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India’s energy investment is projected to reach a record $170 billion in 2026, driven by rapid growth in solar power, transmission infrastructure, energy storage and oil refining, according to the International Energy Agency’s (IEA) latest World Energy Investment 2026 report.
The report highlighted that India’s overall energy investment has expanded at an average annual rate of 11% over the last five years, reflecting the country’s increasing focus on energy security, infrastructure expansion, and clean energy transition.
According to the IEA, investment in solar photovoltaic (PV) projects has grown at an annual rate of 25% since 2020, while oil refining investment has increased by 23% during the same period. Together, both sectors accounted for nearly one-fourth of the rise in India’s overall energy spending.
The report noted that India’s refining sector expansion could increase the country’s refining capacity by nearly 15% by 2030, despite continued dependence on imported crude oil. However, upstream oil and gas investments have declined by an average of 7% annually since 2020, prompting the government to introduce new licensing reforms aimed at attracting fresh exploration investments.
Notably, India achieved its Nationally Determined Contribution (NDC) target of sourcing 50% of installed power generation capacity from non-fossil fuel sources in 2025, supported by strong solar investments, which reached nearly $20 billion.
Solar and wind energy now account for more than half of India’s installed generation capacity, increasing the need for grid upgrades, energy storage systems and flexible power generation to manage renewable intermittency.
The report added that India currently invests around three dollars in renewable and nuclear energy for every dollar spent on fossil fuel-based power generation, compared to around 1.5 dollars five years ago. Meanwhile, investments in coal-fired generation have fallen to nearly 40% of their 2010 peak levels.
Despite the rapid rise of renewables, coal continues to play a dominant role in India’s energy system. The IEA identified India as the world’s second-largest investor in coal supply, with coal-related investments tripling over the last decade.
Investment in coal supply is expected to reach around $13 billion in 2026 as India works towards increasing domestic coal production from around 1 billion tonnes currently to 1.5 billion tonnes by 2030. Coal remains central to both electricity generation and industrial energy demand.
India is also witnessing a sharp increase in investments related to battery storage, transmission infrastructure and grid modernisation. Energy storage system (ESS) tenders crossed 100 GWh in 2025, more than double the previous year’s level and over ten times higher than in 2023.
Battery storage tariffs declined significantly as project sizes expanded, with discovered storage tariffs falling from around $14,700/MW/month in 2023 to below $3,000/MW/month in 2025, according to the report.
The government has also introduced viability gap funding support through the Power System Development Fund (PSDF) to accelerate battery storage deployment, subject to local content requirements. Additionally, the Central Electricity Authority (CEA) has outlined plans to develop 100 GW of pumped storage capacity by 2035-36.
Transmission and distribution investment is projected to reach $26 billion in 2026 after recording annual growth of 15% over the last five years. The report highlighted the Green Energy Corridor (GEC) programme, which has already added more than 3,000 kilometres of transmission lines to integrate renewable energy into national and state grids.
The IEA also noted that end-use energy investments, led by energy efficiency spending, have risen by more than 10 percent annually to around $18 billion. Electric vehicle investment remains relatively small at around $2 billion, accounting for nearly 5% of total vehicle sales, although growth in the segment continues to accelerate.
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