India now third largest in global power capacity: IEA

Only China and the United States surpassed India highlighting the country’s rapid progress in expanding its electricity infrastructure.

India has recorded the third-largest increase in power generation capacity globally over the past five years, according to the latest report by the International Energy Agency (IEA). Only China and the United States surpassed India, highlighting the country’s rapid progress in expanding its electricity infrastructure.
This growth has been driven by rising urbanisation, industrial development and a surge in electricity demand, particularly from air conditioning use in homes and businesses. To meet this growing need, India has expanded its power generation base across a wide range of energy sources.

A significant portion of this expansion has come from renewable energy, with solar photovoltaic (PV) projects playing a central role. Over the past five years, solar has accounted for more than half of India’s non-fossil fuel energy investments. In 2024 alone, clean energy projects attracted 83 per cent of the total investments in the power sector, indicating a decisive move away from fossil fuels.

The IEA also named India as the largest recipient of clean energy project funding from development finance institutions in 2024, securing around USD 2.4 billion. Foreign direct investment (FDI) in the power sector reached USD 5 billion in 2023, nearly double the pre-pandemic average. This surge has been supported by investor-friendly policies including the allowance of 100 per cent FDI in electricity generation, excluding nuclear and transmission infrastructure.

However, the report also noted a decline in foreign portfolio investment in the sector over the past two years. This downturn has been attributed to broader macroeconomic uncertainties and sector-specific challenges.
Despite these short-term hurdles, the IEA maintains a positive outlook for India’s power sector. The country’s continued expansion of generation capacity and strong focus on clean energy mark a significant shift in its domestic energy landscape and underline its growing role in the global energy transition.