India Secures 3rd Spot in Global Power Capacity Growth: IEA Report

India’s Power Sector Growth: Key Highlights
1. Surging Electricity Demand
India’s rapid urbanization, industrial growth, and increased appliance usage—especially air conditioners—have led to a sharp rise in electricity consumption. To meet this demand, the country has diversified its power generation mix, incorporating both conventional and renewable sources.

2. Renewable Energy Leading the Charge
Solar Power Dominance: Solar photovoltaic (PV) projects contribute over 50% of non-fossil fuel investments.
Clean Energy Investments: In 2024, renewables accounted for 83% of total power sector investments, signaling a strong shift away from fossil fuels.

3. India Tops Clean Energy Financing
India received USD 2.4 billion in development finance for clean energy projects in 2024—the highest globally. This funding supports large-scale solar, wind, and hybrid energy initiatives.

4. Foreign Direct Investment (FDI) Boom
FDI in India’s power sector hit USD 5 billion in 2023, nearly doubling pre-pandemic levels.
The government’s 100% FDI allowance (excluding nuclear and transmission) has been a major growth driver.

5. Challenges in Foreign Portfolio Investments
Despite strong FDI, foreign portfolio investments have declined due to:
Macroeconomic uncertainties
Sector-specific challenges like regulatory delays

6. Future Outlook: Sustainable & Scalable Growth
The IEA report emphasizes India’s potential to:
Expand renewable energy capacity further
Reduce dependency on coal-based power
Play a pivotal role in global energy transition efforts


Sample Questions & Answers (FAQs)
Q1. What is India’s rank in global power capacity growth?
A1. India ranks third in power generation capacity growth, following China and the United States, as per the IEA.
Q2. Which renewable energy source is leading India’s power expansion?
A2. Solar energy dominates, contributing to over 50% of non-fossil fuel investments.
Q3. How much FDI did India’s power sector attract in 2023?
A3. Foreign Direct Investment (FDI) reached USD 5 billion in 2023, nearly double pre-pandemic levels.
Q4. Why have foreign portfolio investments declined?
A4. Due to economic uncertainties and energy sector challenges, foreign portfolio investments have seen a drop.
Q5. What percentage of power investments went into clean energy in 2024?
A5. A staggering 83% of total power investments in 2024 were directed towards clean energy projects.