Guest author: Nikhil Tiwari | Business Development Manager | Ensinger India Engineering Plastics Private Ltd.

Energy has been universally recognized as one of the most important inputs for economic growth and human development. There is a strong two-way relationship between economic development and energy consumption. On one hand, growth of an economy, with its global competitiveness, hinges on the availability of cost-effective and environmentally benign energy sources, and on the other hand, the level of economic development has been observed to be reliant on the energy demand. The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy.

India’s power sector is one of the most diversified over the globe. Power generation sources range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and 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.

  • Electricity production in India stood at 1,048.7 TWh in FY15, a 8.4 % growth over the previous fiscal
  • Over FY10–15, electricity production expanded at a CAGR of 6.3 %
  • As of 2015, total thermal installed capacity stood at 189.3 GW, while hydro and renewable energy installed capacity totalled 41.6 GW and 35.8 GW, respectively. At 5.8 GW, nuclear energy capacity had increased considerably which otherwise remained the same from 2010 – 14
  • Indian solar installations are forecasted to be approximately 2,200 megawatt (MW) in 2015, according to Mercom Capital Group, a global clean energy communications and consulting firm.

The Planning Commission’s 12th Five-Year Plan estimates total domestic energy production to reach 669.6 million tonnes of oil equivalent (MTOE) by 2016–17 and 844 MTOE by 2021–22. By 2030–35, energy demand in India is projected to be the highest among all countries according to the 2014 energy outlook report by British oil giant, BP.

Government Initiatives

The Government of India has identified power sector as a key sector of focus so as to promote sustained industrial growth. Some initiatives by the Government of India to boost the Indian power sector:

  • A Joint Indo-US PACE Setter Fund has been established, with a contribution of US$ 4 million from each side to enhance clean energy cooperation.
  • The Government of India announced a massive renewable power production target of 175,000 MW by 2022; this comprises generation of 100,000 MW from solar power, 60,000 MW from wind energy, 10,000 MW from biomass, and 5,000 MW from small hydro power projects.
  • US Federal Agencies committed a total of US$ 4 billion for projects and equipment sourcing, one of the biggest deals for the growing renewable energy sector in India
  • The Reserve Bank of India (RBI) has notified to include renewable energy under priority sector lending (PSL). Therefore, banks can provide loans up to a limit of US$ 2.36 million to borrowers for renewable energy projects.

The Road Ahead

The Indian power sector has an investment potential of Rs 15 trillion (US$ 237 billion) in the next 4–5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment.

The government’s immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24×7 electricity for residential, industrial, commercial and agriculture use.

The government had revised the National Solar Mission with the electricity production target of 100,000 MW by 2022. The government has also sought to restart the stalled hydro power projects and increase the wind energy production target to 60 GW by 2022 from the current 20 GW.

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#Sources – IBEF, Powermin, India energy portal, mospi