India needs $76 bn annually till FY2035 to meet net-zero goal: Moody’s

India will need ₹4.5- 6.4 trillion ($53-76 billion) of investments annually until FY2034-35, particularly in the  power sector, to achieve its 2070 net-zero commitment, Moody’s Ratings said in a note on Wednesday.

The sector, which accounts for 37% of India’s carbon emissions, will need funding equivalent to 2% of gross domestic product (GDP) annually in the next decade and between 1.5-2% of GDP in the next 25 years, the report said.

Beyond FY35, annual investments shared between public and private players, with both domestic and foreign capital playing a crucial role, will range from ₹6 trillion to ₹9 trillion through FY2051, the report added.

India’s economy is expected to expand at 6.5% annually on average in the next decade, with power demand rising at a similar pace, Moody’s said.

While India may add 450 gigawatts (GW) of renewable capacity during this period, it will not be sufficient to meet growing demand, indicating that coal-based power generation capacity may expand by about 35%, increasing from 218GW to 295GW by 2034-35.

The credit rating agency said investments will focus on renewable energy, grid networks, and energy storage, adding that in the next 20-25 years, solar and wind power will dominate new generation capacity additions, with smaller additions of nuclear and hydropower.

Moody Ratings expects installed generation capacity to double by fiscal 2034-35 to meet India’s power demand, which is expected to grow by 1.7x-1.8x in the same period.

Non-fossil fuel power will account for 45% to 50% of total output by March 2035, up from 23.5% the last fiscal year.

The credit rating agency suggested that the private sector will play a vital role in paving the transition and that foreign capital will be necessary to bridge the funding gap.