is expected to reach $13 billion in 2026 as the country seeks to raise domestic coal production to 1.5 billion tonnes by 2030 from around 1 billion tonnes currently. At the same time, upstream oil and gas investment has declined by an average of 7 per cent annually since 2020, prompting the government to introduce a new licensing regime to attract investment in exploration and production.
Power sector investment accounts for roughly half of India's total energy spending, with the country achieving its Nationally Determined Contribution target of sourcing 50 per cent of installed power generation capacity from non-fossil fuel sources in 2025 - five years ahead of schedule. Solar investment reached $20 billion in 2025, while India now invests three dollars in renewables and nuclear power for every dollar spent on fossil fuel-based generation, up from 1.5 dollars five years ago. Solar and wind now account for more than half of India's installed generation capacity, with the country targeting 500 GW of non-fossil-fuel capacity by 2030. Investments in hydropower and nuclear energy have tripled since 2020, with India targeting 100 GW of nuclear capacity by 2047, up from 9 GW currently. The government has introduced reforms to attract private investment, allowing foreign companies to participate in the nuclear energy space, including a new reform in 2025 to end the state monopoly of nuclear power, allowing private companies with up to 49 per cent foreign equity to build and operate reactors and SMRs.
Energy storage system tenders crossed 100 GWh in 2025, more than double the previous year and over ten times 2023 levels, while battery storage tariffs dropped sharply as project scale increased. For energy storage, India has been promoting capacity additions through both pure energy storage systems (ESS) and wind-solar hybrid (WSH) projects. In 2025, ESS project tenders shot up to over 100 GWh, with battery tenders making up 60 GWh - more than double the previous year's tenders, and more than ten times the 2023 level. WSH tenders have also surged, accounting for more than half of the 63 GW of capacity awarded in 2024. The Central Electricity Authority has set a target of developing 100 GW of pumped storage capacity by 2035-36. Transmission and distribution investment is expected to reach $26 billion in 2026 after expanding at an annual rate of 15 per cent over the past five years. The government's Green Energy Corridor programme has already added more than 3,000 km of transmission lines, with the first phase complete and subsequent phases under development.
End-use energy investment led by efficiency spending, which has risen more than 10 per cent annually to $18 billion. Electric vehicle investment, while growing rapidly, remains relatively small at $2 billion and accounts for around 5 per cent of total vehicle sales. The IEA report highlights that sharp rises in solar PV and wind investments have taken their share to over 50 per cent of installed capacity in India, necessitating power sector infrastructure upgrades to avoid curtailment. These include grid upgrades to evacuate electricity from renewable sources, energy storage capacity additions, and development of dispatchable electricity generation in line with India's ambition of installing 500 GW of non-fossil-fuel capacity by 2030. The government has established a viability-gap funding programme supported by the Power System Development Fund to crowd in investment, providing financial aid to scale up battery storage in the country, as long as it meets the 20 per cent local content requirement. The comprehensive approach to energy infrastructure development reflects India's commitment to balancing clean energy growth with grid reliability and energy security.
