India Needs To Invest $600 Bn In Power Sector: Wood Mackenzie

India is set to become a major player in the global energy markets with a unique growth path, featuring lower energy intensity, a diverse energy mix and increased commodity imports, the latest report from Wood Mackenzie said.

The latest Wood Mackenzie’s Horizons report is titled “Eye on the Tiger: How Higher Indian economic growth could impact global energy markets”. It highlighted that, unlike China’s energy-intensive boom in the early 2000s, India’s growth is expected to be more balanced, with a focus on high-value manufacturing and renewable energy.

Wood Mackenzie estimates that India will need to invest US$600 billion in its power sector over the next decade. This investment presents a significant investment opportunity for power generation capacity additions, grid improvements, and supply chains.

Opportunities for global producers, challenges for domestic policy 

Energy and natural resources producers are likely to benefit from increased demand, particularly those located in Russia, the Middle East, Australia, Indonesia, and South Africa. However, investors will need to prioritize securing a first-mover advantage before domestic companies scale up, as noted by Wood Mackenzie.

By implementing supportive policies—such as streamlined approval processes, attractive incentives for renewable energy projects, and the promotion of public-private partnerships—India can significantly decrease its reliance on commodity imports after 2035. This shift could improve the balance of payments, reduce public debt, and boost foreign reserves.

“India’s growth story shares similarities with China’s rapid expansion, but crucial differences set it apart,” said Yanting Zhou, principal economist at Wood Mackenzie. “While energy demand will surge, India’s industrial sector is less energy-intensive, and the country is better positioned to adopt efficient, low-carbon technologies compared to China in the 2000s.”

Zhou said, “In addition to rising imports, achieving higher growth will require significant investment in domestic energy production, oil refining, steelmaking, and low-carbon supply chains. Just like in China during the 2000s, there are many opportunities to explore.”

This unique trajectory could accelerate India’s transition to a low-carbon economy, potentially enabling the nation to achieve its net-zero emissions goal ahead of the 2070 target.

According to Wood Mackenzie’s high-growth scenario for India, by 2033:  

• the economy to reach just under US$9 trillion, nearly triple from US$3.2 trillion

• coal demand to grow nearly doubles to 2.2 billion tonnes

• power demand surges to almost 4,000 TWh, with significant increases in both coal and renewable generation

Under different industrial structures, India’s growth focuses on high-value-added manufacturing, including renewables and advanced batteries, which is supported by government subsidies and technological advancements.

Lower energy intensity:

India’s industrial sector currently consumes less energy per unit of GDP than China did in the early 2000s. By 2033, crude steel and cement production in India is projected to be only about one-third of China’s output in 2011, according to Wood Mackenzie’s high-growth scenario. Additionally, an increasing share of renewable energy and the adoption of electric vehicles will further lower India’s energy intensity.

Roshna Nazar, research analyst, energy transition at Wood Mackenzie, said, “If India can repeat China’s post-2010 strategy of investing in low-carbon supply chains for solar, wind, electric vehicles, and critical minerals, the higher emissions anticipated in the early 2030s will be temporary. This stronger growth could lay the groundwork for faster and more durable decarbonisation to follow.”