Moody’s Ratings on Wednesday said India’s power sector, which is the biggest carbon emitter, will need massive USD 700 billion investment over the next 10 years to help the country achieve its 2070 net-zero pledge.

It said the power sector accounts for around 37% of carbon emissions in the country, and the investments required by the power sector during fiscal 2026-51 to be of the order of 1.5% to 2% of GDP (around 2% for the next 10 years), which is manageable for India.

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“Our expectation of strong economic growth over the next 10 years implies an expansion of India’s coal-based power generation capacity in that period, hindering carbon transition,” it said.

In a note, Moody’s pegged the power sector’s annual investment requirement between Rs 4.5 trillion to Rs 6.4 trillion ($53 billion to $76 billion) of investment until fiscal 2034-35, and around Rs 6 trillion to Rs 9 trillion annually over fiscal 2026-51.

“We estimate India’s power sector investments… would be in the range of Rs 4.5 trillion to Rs 6.4 trillion ( $53 billion to $76 billion) until fiscal 2034-35 (total investment of around $700 billion over the next 10 years), and Rs 6.0 trillion to Rs 9.5 trillion annually over fiscal 2025-51,” it said.

Moody’s said annually, this represents 2% of real GDP over the next 10 years, and 1.5-2% of GDP over fiscal 2026-51.

“These investments are significant and will be funded jointly by the public and private sectors and foreign and domestic capital.”

The per capita consumption of electricity in India (1,255 kilowatt-hours (KWH) in fiscal 2022) is around one-third of the world average, according to the International Energy Agency (IEA). This is expected to increase with the growing economy and improved living standards of India’s population.

“Our projection of an increase of around 450 GW of renewable energy capacity over this period would be insufficient to meet such demand, implying that India’s coal-based power generation capacity will continue to expand by 35 per cent (from 218 GW to around 295 GW) over the next 10 years,” it said.

Notably, Moody’s expects India’s economy to grow at around 6.5% per annum over the next 10 years, with a compound annual growth rate for power demand of around 6%.