Energy demand in India is expected to be the highest globally, growing at more than 3 per cent on an annual basis, during the current decade aided by rapid urbanisation and industrialisation, the International Energy Agency (IEA) said on Thursday.

India becomes the world’s most populous country by 2025 and, combined with the twin forces of urbanisation and industrialisation, this underpins rapid growth in energy demand, which rises by more than 3 per cent per year in the Stated Policies Scenario (STEPS) from 2021 to 2030, IEA said in its World Energy Outlook 2022 report.

“It sees the largest increase in energy demand of any country. Even though India continues to make great strides with renewables deployment and efficiency policies, the sheer scale of its development means that combined import bill for fossil fuels doubles over the next two decades in the STEPS, with oil by far the largest component. This points to continued risks to energy security,” it added.

Energy demand

The report elucidates that coal will meet a third of this growth with demand rising above 770 million tonnes of coal equivalent (Mtce) by 2030 and continuing thereafter before peaking in the early 2030s. Oil demand meets a further quarter of the energy demand growth and rises to nearly 7 million barrels per day by 2030.

Government programmes, Gati Shakti National Master Plan and Self‐Reliant India scheme, lead to increase in renewables and sales of EVs in the STEPS. Helped by these programmes, renewables meet 30 per cent of demand growth to 2030, notably through a rapid increase in solar PV deployment.

“By 2030, renewables account for 35 per cent of generation, and solar alone accounts for 15 per cent. In the Announced Pledges Scenario (APS), both electrification and renewables increase faster in line with the progress needed for India to reach its net zero emissions target by 2070,” the report said.


The IEA report points out that the primary challenge for India is to meet the rising electricity demand with renewables and nuclear on a large enough scale to reduce use of unabated coal‐fired generation, which provides nearly three‐quarters of electricity supply today.

“In both the STEPS and APS, coal generation is projected to continue to rise in absolute terms, peaking around 2030, though its share of electricity generation declines. Expanding renewables is the central means of meeting demand growth and limiting coal use, with solar PV leading the way and wind also playing an important part,” it added.

In India, coal demand in the STEPS rises by 25 per cent to 2030. Strong economic growth brings with it more demand for coal‐fired power generation and in the use of coal to produce iron, steel and cement.

Coal‐fired power capacity increases from 240 gigawatts (GW) in 2021 to 275 GW in 2030, while there is limited use of electric arc furnaces in industry. India became the world’s second‐largest coal producer in 2021 (in energy terms), overtaking Australia and Indonesia, and it plans to increase domestic production by over 100 Mtce from current levels to 2025.