India spent $100 billion on clean energy in 2024, China $627 billion, say IEA

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India will meets its target of 50 percent non-fossil generation capacity earlier than planned even as the country saw the third-largest growth in power generation capacity in the world after China and the US in past five years, the International Energy Agency (IEA) has said in its latest report.

In 2024, 83 percent of India's investments in the power sector was towards clean energy, the World Energy Investment 2025 report, released on June 6, said.

"India looks set to reach its 2030 target of 50 percent non-fossil generation capacity ahead of schedule... While growth in power generation has come from all sources, there has been a surge in investment in renewables, led by solar PV, which constitutes more than half of total non-fossil investment over this period," the report said.

The government has been pushing for cleaner energy to save India precious foreign exchange and cut emissions.

China spent $627 billion on clean energy in 2024, the highest of all the countries, the report said. The US was next at $400 billion followed by the European Union (EU) at $ 386 billion.

India spent $100 billion in 2024, which is close to the $103 billion spent by Japan and South Korea together in the same year.

India was also the world’s largest recipient of development finance funding in 2024, receiving around $ 2.4 billion in project-type interventions in clean energy generation. This helped bring the share of non-fossil power generation capacity to 44 percent in 2024, approaching India’s target of 50 percent by 2030, the IEA stated.

It, however, noted that foreign portfolio investment in energy declined in the past two years due to macroeconomic and sectoral factors, even as the longer-term trend has been one of steady growth.

A large share of the investment in India’s power generation capacity and transmission networks is met by domestic sources, though foreign direct investment (FDI) has been growing steadily, reaching $ 5 billion in 2023, nearly double the pre-coronavirus (Covid-19) levels.

India allows 100 percent FDI across electricity generation sources (with the exception of nuclear) and transmission infrastructure.

India’s cost of capital for grid-scale renewable energy is still 80 percent higher than in advanced economies, though it is one of the lowest among emerging markets and developing economies.

"Higher financing costs affect the financial viability of projects, leading to higher energy prices. Furthermore, real and perceived risks affect the attractiveness of projects to investors. One such risk is off-taker risk, which arises from the inability of distribution companies to pay generation companies fully and on time," it stated.

As of March, distribution companies in India owed more than $ 9 billion in unpaid dues. The accumulated losses of distribution companies stood at $ 75 billion in 2023. Another risk is the inadequacy of transmission infrastructure, which has impeded 60 GW of renewable capacity in India, the IEA said.