Networks cannot keep up with the rising demand for electricity in India, while economic growth, increasing prosperity, increased urbanization and rising per capita energy consumption has widened gaps in access to energy across the country. There is a lot being done to try to solve the problem in both the traditional and renewable energy sectors, and there is a lot of potential for foreign businesses interested in doing business in India. The government is working to improve the framework conditions for conventional power plants, while also ensuring renewable sources will play a much more important role in the energy mix of the country and high targets have been set for both the wind and the solar power generation at the same time as working to make ailing networks meet the new requirements.

India has the fifth largest power generation portfolio worldwide with a power generation capacity of 245 GW and the country wants to continuously expand its power. The supply deficit decreased at the end of the financial year 2013/14, thanks in part to a good monsoon and resultant high hydropower production. But the availability of electricity varies greatly between regions, and while some states produce a surplus, others suffer from high deficits. Hours of power outages are commonplace in almost all communities in the country, and still around one third of the population has still no access to the electricity grid.

The Energy Minister, Piyush Goyal, has announced that all households will be connected to the network in 2019 and he wants to provide electricity 24 hours a day. To achieve this ambitious goal, the country needs to improve the regulatory framework in the electricity sector and the supply of fuel, modernize the ailing transmission and distribution network and expand and continue to invest heavily in generation capacities. The Twelfth Five-Year Plan (2012-2017) looks for new capacity totaling 119 gig watts (GW) from all energy sources.

Renewable sources contribute 30% of all current sources and India will rely heavily on renewable energy in the future. The previous government had already announced a goal to double the network capacity in renewable sources from around 72GW today to 137GW by 2022. Large hydro stations produce more than half of all power in India. The new government wants to increase these efforts significantly and is working on ambitious plans for the expansion, in particular for solar and wind power. Wind energy is the largest renewable energy source in India. It accounts for nearly 70% (21.1 GW) of installed capacity, thereby making India the world’s fifth largest wind energy producer. The Jawaharlal Nehru National Solar Mission aims to generate 20,000 MW of solar power by 2022, and encourages FDI, creating a positive environment among investors keen to tap into India’s potential. The country offers unlimited growth potential for the solar photovoltaic industry. India is endowed with vast potential for solar energy and is rapidly emerging as a major manufacturing hub for solar power plants.

The government has created a liberal environment for foreign investment in renewable energy projects in India. The establishment of a dedicated financial institution – the Indian Renewable Energy Development Agency, renews impetus on promotion, development and extension of financial assistance for renewable energy and energy efficiency/conservation projects.

To read the latest news on Energy & Utilities in India click Energy & Utilities Newsletter