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India needs more than Rs 9 lakh crore in energy investment annually for the next 25 years to meet the nation's energy demand, which will be the largest contributor to the global demand by 2040, International Energy Agency (IEA) has said.
"India's energy transformation requires three things: investment, investment and investment," said IEA executive director Fatih Birol, while launching the India Energy Outlook 2015. "A lot is being done already to overhaul the energy regulatory system and get the incentives in place; this is vital, as India will need to call upon a wider range of investors and sources of finance than it has in the past."
A rapid economic growth, rising population, higher access to energy, state welfare measures, higher quality of life and the government's increased focus on manufacturing will together fuel a big demand for energy in India, Birol said. The phase of China as the biggest energy demand driver is coming to an end and it will be replaced by India, he said.
A slowing Chinese economy has contributed to the end of the commodity super cycle, with analysts and investors now hoping India, the fastest growing major economy in the world, could help make up for the slide in demand to some extent.
India's energy demand has doubled since 2000, but the country still has about 240 million people, or one fifth of the population, without access to electricity. By 2040, the country's energy demand per capita will still be 40 per cent lower than the world average, IEA said.
The country will have to provide for nearly 600 million new electricity consumers by 2040. India is also projected to be the largest source of global coal demand growth by 2040, most of which is expected to be met by local production.
India's oil demand increase will be the largest in any country, reaching about 10 million barrels a day by 2040.
The increased demand will be met largely by imports, which are projected to increase to 90 per cent from about 78 per cent at present. This will also push up dependence on the Middle East, requiring constant vigilance as to the implications for energy security, IEA said.
More than half of the new electricity generation capacity added till 2040 will come from non-fossil fuels, led by solar and wind power, IEA said. India will become the world's second-largest market for solar photovoltaic power system as more capacity is added, the agency said.
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