Wood Mackenzie shares critical pathway for India to navigate energy security and transition while maintaining 6% GDP growth through 2035
GOA (India): India’s energy sector must mobilise an average annual investment of approximately US$ 145 billion (about ₹12.04 lakh crore) to bridge the gap between its robust economic expansion and ambitious net-zero pathways. Speaking at the India Energy Week 2026, Joshua Ngu, Vice Chairman, Asia Pacific at Wood Mackenzie, stated that this capital must be strategically concentrated in power generation, storage, and the urgent modernisation of grid infrastructure.
“India’s next decade is decisive,” said Ngu. “The challenge is a dual mandate: India must de-risk its immediate energy security while simultaneously building the low-carbon architecture required to support a top-tier global economy. Today’s investment choices will determine whether the country locks in carbon-intensive infrastructure or leads the world in low-carbon industrialisation”.
Power sector transformation: the primary engine of transition
The power sector remains the largest source of emissions in India, yet it also represents the primary engine of the energy transition.
The sector has already structurally shifted, with non-fossil installed capacity now exceeding fossil capacity. Looking ahead, Wood Mackenzie noted that the transition will increasingly be defined by the scale-up of renewables, grid flexibility, and storage, while coal additions are largely limited to reliability and peak-balancing needs rather than energy growth.
However, this rapid decarbonisation is creating binding system-integration challenges. “The US$1.5 trillion investment between 2026 and 2035 for energy transition is not just about adding megawatts; it is about the wires,” Rashika Gupta, Vice President, Power and Renewables Research at Wood Mackenzie noted. “Success hinges on the pace of market reforms, specifically the Electricity Amendment Bill to improve distribution competition and provide the transparent investment signals needed to unlock private capital for grid modernisation.”
Balancing fossil fuel stability and energy security
Despite the acceleration of the energy transition, Wood Mackenzie notes that hydrocarbon fuels remain fundamental to near-term stability. India remains on track to hit its 1.5-billion-tonne coal production target by 2030, with increasing emphasis on coal gasification to diversify the energy mix.
In contrast, the crude oil sector presents a growing dependency risk, with import reliance projected to hit 87% by 2035. “To mitigate this, India must revitalise its upstream sector,” Ngu suggested. “Attracting International Oil Companies (IOCs) back to Indian exploration and production (E&P) is no longer optional. It is a security imperative.”
Meanwhile, the natural gas landscape offers a parallel challenge and opportunity. National gas demand is expected to double from 72 bcm in 2024 to over 140 bcm by 2050, largely driven by the industrial sector. This industrial appetite will account for more than two-thirds of gas demand through 2030, remaining above 55% until 2050.
“The LNG opportunity in India is significant, with imports projected to grow at a 4.8% CAGR and peak at 90 mmtpa by 2050. This growth is underpinned by a 2.6% CAGR in overall demand set against declining local supply. However, the pivot to gas remains sensitive to market dynamics; for this expansion to be sustainable, gas must remain price-competitive against alternative fuels.”
Supply chain: closing the wafer and battery gap
A central pillar of India’s growth strategy is the indigenisation of low-carbon supply chains to reduce import dependency. While India is now the world’s second-largest solar module manufacturer, a critical gap remains in vertical integration for cells and wafers. The domestic content requirements for cells starting in June 2026 will likely create short-term supply pressure until an estimated 24 GW of new capacity comes online later this year, Wood Mackenzie noted.
The battery sector faces even steeper hurdles. Despite over 200 GWh of announced capacity plans, Wood Mackenzie forecasts that only about 100 GWh (half of the target) will likely come on stream by 2030. This gap is attributed to execution challenges and stumbles in the Advanced Chemistry Cell (ACC) battery Production Linked Incentive (PLI) scheme, which currently requires a significant re-haul.
Hydrogen and CCUS: a commercial reality check
India’s 5 Mtpa green hydrogen target for 2030 faces a widening reality gap. Most announced projects remain in early feasibility stages, lacking the project maturity needed for near-term scale. Similarly, CCUS deployment is at a nascent stage, focused primarily on refining policy rather than industrial-scale application.
Hetal Gandhi, Lead – CCUS, Asia Pacific at Wood Mackenzie commented, “the 2026 launch of the Carbon Credit Trading Scheme (CCTS) marks a definitive shift in India’s climate policy, transitioning the industrial sector from the energy-efficiency focus of the PAT scheme toward mandatory emissions caps. By imposing these limits, the framework will incentivise the decoupling of industrial growth from emissions intensity. Ultimately, this shift is the right first step to transform carbon compliance into a competitive differentiator and provides the regulatory certainty required to enable adoption of low-carbon technologies.”
Despite these hurdles, India is uniquely positioned to become one of the world’s most credible, large-scale alternative to the Chinese solar and battery supply chain. As global markets seek to diversify their procurement, India’s maturing manufacturers ring ecosystem offers a distinct competitive edge.
“India is at a crossroads, but its long-term trajectory is undeniably bright,” concluded Ngu. “By scaling domestic manufacturing and maintaining policy momentum, India will not only hit its 500 GW target but emerge as a central pillar of the global renewable market. This decade of investment is the foundation for India to lead the new energy economy.”
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