India has secured its position as the country with the third-largest growth in power generation capacity worldwide over the past five years, according to the latest International Energy Agency (IEA) report. Only China and the United States have surpassed India in this expansion.

The report highlighted that India’s electricity demand is rising rapidly due to the growth of commercial and residential spaces, increased ownership of air conditioners and household appliances, and booming industrial demand. To meet this surge, power generation capacity has expanded across all energy sources.

A key driver behind this growth is India’s strong push towards renewable energy, particularly solar photovoltaic (PV) projects. “Solar PV alone accounted for more than half of the total non-fossil energy investment in India over the past five years,” the report noted. In 2024, 83% of power sector investments went into clean energy initiatives.

India was also the largest recipient of development finance institution funding for clean energy in 2024, receiving approximately USD 2.4 billion for clean energy projects. Foreign direct investment (FDI) in the power sector has nearly doubled since before the pandemic, reaching USD 5 billion in 2023. Government policies allowing 100% FDI in most electricity generation and transmission areas have fueled this growth.

However, the report mentioned a recent decline in foreign portfolio investments due to macroeconomic and sector-specific challenges but said the long-term outlook remains positive.

Overall, the IEA report reflects India’s rising prominence in power generation and its commitment to clean energy investment.