The power sector in India
The power sector in India has faced challenges such as financial stress in distribution companies, issues related to land acquisition for projects, and occasional policy uncertainties. Addressing these challenges is crucial for the sustainable growth of the sector. Renewable Energy Growth: India has been making significant strides in the renewable energy sector. The government has set ambitious targets for increasing the share of renewable energy in the total energy mix, including solar and wind power. Policy Initiatives: The government has been implementing various policy initiatives to boost the power sector, such as the Ujwal DISCOM Assurance Yojana (UDAY) for financial restructuring of power distribution companies and the Saubhagya scheme to ensure electrification of all households. Electricity Generation Capacity: India has been continuously working on increasing its electricity generation capacity, both conventional and renewable. Investments in new power plants, both thermal and renewable, have been ongoing. Energy Efficiency Programs: The government has been focusing on improving energy efficiency and has launched programs like the Perform, Achieve, and Trade (PAT) scheme for industrial energy efficiency. Grid Modernization: Efforts have been made to modernize the power grid infrastructure to enhance reliability, reduce transmission losses, and integrate a higher share of renewable energy into the grid. Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy. The fundamental principle of India’s power industry has been to provide universal access to affordable power in a sustainable way. The Ministry of Power has made significant efforts over the past few years to turn the country from one with a power shortage to one with a surplus by establishing a single national grid, fortifying the distribution network, and achieving universal household electrification. India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power, to viable non-conventional sources such as wind, solar, agricultural and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. India was ranked fourth in wind power capacity and solar power capacity and fourth in renewable power installed capacity, as of 2021. India is the only country among the G20 nations that is on track to achieve the targets under the Paris Agreement. India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 426.13 GW as of November 30, 2023. As of November 30, 2023, India’s installed renewable energy capacity (including hydro) stood at 179.57 GW, representing 42.1% of the overall installed power capacity. As of November 30, 2023, Solar energy contributed 72.31 GW, followed by 44.56 GW from wind power, 10.26 GW from biomass, 4.98 GW from small hydropower, 0.57 from waste to energy, and 46.88 GW from hydropower. The non-hydro renewable energy capacity addition stood at 15.27 GW in FY23, up from 14.07 GW in FY22. India’s power generation witnessed its highest growth rate in over 30 years in FY23. Power generation in India increased by 8.87% to 1,624.15 billion kilowatt-hours (kWh) in FY23. According to data from the Ministry of Power, India’s power consumption stood at 130.57 BU in April, 2023. The peak power demand in the country stood at 243.27 GW in November 2023. The coal plants registered a PLF of 73.7% for the first nine-months period in FY23 compared to 68.5% in FY22 for the same period. Thermal power plant load is estimated to improve by 63% in FY24, fuelled by strong demand growth along with subdued capacity addition in the sector. In the current decade (2020-29), the Indian electricity sector is likely to witness a major transformation with respect to demand growth, energy mix and market operations. India wants to ensure that everyone has reliable access to sufficient electricity at all times, while also accelerating the clean energy transition by lowering its reliance on dirty fossil fuels and moving toward more environmentally friendly, renewable sources of energy. Future investments will benefit from strong demand fundamentals, policy support and increasing government focus on infrastructure. The Government of India is preparing a ‘rent a roof’ policy for supporting its target of generating 40 GW of power through solar rooftop projects by 2022. It also plans to set up 21 new nuclear power reactors with a total installed capacity of 15,700 MW by 2031. The Central Electricity Authority (CEA) estimates India’s power requirement to grow to reach 817 GW by 2030. Also, by 2029-30, CEA estimates that the share of renewable energy generation would increase from 18% to 44%, while that of thermal energy is expected to reduce from 78% to 52%. The government plans to establish renewable energy capacity of 500 GW by 2030.
