India’s energy investment is projected to touch a record USD 170 billion in 2026, driven by strong spending on solar power, grid infrastructure and oil refining, according to the International Energy Agency’s (IEA) World Energy Investment 2026 report.

The report said India’s energy investment has grown at an average annual rate of 11 per cent over the past five years, supported by rapid expansion in renewable energy and transmission infrastructure to meet rising electricity demand and clean energy targets.

"Energy investment in India has grown 11 per cent annually on average in the past five years and is set to reach USD 170 billion in 2026. Investment in solar PV grew annually by 25 per cent in this period, and oil refining by 23 per cent. Together, these two sectors contributed to one-fourth of India's energy investment growth," it said.

According to the IEA, India achieved 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 — aided by a sharp rise in solar investments, which touched USD 20 billion.

Power sector investment now accounts for nearly half of India’s total energy spending. While investment in coal-fired generation has declined to around 40 per cent of its 2010 peak, India currently invests three dollars in renewables and nuclear energy for every dollar spent on fossil fuel-based power generation, up from 1.5 dollars five years ago.

The report noted that solar and wind energy now account for more than half of India’s installed generation capacity, prompting increased spending on transmission networks, battery storage and dispatchable power generation to support grid stability.

"Sharp rises in solar PV and wind investments have taken their share to over 50 per cent of installed capacity in India.

"The increase in variable renewable electricity from these two sources has necessitated power sector infrastructure upgrades to avoid curtailment. These include grid upgrades to evacuate electricity from renewable sources; energy storage capacity additions; and the development of dispatchable electricity generation in line with India's ambition of installing 500 GW of non-fossil-fuel capacity by 2030," the report said.

India is also expanding investments in hydropower and nuclear energy, with spending in both sectors tripling between 2020 and 2025. The country aims to raise nuclear power capacity to 100 GW by 2047 from the current 9 GW.

"India aims to install 100 GW of nuclear capacity by 2047, up from 9 GW today. To further promote investment, the government introduced 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."

The IEA said India remains the world’s second-largest investor in coal supply, with investments tripling over the last decade. Coal supply investment is expected to reach USD 13 billion in 2026 as the country seeks to increase domestic coal production to 1.5 billion tonnes by 2030 from about 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.

India is also accelerating investments in battery storage systems and hybrid renewable projects. The report said energy storage system (ESS) tenders crossed 100 GWh in 2025, more than double the previous year’s level and over ten times the 2023 figure.

"For energy storage, India has been promoting capacity additions through both pure energy storage systems (ESS) and wind-solar hybrid (WSH) projects. It has also 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."

"In 2025, ESS project tenders shot up to over 100 GWh, with battery tenders making up 60 GWh. This is 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 report added that battery storage tariffs have fallen sharply as project sizes increased, while 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 rise to USD 26 billion in 2026 after growing at an annual rate of 15 per cent over the past five years.

"Finally, transmission and distribution investment is set to reach USD 26 billion in 2026 after growing 15 per cent annually for the previous five years. Supportive policies have been introduced to promote grid investment."

"For instance, the Green Energy Corridor project was conceived to inject large volumes of solar and wind power into national and state grids. The first phase is complete, with over 3,000 km of new lines funded through 30 per cent equity and 70 per cent debt from multilateral development banks and commercial loans. Work on subsequent phases of this project is now underway."