India's Energy Investment to Hit Record $170 Billion in 2026 Driven by Solar Power and Oil Refining Expansion

• India's energy investment will hit record $170 billion in 2026, up 11% annually over past 5 years per IEA report.

• Solar PV investment rose 25% annually and oil refining 23%, together accounting for a quarter of energy spending growth.

• Coal investment to reach $13 billion in 2026; India targets 1.5 billion tonnes coal by 2030 while 50% power capacity is now non-fossil.

India's energy investment is set to reach a record $170 billion in 2026, driven by rapid expansion in solar power and oil refining as the country accelerates efforts to meet rising energy demand and strengthen infrastructure for its clean energy transition.

The International Energy Agency (IEA), in its World Energy Investment 2026 report, said energy investment in India has grown at an average annual rate of 11% over the past five years, with solar photovoltaic (PV) investment rising 25% annually and oil refining investment growing 23% over the same period. Together, the two sectors accounted for roughly a quarter of the increase in overall energy spending.

The surge in refining investment has put India on track to expand refining capacity by nearly 15% by 2030, even as the country remains heavily dependent on imported crude oil, the report said.

Upstream oil and gas investment, however, has contracted by an average of 7% annually since 2020, prompting the government to introduce a new licensing regime, aimed at attracting fresh capital into exploration and production.

According to IEA, India is the second-largest investor in coal supply, and its investments have tripled over the last decade.

Coal continues to dominate India's energy mix, underpinning both power generation and industrial demand. Investment in coal supply is expected to reach $13 billion in 2026, as India seeks to raise domestic coal production to 1.5 billion tonnes by 2030 from around 1 billion tonnes currently.

Power sector investment accounts for roughly half of India's total energy spending. In 2025, India achieved its Nationally Determined Contribution target of sourcing 50% of installed power generation capacity from non-fossil fuel sources - five years ahead of schedule - supported by a sharp increase in solar investment that reached $20 billion.

Investment in coal-fired generation has meanwhile fallen to around 40% of its 2010 peak. India now invests three dollars in renewables and nuclear power for every dollar spent on fossil fuel-based generation, up from 1.5 dollars five years ago.

The country is also ramping up spending on grid modernisation, battery storage and dispatchable power generation to support rising renewable penetration. Solar and wind now account for more than half of India's installed generation capacity, increasing the need for transmission upgrades and storage systems to manage intermittency and avoid renewable curtailment.

Investments in hydropower and nuclear energy have tripled since 2020. India is targeting 100 GW of nuclear capacity by 2047, up from 9 GW currently, after introducing reforms in 2025, allowing private companies with up to 49% foreign ownership to build and operate reactors and small modular reactors.

Energy storage system (ESS) tenders crossed 100 GWh in 2025, more than double the previous year and over ten times 2023 levels, while battery storage tariffs dropped sharply as project scale increased.

Transmission and distribution investment is expected to reach $26 billion in 2026 after expanding at an annual rate of 15% over the past five years. The government's Green Energy Corridor programme, aimed at integrating renewable energy into national and state grids, has already added more than 3,000 km of transmission lines, with additional phases under development.

End-use energy investment led by efficiency spending, which has risen more than 10% annually to $18 billion. Electric vehicle investment, while growing rapidly, remains relatively small at $2 billion and accounts for around 5% of total vehicle sales, the report said.

"Energy investment in India has grown 11% annually on average in the past five years and is set to reach $170 billion in 2026. Investment in solar PV grew annually by 25% in this period, and oil refining by 23%. Together, these two sectors contributed to one-fourth of India's energy investment growth," it said.

Sharp rises in solar PV and wind investments have taken their share to over 50% of installed capacity in India.

"The increase in variable renewable electricity from these two sources has necessitated power sector infrastructure upgrades to avoid curtailment. These include grid upgrades to evacuate electricity from renewable sources; energy storage capacity additions; and the development of dispatchable electricity generation in line with India's ambition of installing 500 GW of non-fossil-fuel capacity by 2030," the report said.

Between 2020 and 2025, investments in hydropower and nuclear energy, both non-fossil dispatchable sources, have tripled, as new projects are being built.

India aims to install 100 GW of nuclear capacity by 2047, up from 9 GW today. To further promote investment, the government introduced a new reform in 2025 to end the state monopoly of nuclear power, allowing private companies with up to 49% foreign equity to build and operate reactors and SMRs.

For energy storage, India has been promoting capacity additions through both pure energy storage systems (ESS) and wind-solar hybrid (WSH) projects. It has also established a viability-gap funding programme supported by the Power System Development Fund to crowd in investment, providing financial aid to scale up battery storage in the country, as long as it meets the 20% local content requirement.

In 2025, ESS project tenders shot up to over 100 GWh, with battery tenders making up 60 GWh. This is more than double the previous year's tenders, and more than ten times the 2023 level. WSH tenders have also surged, accounting for more than half of the 63 GW of capacity awarded in 2024.

However, challenges persist despite this success, including under-subscription and cancellations of some tendered capacity.

As battery storage projects scaled up, the discovered tariff of storage fell from $14,700/MW/month in 2023 to less than $3 000/MW/month in 2025. In addition to battery storage, a new roadmap by the Central Electricity Authority (CEA) targets 100 GW of pumped storage by 2035-36.

Finally, transmission and distribution investment is set to reach $26 billion in 2026 after growing 15% annually for the previous five years. Supportive policies have been introduced to promote grid investment.

For instance, the Green Energy Corridor project was conceived to inject large volumes of solar and wind power into national and state grids. The first phase is complete, with over 3,000 km of new lines funded through 30% equity and 70% debt from multilateral development banks and commercial loans. Work on subsequent phases of this project is now underway.