India's Energy Demand to Surge Amid Infrastructure Investment Lag

A report from the India Energy and Climate Centre predicts a three to four-fold rise in India's energy consumption over the next decade, driven by industrialization and rising incomes. The country faces a USD 1-2 trillion investment gap in energy infrastructure despite increasing renewable capacity and cost-competitive clean technology.

The India Energy and Climate Centre (IECC) recently released a report forecasting a substantial increase in India's energy consumption, projecting it to rise three to four-fold within the next decade due to growing industrialization, urbanization, and rising incomes. India is expected to be the largest contributor to global energy demand by 2040.

The report highlights the significant investment gap in India's energy infrastructure, which lags behind other industrialized economies by USD 1-2 trillion. Despite this, India's total electricity demand is surging at an annual rate of 8-9 percent, and per capita consumption remains below the global average.

Electricity demand for cooling appliances is anticipated to increase six-fold by 2040 due to global warming and higher disposable incomes. The IECC report also indicates a deep reduction in clean energy technology costs, particularly for wind turbines, solar PV cells, lithium-ion batteries, and hydrogen electrolysers.

Currently, India has over 130 GW of renewable energy capacity. Prime Minister Modi announced plans at COP-26 to expand non-fossil fuel power generation to 500 GW by 2030. In the last five years, India added 55 GW of renewable capacity, surpassing the 27 GW added from coal-based power plants.

Despite five consecutive years of higher investments in renewables compared to fossil fuels, concerns remain about the capacity of renewable energy to meet peak load periods. Coal still accounts for over 70 percent of India's electricity generation, though renewables are increasingly cost-competitive, even in historically resource-poor regions.

The IECC report projects that by 2030, co-located solar and storage projects with 2-4 hours of energy storage could supply evening peak demand at Rs. 3-4/kWh, cheaper than the variable cost of nearly half of India's existing coal capacity. Large-scale auctions by SECI and NTPC have underscored the cost-effectiveness of energy storage.

IECC also emphasizes that energy efficiency measures could prevent an additional 40-50 GW of load during evening peak hours. The report was prepared in collaboration with key stakeholders in government, regulatory commissions, and the Bureau of Energy Efficiency.