The war opens up renewable energy pathway
Key Findings
Crude oil prices have surged in the wake of the West Asia conflict, echoing the spike seen after the Russia-Ukraine war. Prices rose from USD69 (INR6,400) per barrel in February 2026 to a month-to-date average of USD114 (INR10,300) in March, highlighting how fuel systems remain vulnerable to global disruptions, as well as the urgency for India to shift towards electricity.
Global LNG prices spiked after Qatar, a key supplier to Asia, shut production, with prices in the region jumping nearly 70% to three-year highs and pricing out many buyers. Coal prices have also risen in response, underlining its role as the nearest alternative in the absence of gas.
India’s fossil fuel import burden is increasing without a proportional rise in volumes. Net imports of crude oil and petroleum products grew from 220 million tonnes (mt) in FY2023–24 to 229mt in FY2024–25, while the import bill rose more sharply, from USD108.6 billion (INR900,521 crore) to USD116.4 billion (INR 985,032 crore).
In India, as sectors from cooking and transport to industry electrify, renewable energy becomes central. As does the need to build a domestic, flexible electricity system supported by resilient grids, storage, green hydrogen, and secure supplies of critical minerals for clean energy technologies.
The Russia-Ukraine war, Covid-19 pandemic, and now the West Asia conflict have repeatedly exposed a persistent reality: Fuel systems remain highly vulnerable to global disruptions, triggering price spikes and fuel supply shocks. This has only strengthened the case for India to accelerate its shift to domestically produced electricity, increasingly powered by renewables.
In FY2023, the Russia-Ukraine war pushed India’s average crude price to USD93 (INR8,600) per barrel, up 17.6% from the average USD79 (INR7,300) in FY2021-22. Following the tensions in West Asia, the price of Indian crude saw another surge, from USD69 (INR6,400) per barrel in February 2026 to a month-to-date average of USD114 (INR10,300) in March.
Similarly, global spot liquefied natural gas (LNG) prices spiked after Qatar, a key supplier to Asia, shut production, cutting 20% of exports overnight. Meanwhile, In India, Adani Total Gas Ltd (ATGL) raised prices for commercial and industrial (C&I) customers from INR40 (USD0.43) to INR119 (USD1.27) per standard cubic metre. In the absence of gas, coal prices also rose around 14%, a smaller increase compared to LNG, but still indicative of the ripple effects across the global energy market.
These swings highlight how global disruptions quickly raise energy costs, forcing governments to secure alternate supplies and protect consumers from price shocks.
Fiscal impact
India’s fossil fuel import burden is rising even without a proportional increase in volumes. Net crude and petroleum products imports increased from 220 million tonnes (mt) in FY2024 to 229mt in FY2025, while the import bill climbed from USD108.6 billion (INR900,521 crore) to USD116.4 billion (INR985,032 crore).
LNG imports also grew from 20 million metric tonne (mmt) in FY2023 to 27mmt in FY2025, even as the import bill fluctuated from USD17 billion (INR137,210 crore) to USD13.4 billion (INR110,994 crore) in FY2023–24, before rising to USD15 billion (INR125,953 crore) in FY2025. This rising dependence on imported fuels keeps India vulnerable to global price swings, with a worsening tonne-per-dollar ratio indicating higher costs per unit of imports.
These pressures are not limited to oil and gas. India imported about 248.5mt of coal in FY2025, marginally lower than in previous years. Imported coal prices had been easing between 2023 and 2025, but the West Asia conflict disrupted that trend, renewing upward pressure across global benchmarks.
As of 16 March, Richards Bay (South Africa) coal price stood at USD132.3/tonne (INR12,353/tonne) and Newcastle coal at USD111.35/tonne (INR10,397/tonne), both remaining elevated. For India, the world’s second-largest importer of coal importer and third-largest of oil, this carries significant macroeconomic risks. During peak demand periods, the power sector turns to expensive imported fuels, including coal, reinforcing dependence on volatile global markets.
Every USD10 (INR930) per barrel increase in crude prices is estimated to raise India’s oil import bill by USD14–16 billion (INR1,300–1,486 billion), amplifying fiscal pressures and widening the current account deficit.
Shift to electrification
Fortunately, India’s electricity transition is underway. Its impact, though, will remain limited unless electrification accelerates across end-use sectors. Electricity accounts for only about 19% of the total final energy consumption, and even with renewables supplying a quarter of that, clean energy remains a small share overall. This makes it critical to both expand electricity demand across end-use sectors and green it.
The potential for such a shift is increasingly visible across sectors. In cooking, a gradual move from LPG to induction cookstoves can reduce reliance on imported fuels. In transport, electric vehicles (EVs), which crossed 2 million registrations in 2025, are beginning to reduce oil demand in urban systems. In industry, accounting for 42% of total electricity consumption, electric boilers, heat pumps and furnaces can replace fossil fuel use.
As these sectors electrify, renewable energy will no longer be just a climate solution but emerge as a new domestic fuel. As of February 2026, India has 266 gigawatt (GW) of installed renewable energy capacity, including large hydro, accounting for nearly 51% of total installed power capacity. Solar alone has grown nearly 50-fold over the past decade — from 3GW in 2014 to about 143GW as of February 2026.
States will drive transition
The current fuel disruptions highlight how India’s energy transition will be shaped by States. As LPG supplies tightened, households rapidly shifted to electricity. In Gurugram, electricity consumption increased by over 80 lakh units in just nine days as households and small businesses switched to electric cooking, exhibiting how States with reliable power supply and higher renewable penetration are better placed for this transition.
The Indian States’ Electricity Transition (SET) 2026 report by the Institute for Energy Economics and Financial Analysis (IEEFA) and Ember identifies Karnataka, Himachal Pradesh and Kerala as leaders in decarbonisation, better positioned to support electrification. Andhra Pradesh, highlighted in SET 2026 for its proactive policy and regulatory ecosystem, has already begun scaling e-cooking by deploying induction stoves in Anganwadi centres.
Going forward, State-specific actions on grid readiness and renewable integration will be critical. It is estimated that over 35GW of renewable capacity could face curtailment in FY2027 due to transmission bottlenecks and grid constraints. Hence, building renewable capacity alone will not suffice, States must ensure power can be delivered, absorbed and used effectively.
For C&I consumers, unreliable electricity forces a fall back on expensive imported fuels. Expanding open access and short-term power markets can enable procurement of cheaper renewable electricity and avoid these alternatives. While energy shocks are inevitable, their impact will depend on India’s preparedness — reducing reliance on imported fuels; building a flexible and domestic electricity system backed by resilient grids, storage, and green hydrogen; and securing critical minerals supply chains.
This article was first published in The Hindu Business Line.
