India’s energy challenge

India is the global economy’s future superpower. The economy is already expanding at a healthy rate of 5.3% (GDP FY2025), and with GDP per capita less than a fifth of China’s, the potential for future growth is huge. Investment in everything – roads, housing, infrastructure, even data centres – will accelerate India’s GDP growth to 6% a year or more for the next 10 years in our forecasts. Expanding access to energy will be central to delivering on the government’s bold aspirations for the economy.

I attended India Energy Week 2026 in Goa at the end of January with Joshua Ngu, Vice Chair APAC. The overarching theme of the vibrant conference was a call for partnership and collaboration to meet India’s rampant growth in energy demand. Here are our reflections.

First, the scale of the challenge

India will account for one-third of global final energy demand growth through to 2050, as its share of the world’s primary energy consumption increases from 8% today to 11%.

India’s ultimate goal is energy independence. Presently, the government has to tread a delicate balance between energy security, sustainability and affordability. Consumers, industrial, commercial and residential – remain highly price-sensitive. Domestically produced coal fuels much of India’s power sector, but the country is also a major importer of oil and gas (LNG). At the same time, India has one of the world’s most ambitious strategies to develop a low-carbon energy system. Fuel diversity, or an ‘all of the above’ approach, sums it up, with affordability an ever-present societal guardrail.

Second, securing massive levels of capital investment

India’s government estimates investment in the energy sector at US$7 trillion through 2050. Almost two-thirds of it is targeted at the power sector, with India’s electricity consumption set to increase by 27% just through 2030, according to our forecasts.

Much of the investment will be in low-carbon generation and related power grid and EV infrastructure. The government aims to double current low-carbon generation capacity, including nuclear, to 500 GW by 2030, driven mainly by wind and solar. In Wood Mackenzie forecasts, combined renewable capacity rises from 190 GW in 2025 to 420 GW over the same period.

Power demand growth could rise more quickly in the next five years if the rapid expansion of datacentres from 1.8 GW currently to 9 GW by 2030 plays out. Grid infrastructure delays pose the biggest risk to these projects.

A key part of India’s strategy is to establish self-sufficiency in supply chains through local content requirements, but also via targeted support, including Production-Linked Incentive schemes. This is all part of PM Narendra Modi’s “Make in India” industrial policy. India is already self-sufficient in solar module manufacturing and is also investing heavily to establish supply chains for cells and wafers.

The ambition does not stop at power generation, however. The government remains unswerving in its goal of establishing a green hydrogen value chain, with significant support for the sector through India’s National Green Hydrogen Mission. More will be required, as the strategy currently falls well short of the 5 Mtpa target of green hydrogen production in 2030.

Indian ammonia producer AM Green’s offtake deal with Uniper is a rare bright spot amid stalled projects, extremely low auction pricing and uncertain funding mechanisms. The Solar Energy Corp of India’s ammonia auction price discovery of US$600/t of green ammonia was the lowest globally. But that supply bid implies a green hydrogen price of US$1-1.5/kg for the tendered size, which is unachievable given today's electricity prices in India. 

Third, fossil fuels will continue to play a critical role in meeting energy demand

 In the power sector, domestically produced thermal coal remains far more competitive than alternatives, including LNG. We expect output to increase from 1.1 Btpa currently to 1.4 Btpa by 2030 as power demand rises.

India currently imports just over 5 million b/d of crude oil and liquids and 25 Mt of LNG. With continued growth in demand, and maturing oil and gas production from its domestic E&P sector, India faces a widening supply gap and ever-higher imports. We forecast liquids imports to exceed 6 million b/d by the early 2030s, and LNG imports to triple by 2050.  

The government has made great strides towards galvanising the upstream industry and attracting investment from domestic companies and international players. Huge swathes of India’s vast continental shelf, previously closed to the industry, have been opened to drilling, including deepwater.

The geology looks good and the proximity to market is a huge benefit for gas. Improved data access, government-funded seismic studies and fiscal reforms have together elevated India’s offshore sector in highly competitive global rankings to attract capital. It has also encouraged the Majors and other explorers to reconsider the commercial potential of material discoveries in new deepwater basins. Allaying investor concerns about fiscal stability could be the final piece of the jigsaw. India's Oilfields Regulation and Development Act 2025 is intended to help achieve this. Prime deepwater acreage in the Bengal, Krishna-Godavari and Andaman Sea basins is up for licensing in May’s OALP-X licensing round and will be a key test of IOCs’ appetite.

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