India has emerged as the nation with the third-highest growth in power generation capacity worldwide in the last five years, according to a recent report by the International Energy Agency (IEA).

China and the US are the only countries that have surpassed India in power generation growth during this time frame.

The report stated that "India has experienced the third-largest increase in power generation capacity globally, following China and the United States."

The report emphasized that India's electricity demand has been surging sharply due to various factors.

These factors include the expansion of commercial and residential developments, increased ownership of air conditioners and other home appliances, and rising industrial demand.

In order to satisfy this increasing demand, power generation in India has grown across all energy sources. According to the report, a significant contributor to this growth has been the robust initiative towards renewable energy.

It also highlighted a notable rise in investments in clean energy, particularly in solar photovoltaic (PV) projects.

 

In fact, solar PV accounted for over half of all non-fossil energy investments in India over the past five years. In 2024, as much as 83 percent of investments in the power sector of the country targeted clean energy projects.

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India emerged as the largest beneficiary of development finance institution (DFI) funding for clean energy in 2024, receiving approximately USD 2.4 billion in project-specific financing aimed at enhancing clean energy generation.

Regarding foreign investment, India has experienced a consistent increase in foreign direct investment (FDI) in the power sector. FDI reached USD 5 billion in 2023, nearly double the amount recorded prior to the COVID-19 pandemic.

This growth can be attributed in part to government policies that permit 100 percent FDI in all areas of electricity generation (excluding nuclear power) and transmission infrastructure.

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Nevertheless, the report also indicated a decline in foreign portfolio investment in India's energy sector over the past two years. This decrease is linked to a combination of macroeconomic and sector-specific challenges, although the long-term outlook remains encouraging.

In summary, the IEA report outlined India's strong performance in power generation and its increasing emphasis on clean energy investments.