-- Crude at $98 per barrel and gas prices up 31% are accelerating India's shift to renewables as fossil fuel disruptions hit 25% of global seaborne trade, the Institute for Energy Economics and Financial Analysis said in a Tuesday note.
The near-shutdown of the Strait of Hormuz has disrupted about 25% of global seaborne oil and significant liquefied natural gas volumes, heavily impacting India as a major importer, IEEFA said.
Brent crude has surged over 35% above pre-crisis levels, while financial markets reacted by erasing over $1 trillion from emerging market equities, according to the note.
Rising energy costs are pressuring central banks to lift interest rates, while currency depreciation is increasing the cost of imported clean energy components, IEEFA added.
Despite these pressures, the crisis is accelerating electrification and exposing vulnerabilities in fossil fuel supply chains, strengthening the investment case for renewable energy.
Liquefied petroleum gas prices increased 7% per cylinder in March 2026, driving higher adoption of electric induction cooktops, while power trading hit a record 13.9 billion units on the Indian Energy Exchange, IEEFA said.
Electric vehicle adoption also expanded, with retail sales rising 24.6% to 2.45 million units in fiscal 2026, reflecting a broader shift toward electrification, IEEFA added.
Renewable projects with power purchase agreements offer stable cash flows without fuel cost exposure, while India targets 60% non-fossil capacity by 2035, reinforcing investment momentum, IEEFA said.
Solar costs have fallen about 80% over a decade and battery prices dropped 36% since 2022, with renewables accounting for 84% of capacity additions and tariffs near 4.5 Indian rupee ($0.04) per watt peak, the report said.
Domestic solar and wind avoid fuel import risks, while India's expanding manufacturing base reduces reliance on imports, positioning renewables as more resilient assets as investors shift toward options insulated from price volatility and geopolitical disruptions, IEEFA said.
Indian corporates hold 71.8% of installed renewable capacity and are better positioned than state utilities to attract global capital, with firms advancing projects such as JSW Energy's 1,000 megawatt-hours BESS and Adani's 3,530 MWh system, IEEFA added.
Private players are also driving funding flows, with India's green bond issuance nearing $25 billion by March 2026, alongside deals such as Adani Green's $3 billion financing and ReNew Power's $331 million raise from the Asian Development Bank.
However, execution risks are emerging despite strong capital inflows, as battery storage tenders rose from 24 gigawatt-hours in 2024 to 60 GWh in 2025 while actual deployment remains near 0.5 GWh, raising investor concerns, IEEFA said.
Around 45 GW of renewable capacity lacks signed power sale agreements, while discoms posted a profit of 27 billion Indian rupees ($285.5 million) in FY2025 versus a loss of 255 billion rupees ($2.70 billion) in FY2024, making sustained financial stability key for investor confidence, IEEFA added.