Energy policy of India

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The energy policy of India is largely defined by the country's burgeoning energy deficit[1] and increased focus on developing alternative sources of energy,[2] particularly nuclear, solar and wind energy.

About 70% of India's energy generation capacity is from fossil fuels, with coal accounting for 40% of India's total energy consumption followed by crude oil and natural gas at 28% and 6% respectively.[1] India is largely dependent on fossil fuel imports to meet its energy demands — by 2030, India's dependence on energy imports is expected to exceed 53% of the country's total energy consumption.[1] In 2009-10, the country imported 159.26 million tonnes of crude oil which amounts to 80% of its domestic crude oil consumption and 31% of the country's total imports are oil imports.[1][3] The growth of electricity generation in India has been hindered by domestic coal shortages[4] and as a consequence, India's coal imports for electricity generation increased by 18% in 2010.[5]

India has the world's fifth largest wind power industry, with an installed capacity of 11800 MW.[6] Shown here is a wind farm in Kayathar, Tamil Nadu.
India has the world's 3rd largest coal reserves.[7] Shown here is a coal mine in Jharkhand.

Due to rapid economic expansion, India has one of the world's fastest growing energy markets and is expected to be the second-largest contributor to the increase in global energy demand by 2035, accounting for 18% of the rise in global energy consumption.[8] Given India's growing energy demands and limited domestic fossil fuel reserves, the country has ambitious plans to expand its renewable and nuclear power industries. India has the world's fifth largest wind power market[9] and plans to add about 20GW of solar power capacity by 2022.[8] India also envisages to increase the contribution of nuclear power to overall electricity generation capacity from 4.2% to 9% within 25 years.[10] The country has five nuclear reactors under construction (third highest in the world) and plans to construct 18 additional nuclear reactors (second highest in the world) by 2025.[11]

Energy sources in India[edit]

Total Installed Capacity (September 2013)[12]

Source Total Capacity (MW) Percentage
Coal 134,388.39 58.75
Hydroelectricity 39,788.40 17.39
Renewable energy source 28,184.35 12.32
Natural Gas 20,380.85 8.91
Nuclear 4780 2.08
Oil 1,199.75 0.52
Total 2,28,721.73
Sector Total Capacity (MW) Percentage
State Sector 90,062.14 39.37
Central Sector 65,732.94 28.73
Private Sector 72,926.66 31.88
Total 2,28,721.73

Energy conservation[edit]

Energy conservation has emerged as a major policy objective, and the Energy Conservation Act 2001, was passed by the Indian Parliament in September 2001, 35.5% of the population still live without access to electricity. This Act requires large energy consumers to adhere to energy consumption norms; new buildings to follow the Energy Conservation Building Code; and appliances to meet energy performance standards and to display energy consumption labels. The Act also created the Bureau of Energy Efficiency to implement the provisions of the Act.

Rural electrification[edit]

Some rural areas in India remain to be connected to the electricity grid. Shown here villagers heating tea with the help of firewood.
  1. The key development objectives of the power sector is supply of electricity to all areas including rural areas as mandated in section 6 of the Electricity Act. Both the central government and state governments would jointly endeavour to achieve this objective at the earliest. Consumers, particularly those who are ready to pay a tariff which reflects efficient costs have the right to get uninterrupted twenty four hours supply of quality power. About 56% of rural households have not yet been electrified even though many of these households are willing to pay for electricity. Determined efforts should be made to ensure that the task of rural electrification for securing electricity access to all households and also ensuring that electricity reaches poor and marginal sections of the society at reasonable rates is completed within the next five years. India is using Renewable Sources of Energy like Hydel Energy, Wind Energy, and Solar Energy to electrify villages.
  2. Reliable rural electrification system will aim at creating the following:
    1. Rural Electrification Distribution Backbone (REDB) with at least one 33/11 kv (or 66/11 kv) substation in every Block and more if required as per load, networked and connected appropriately to the state transmission system
    2. Emanating from REDB would be supply feeders and one distribution transformer at least in every village settlement.
    3. Household Electrification from distribution transformer to connect every household on demand.
    4. Wherever above is not feasible (it is neither cost effective nor the optimal solution to provide grid connectivity) decentralised distributed generation facilities together with local distribution network would be provided so that every household gets access to electricity. This would be done either through conventional or non-conventional methods of electricity generation whichever is more suitable and economical. Non-conventional sources of energy could be utilised even where grid connectivity exists provided it is found to be cost effective.
    5. Development of infrastructure would also cater for requirement of agriculture & other economic activities including irrigation pump sets, small and medium industries, khadi and village industries, cold chain and social services like health and education.
  3. Particular attention would be given in household electrification to dalit bastis, tribal areas and other weaker sections.
  4. Rural Electrification Corporation of India, a Government of India enterprise will be the nodal agency at Central Government level to implement the programme for achieving the goal set by National Common Minimum Programme of giving access to electricity to all the households in next five years. Its role is being suitably enlarged to ensure timely implementation of rural electrification projects.
  5. Targeted expansion in access to electricity for rural households in the desired timeframe can be achieved if the distribution licensees recover at least the cost of electricity and related O&M expenses from consumers, except for lifeline support to households below the poverty line who would need to be adequately subsidised. Subsidies should be properly targeted at the intended beneficiaries in the most efficient manner. Government recognises the need for providing necessary capital subsidy and soft long-term debt finances for investment in rural electrification as this would reduce the cost of supply in rural areas. Adequate funds would need to be made available for the same through the Plan process. Also commensurate organisational support would need to be created for timely implementation. The Central Government would assist the State Governments in achieving this.
  6. Necessary institutional framework would need to be put in place not only to ensure creation of rural electrification infrastructure but also to operate and maintain supply system for securing reliable power supply[13][14] to consumers. Responsibility of operation & maintenance and cost recovery could be discharged by utilities through appropriate arrangements with Panchayats, local authorities, NGOs and other franchisees etc.
  7. The gigantic task of rural electrification requires appropriate cooperation among various agencies of the State Governments, Central Government and participation of the community. Education and awareness programmes would be essential for creating demand for electricity and for achieving the objective of effective community participation.

The electricity industry was restructured by the Electricity Act 2003, which unbundled the vertically integrated electricity supply utilities in each state of India into a transmission utility, and a number of generating and distribution utilities. Electricity Regulatory Commissions in each state set tariffs for electricity sales. The Act also enables open access on the transmission system, allowing any consumer (with a load of greater than 1 MW) to buy electricity from any generator. Significantly, it also requires each Regulatory Commission to specify the minimum percentage of electricity that each distribution utility must source from renewable energy sources.

The introduction of Availability based tariff has brought about stability to a great extent in the Indian transmission grids. A report in 2005 suggested that there was room for improvement in terms of the efficiency of electricity generation in India, and suggested that two factors possibly responsible for the inefficiency were public ownership of utilities and low capacity utilisation.[15]

Rural Electrification Status[edit]

Rural Electrification rates N.o of states and UTs Remarks [16]
100% 14
99% 4 electrification %, un-electrified villages: Gujarat (99.8%, 35), Maharashtra (99.9%, 36), Himachal Pradesh (99.9%, 15), West Bengal (99.99%, 4)
+95% 7 Assam (96.1%), Bihar (97%), Chattisgarh (97.4%), Rajasthan (97.6%), Madhya Pradesh (97.7%), Jammu & Kashmir (98.2%), Uttaranchal (98.9%)
+90% 2 Tripura (92.9%), Mizoram (93.5%)
+80% 5 Orissa (81.9%), Meghalaya (86.3%), Manipur (86.3%), Uttar Pradesh (88.9%), Jharkhand (89.2%)
Under 80% 3 Andaman & Nicobar (67.7%), Nagaland (70.1%), Arunachal Pradesh (75.5%)


The former President of India, Dr. Abdul Kalam, is one of the strong advocaters of Jatropha cultivation for production of bio-diesel.[17] In his recent speech, the Former President said that out of the 6,00,000 km² of waste land that is available in India over 3,00,000 km² is suitable for Jatropha cultivation. Once this plant is grown, it has a useful lifespan of several decades. During its life Jatropha requires very little water when compared to other cash crops. A plan for supplying incentives to encourage the use of Jatropha has been coloured with green stripes.

It is estimated that renewable and carbon neutral biomass resources of India can replace present consumption of all fossil fuels if used productively.[18]

Wind power showcase[edit]

The once-impoverished village of Muppandal benefited from the building of the nearby Muppandal wind farm, a renewable energy source, which supplies the villagers with electricity for work.[19][20] The village had been selected as the showcase for India's $2 billion clean energy programme which provides foreign companies with tax breaks for establishing fields of wind turbines in the area. Now huge power-producing windmills tower over the palm trees. The village has attracted wind energy producing companies creating thousands of new jobs, dramatically raising the incomes of villagers.[21] The suitability of Muppandal as a site for wind farms stems from its geographical location as it has access to the seasonal monsoon winds.[19]


The state-owned Oil and Natural Gas Corporation (ONGC) acquired shares in oil fields in countries like Sudan, Syria, Iran, and Nigeria – investments that have led to diplomatic tensions with the United States.[22] Because of political instability in the Middle East and increasing domestic demand for energy, India is keen on decreasing its dependency on OPEC to meet its oil demand, and increasing its energy security. Several Indian oil companies, primarily led by ONGC and Reliance Industries, have started a massive hunt for oil in several regions in India including Rajasthan, Krishna-Godavari and north-eastern Himalayas. The proposed Iran-Pakistan-India pipeline is a part of India's plan to meet its increasing energy demand.

Nuclear power[edit]

The Koodankulam Nuclear power plant in Tamil Nadu, which has a capacity of producing 1260 MW

India boasts a quickly advancing and active nuclear power programme. It is expected to have 20 GW of nuclear capacity by 2020, though they currently stand as the 9th in the world in terms of nuclear capacity.

An achilles heel of the Indian nuclear power programme, however, is the fact that they are not signatories of the Nuclear Non-Proliferation Treaty. This has many times in their history prevented them from obtaining nuclear technology vital to expanding their use of nuclear industry. Another consequence of this is that much of their programme has been domestically developed, much like their nuclear weapons programme. United States-India Peaceful Atomic Energy Cooperation Act seems to be a way to get access to advanced nuclear technologies for India.

India has been using imported enriched uranium and are under International Atomic Energy Agency (IAEA) safeguards, but it has developed various aspects of the nuclear fuel cycle to support its reactors. Development of select technologies has been strongly affected by limited imports. Use of heavy water reactors has been particularly attractive for the nation because it allows Uranium to be burnt with little to no enrichment capabilities. India has also done a great amount of work in the development of a Thorium centred fuel cycle. While Uranium deposits in the nation are extremely limited, there are much greater reserves of Thorium and it could provide hundreds of times the energy with the same mass of fuel. The fact that Thorium can theoretically be utilised in heavy water reactors has tied the development of the two. A prototype reactor that would burn Uranium-Plutonium fuel while irradiating a Thorium blanket is under construction at the Madras/Kalpakkam Atomic Power Station.

Uranium used for the weapons programme has been separate from the power programme, using Uranium from scant indigenous reserves.

Hydrogen Energy[edit]

Hydrogen Energy programme started in India after joining the IPHE (International Partnership for Hydrogen Economy) in the year 2003. There are nineteen other countries including Australia, USA, UK, Japan. This global partnership helps India to set up commercial use of Hydrogen gas as an energy source. This will implemented through Public Private Partnership.

Solar Energy[edit]

Solar Resource Map of India

India's theoretical solar potential is about 5000 T kWh per year (i.e. ~ 600 TW), far more than its current total consumption.[23][24] Currently solar power is prohibitive due to high initial costs of deployment. However India's long-term solar potential could be unparalleled in the world because it has the ideal combination of both high solar insolation and a big potential consumer base density.[25][26] With a major section of its citizens still surviving off-grid, India's grid system is considerably under-developed. Availability of cheap solar can bring electricity to people, and bypass the need of installation of expensive grid lines. Also a major factor influencing a region's energy intensity is the cost of energy consumed for temperature control. Since cooling load requirements are roughly in phase with the sun's intensity, cooling from intense solar radiation could make perfect energy-economic sense in the subcontinent, whenever the required technology becomes competitively cheaper.

Policy framework[edit]

In general, India's strategy is the encouragement of the development of renewable sources of energy by the use of incentives by the federal and state governments. Other examples of encouragement by incentive include the use of nuclear energy (India Nuclear Cooperation Promotion Act), promoting windfarms such as Muppandal, and solar energy (Ralegaon Siddhi).

A long-term energy policy perspective is provided by the Integrated Energy Policy Report 2006 which provides policy guidance on energy-sector growth. Increasing energy consumption associated primarily with activities in transport, mining, and manufacturing in India needs rethinking India's energy production.

Electricity trading with neighbouring countries[edit]

Despite low electricity per capita consumption in India, the country is going to achieve surplus electricity generation during the 12th plan (2012 to 2017) period provided its coal production and transport infrastructure is developed adequately.[27][28] Surplus electricity can be exported to the neighbouring countries in return for natural gas supplies from Pakistan, Bangladesh and Myanmar.

Bangladesh, Myanmar and Pakistan are producing substantial natural gas and using for electricity generation purpose. Bangladesh, Myanmar and Pakistan produce 55 million cubic metres per day (mcmd), 9 mcmd and 118 mcmd out of which 20 mcmd, 1.4 mcmd and 34 mcmd are consumed for electricity generation respectively.[29] Whereas the natural gas production in India is not even adequate to meet its non-electricity requirements.

Bangladesh, Myanmar and Pakistan have proven reserves of 184 billion cubic metres (bcm), 283 bcm and 754 bcm respectively. There is ample opportunity for mutually beneficial trading in energy resources with these countries. India can supply its surplus electricity to Pakistan and Bangladesh in return for the natural gas imports by gas pipe lines. Similarly India can develop on BOOT basis hydro power projects in Nepal, Myanmar and Bhutan. India can also enter into long term power purchase agreements with China for developing the hydro power potential in Brahmaputra river basin of Tibet region. India can also supply its surplus electricity to Sri Lanka by undersea cable link. There is ample trading synergy for India with its neighbouring countries in securing its energy requirements.[2][13][14]

See also[edit]

External links[edit]


  1. ^ a b c d India’s Widening Energy Deficit
  2. ^ a b “Energy resources in India”
  3. ^ India Energy Profile - EIA
  4. ^ India Electricity Output Misses Target
  5. ^ Indian Power Plants Boost Coal Imports 18%, Market Watch Says
  6. ^ "State-wise Installations Statistics". Wind Power India. 2010-03-31. Retrieved 2010-11-27. 
  7. ^ Deepak Fertilisers signs JV with Norway major
  8. ^ a b India Raises Renewable Energy Target Fourfold
  9. ^ Wind energy in India: Chinese company sold 125 wind turbines of 2 MW
  10. ^ "Slowdown not to affect India's nuclear plans". 2009-01-21. Retrieved 2010-08-22. 
  11. ^ Going nuclear, The Economist
  12. ^ "Power Sector at a Glance "ALL INDIA" as on 30-09-2013 - Installed capacities for power generation in India". 
  13. ^ a b “Electricity online trading in India”
  14. ^ a b "Integrating European Electricity Markets". Retrieved 15 May 2013. 
  15. ^ Madhu Khanna, Kusum Mundra, Aman Ullah (19 May 2005). "Parametric and Semi-Parametric Estimation of the Effect of Firm Attributes on Efficiency: Electricity Generating Industry in India". Journal of International Trade and Economic Development. pp. 419–436. Retrieved 2011-09-01. "Vol. 8, No. 4 ... Public ownership and low capacity utilisation are found to be significant determinants of inefficiency in the electricity generating industry in India." 
  16. ^
  17. ^ "Kalam to attend Jatropha planters’ convention". India eNews Pvt. Ltd. Retrieved 2006-07-08. 
  18. ^ “Productive usage of Biomass”
  19. ^ a b "Tapping the Wind - India". February 2005. Retrieved 2006-10-28. 
  20. ^ Watts, Himangshu (11 November 2003). "Clean Energy Brings Windfall to Indian Village". Reuters News Service. Retrieved 2006-10-28. 
  21. ^ "Wind power boosts Southern Indian economy". 2 November 2003. Retrieved 2006-10-28. 
  22. ^ "Energy Security India, Allianz Knowledge". 2008-05-27. Retrieved 2008-07-03. 
  23. ^ Sustainable production of solar electricity with particular reference to the Indian economy (publication archived in ScienceDirect, shows numbers in detail, but needs subscription / access via university)
  24. ^ Renewing India - Under Heading:Solar Photovoltaics
  25. ^ Solar LEDs Brighten Rural India's Future
  26. ^ Solar plan for Indian computers
  27. ^ "Daily report of power situation, Ministry of Power, GoI,". Retrieved 17 February 2013. 
  28. ^ "See Reports section, National load dispatch centre, Ministry of Power, GoI,". Retrieved 17 February 2013. 
  29. ^ "Select 'Energy' sections of Pakistan, Burma, Bangladesh, Nepal, Bhutan & Sri Lanka. The world Fact book.". Retrieved 17 February 2013.