22nd March 2025 (35 Topics)

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India’s Energy Sector Transformation

Context

India’s power sector, the sixth-largest globally, is undergoing a major transformation as it moves toward sustainability and clean energy. Traditionally reliant on coal, India has shifted its focus in the last two decades to meet rising energy demand while fulfilling its climate commitments. This transition is driven by regulatory reforms, new business models, and global agreements. As India works towards its 2030 goal of 500 GW of non-fossil fuel capacity and a net-zero emissions target by 2070, power sector regulations play a crucial role.

Key Policy Reforms

Electricity Act, 2003: The Act allowed private sector participation, introduced competition, and mandated Renewable Purchase Obligations (RPOs).
National Action Plan on Climate Change (NAPCC) & Energy Conservation Amendment Act (2022): It laid the foundation for a national carbon market.
Incentives & Investments: Programs like Renewable Energy Certificates (RECs), Viability Gap Funding (VGF), and Production-Linked Incentives (PLIs) have boosted solar, wind, battery storage, and green hydrogen.

India’s Power Sector Overview

India’s power sector is among the largest and most diverse in the world, playing a crucial role in economic development.

India’s Power Sources (as of January 31, 2025)
Power Source	Installed Capacity (GW)	Share (%)
Coal	220.49	47.29
Hydro	46.97	10.07
Nuclear	8.18	1.75
Oil & Gas	25.41	5.45
Small Hydro	5.1	1.09
Solar	100.33	21.52
Wind	48.37	10.37
Bio Power	11.41	2.45
Total	466.26	100

According to the S. Energy Information Administration (EIA), as of 2023, India ranked sixth in total energy production with 126.567 quadrillion British thermal units (BTU).
Operating under a mix of central and state government policies and private sector involvement, the sector continues to evolve rapidly.
Energy Mix: India’s energy mix is shifting significantly, with an increasing contribution from renewable energy sources. As of January 2025, the total installed power capacity stands at 26 GW, with coal remaining the dominant source. However, renewable energy, particularly solar, has witnessed significant growth.

Power Capacity Expansion Trends

Coal-based power continues to be crucial for India’s energy security, increasing from 86 GW in 2022-23 to 220.49 GW in 2024-25.
Renewable energy sources, especially solar power, have grown from 78 GW in 2022-23 to 100.33 GW in 2024-25. Wind energy has seen moderate growth, contributing 10.37% to the total capacity.
- Challenges in Renewable Energy Expansion:
Grid integration
Storage solutions
Financial investments
Environmental and project delays in hydropower
Nuclear Energy in India: India is focusing on nuclear power as a low-carbon, stable energy source. Policy amendments, including relaxed liability laws, aim to attract private and foreign investments. India plans to expand its nuclear capacity to 100 GW by 2047, with 14.3 GW targeted by 2032 and small modular reactors (SMRs) by 2033.

India’s National Electricity Plan (2022-32):

The National Electricity Plan (NEP) outlines India’s power expansion strategy:
- Peak demand forecast:2 GW by 2026-27, 366.4 GW by 2031-32
- Installed capacity target: 609 GW by 2031-32
- Renewable energy goal: 500 GW non-fossil fuel capacity by 2030
- Investment requirement: INR 33.6 trillion (US$384.5 billion)
Power Transmission and Distribution: India’s power distribution includes central, state, and private entities:
- Central Entities: Power Grid Corporation of India (PGCIL), NTPC, NHPC, NPCIL, Damodar Valley Corporation
- State Electricity Boards (SEBs): Responsible for regional distribution
- Private Companies: Tata Power, Adani Electricity, BSES Rajdhani, and BSES Yamuna

India’s Targets

India aims for net zero by 2070 with 50% non-fossil electricity by 2030 and ranks fourth globally in renewable energy capacity, supported by a 36.5% CAGR in solar over 11 years.
Additionally, its 2030 Nationally Determined Contributions (NDCs) under the UNFCCC highlight five key objectives:
- Promoting sustainable lifestyles under the “LIFE” initiative, reducing emissions intensity of GDP by 45% from 2005 levels
- Achieving 50% electric power capacity from non-fossil fuel sources
- Creating an additional carbon sink of 2.5 to 3 billion tons of CO2 equivalent through forest and tree cover
- Enhancing investments in climate-vulnerable sectors like agriculture, water, and disaster management

Government measures for energy transition

Conservation Amendment Act 2022 amended the Energy Conservation Act, 2001 and introduction of a carbon credit trading scheme.
National Green Hydrogen Mission: India launched its National Green Hydrogen Mission in 2023 to support production, use and exports of green hydrogen and its derivatives.
PLI Scheme: Recently, the government concluded two tranches of allocations under the Production Linked Incentives (PLI) Scheme for high-efficiency solar photovoltaic (PV) modules.
Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules 2022: The rules aim to promote the generation, purchase and consumption of green energy, including from waste-to-energy plants, through improving open access.
National Framework for Promoting Energy Storage Systems a Viability Gap Funding (VGF) scheme: The scheme aims to boost the set-up of battery energy storage system (BESS) projects.
FDI: Foreign investors are allowed to make 100 per cent investments in the renewable energy sector under the automatic route, without requiring prior government approval.
Pradhanmantri Suryodaya Yojana is a central government scheme which aims to provide electricity to low and middle-income individuals through solar rooftop installations, along with offering additional income for surplus electricity generation.
Biomass-Based Schemes: GOBARdhan and SATAT
- GOBARdhan: Galvanizing Organic Bio-Agro Resources Dhan aims to convert cattle dung and agricultural residues into biogas, compressed biogas (CBG), and bio-compressed natural gas (CNG). It promotes circular economy principles and contributes to India’s climate goals.
- SATAT: The Sustainable Alternative Towards Affordable Transportation scheme focuses on setting up compressed biogas production plants. It enhances energy security, reduces emissions, and benefits both rural communities and women.
Other Government Initiatives for Solar Energy
- Solar Park Scheme
- Atal JyotiYojana (AJAY)
- National Solar Mission
- SRISTI Scheme
- International Solar Alliance (ISA)

PYQ

Q. The question of India’s Energy Security constitutes the most important part of India’s economic progress. Analyse India’s energy policy cooperation with West Asian countries. (2017)

Q. “Access to affordable, reliable, sustainable and modern energy is the sine qua non to achieve Sustainable Development Goals (SDGs)”.Comment on the progress made in India in this regard. (2018)

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