India must invest $600 billion in its power sector over the next decade to enable energy transition, according to a new Wood Mackenzie report.
This investment presents substantial opportunities for enhancing power generation capacity, improving grid systems, and enhancing supply chains.
The Indian government is well-positioned to implement innovative strategies that balance energy security, emissions reduction, economic growth, and affordable energy access.
Growth factors:
India’s growth strategy emphasizes high-value-added manufacturing, leveraging renewables and advanced batteries backed by government subsidies and technological advancements.
| Wood Mackenzie’s High-Growth India Scenario |
| • Economy to reach $9 trillion by 2033, nearly triple from $3.2 trillion. |
| • Coal demand is to double to 2.2 billion metric tons. |
| • Oil demand to reach 8.2 million barrels per day. |
| • Power demand to surge to almost 4,000 TWh. |
| • Steel demand to rise 9% annually to 317 million metric tons. |
India’s industrial sector currently consumes less energy per unit of GDP than China did in the early 2000s. Wood Mackenzie’s high-growth scenario predicts India’s crude steel and cement production to be only one-third of China’s in 2011, with renewable energy and electric vehicle adoption reducing energy intensity.
India’s growing demand is unlikely to trigger significant price surges like China’s 2000s boom due to rising commodity competition in a high-growth scenario. OPEC+’s spare capacity is sufficient to meet India’s increasing oil demand, resulting in a modest increase in Brent prices of $1 to $3 per barrel.
India’s demand for 10 Mtpa of LNG is expected amid declining global gas prices, while the market is absorbing over 200 Mtpa of supply growth.
India’s thermal coal production is expected to reach 1,800 Mt by 2033 in a high-growth scenario, aiming to ensure energy security. The country’s seaborne thermal coal cost, currently at $107 per tonne, could rise to $110 per tonne by 2033 due to the need for 200 Mt imports.
India’s high-growth scenario could accelerate low-carbon supply chain development, potentially enabling faster decarbonization post-2030s, despite initial CO2 emissions rising due to coal expansion.
The global impact:
India can significantly reduce its reliance on commodity imports after 2035 by implementing supportive policies like streamlined approval processes, renewable energy incentives, and public-private partnerships.
India’s economic surge could triple its economy by 2033, driving global energy demand with a low-carbon twist, unlike China’s boom.
Wood Mackenzie’s latest Horizons report indicates that India is poised to dominate global energy markets due to its unique growth path, lower energy intensity, diverse energy mix, and increased commodity imports.
As per the report, India’s growth, unlike China’s energy-intensive 2000s boom, is expected to be balanced, with a focus on high-value manufacturing and
renewable energy.
The report suggests that energy and natural resources producers in Russia, the Middle East, Australia, Indonesia, and South Africa will benefit from increased demand. However, investors should prioritize securing a first-mover advantage before domestic companies expand.
The proposed change could potentially enhance the balance of payments, decrease public debt, and boost foreign reserves, according to Wood Mackenzie.
The unique trajectory could expedite India’s transition to a low-carbon economy, potentially enabling it to achieve its net-zero emissions goal by 2070.
Thought leadership:
“India’s growth story shares similarities with China’s rapid expansion, but crucial differences set it apart,” said Yanting Zhou, principal economist, Wood Mackenzie. “While energy demand will surge, India’s industrial sector is less energy-intensive, and the country is better positioned to adopt efficient, low-carbon technologies compared to China in the 2000s.”
She said that achieving growth will require substantial investment in domestic energy production, oil refining, steelmaking, and low-carbon supply chains, similar to China’s 2000s growth opportunities.
Roshna Nazar, Research Analyst, Energy Transition, Wood Mackenzie, said, “If India can repeat China’s post-2010 strategy of investing in low-carbon supply chains for solar, wind, electric vehicles, and critical minerals, the higher emissions anticipated in the early 2030s will be temporary. This stronger growth could lay the groundwork for faster and more durable decarbonization to follow.”
