Renewable Energy in India

As the world’s fastest-growing major economy with rising energy needs, India will account for approximately 25 per cent of the global energy demand growth between 2020-2040, as per BP energy outlook and IEA estimates. Ensuring energy access, availability and affordability for large population is imperative.

Energy Sector

The energy sector is fundamental to growth and development. Availability of electricity, petrol, diesel and gas at competitive prices is essential for the efficient functioning of energy user sectors, which include households, transportation, industry, agriculture and the government and comprise nearly the entire economy.


  • The government’s on-going energy sector policies aim “to provide access to affordable, reliable, sustainable and modern energy”.
  • Reduce imports of oil and gas by 10 per cent by 2022-23.
  • Continue to reduce emission intensity of GDP in a manner that will help India achieve the intended nationally determined contribution (INDC) target of 2030.

The energy sector in India faces a number of challenges, including:

1. Subsidies and Taxes: A variety of subsidies and taxes distort the energy market and promote the use of inefficient over efficient fuels. They also make Indian exports and domestic production uncompetitive as energy taxes are not under GST and hence, no input credit is given.

2. Limited domestic energy resources: India is heavily reliant on imports to meet its energy needs. The country has limited domestic reserves of coal, oil, and natural gas, which makes it vulnerable to price fluctuations and supply disruptions.

 For Example, Coal:

  • Demand-supply mismatch in coal leading to imports (25% of domestic requirements).
  • Most of the thermal power plants are operating below their capacity- Plant Load Factor (PLF) is hardly around 56% in 2019-20.
  • Delays in Land acquisition for new mines exploration.
  • outdated technology in mining.

3. Power Generation, Transmission and Distribution

  • Old inefficient plants continue to operate whereas more efficient plants are underutilized.
  • Although legally independent, Regulatory Commissions are unable to fully regulate discoms and fix rational tariffs.
  • State power utilities are not able to invest in system improvements due to their poor financial health.
  • High aggregate technical and commercial (AT&C) losses
  • Unmetered power supply to agriculture provides no incentive to farmers to use electricity efficiently
  • High industrial/commercial tariff and the cross- subsidy regime have affected the competitiveness of the industrial and commercial sectors.

4. Financing constraints: The energy sector in India requires significant investments to modernize its infrastructure and develop new sources of energy. However, financing constraints and a lack of private sector participation have hindered the growth of the sector.

5. Renewable Energy: High energy costs result in reneging on old power purchase agreements (PPAs) and erode their sanctity. This leads to uncertainty regarding power off take and consequently endangers further investments.

6. Policy and regulatory issues: India’s energy sector is heavily regulated, and policies and regulations can often be complex and inconsistent. This has led to a lack of clarity and transparency in the sector, which can deter investment and hinder growth.

India has taken several steps to address the challenges faced by the energy sector and promote sustainable energy development.

Steps for sustainable energy development

1. Renewable energy targets: By 2030, India wants to have 450 GW of renewable energy capacity, including 5 GW of small hydropower, 10 GW of bioenergy, 280 GW of solar, and 140 GW of wind. With 38% of India’s total installed capacity being made up of renewable energy as of 2021, the nation has already made significant strides towards achieving this goal.

2. Energy efficiency initiatives: India has implemented several energy efficiency initiatives, including the National Programme for LED-based Home and Street Lighting, the Perform, Achieve and Trade scheme for energy-intensive industries. These initiatives have helped to reduce energy consumption and greenhouse gas emissions.

3. Coal sector reforms: India has implemented several reforms in the coal sector, including the commercialization of coal mining, the introduction of revenue sharing and production-linked incentives, and the liberalization of the coal sector to allow for greater private sector participation. These reforms are aimed at increasing coal production and reducing India’s dependence on imports.

4. Rural electrification: India has made significant progress in rural electrification, with the Deen Dayal Upadhyaya Gram Jyoti Yojana and the Saubhagya scheme aimed at providing electricity connections to all households in rural areas.

5. International cooperation: India has engaged in international cooperation to promote sustainable energy development, including through initiatives such as the International Solar Alliance, the International Energy Agency’s Clean Energy Transitions Programme, and the US-India Strategic Energy Partnership. These steps have helped India to make significant progress in addressing the challenges faced by the energy sector and promote sustainable energy development. However, there is still much work to be done to become a $ 26 trillion economy by 2047, ensuring energy security and achieving energy independence.

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