Around 240 million people have no access to the electrical grid in India and hundreds of millions more live with irregular supply through the existing grid network. That makes India the world’s largest un-electrified population. How does the Indian Government improve this situation?

The Government has set the target to supply as many as 18,452 villages in 19 states in rural India with electricity within 1000 days by May 2018. This aim seems to be achievable as the Power Ministry has already managed to electrify over 13,000 villages since 2015, which constitutes 71% of the target. The Government will further on invite price bids from companies for the project.

With more than 30,000 new electricity connections being granted every week, India is on a fast pace in terms of electrification. To maintain this pace, the Power Ministry is keeping a tab on the progress of the initiative live through the Garv-2 Portal which was launched in December 2016. It is also working towards keeping an eye on measuring the changes in lifestyle in the recent electrified villages.

Renewable energy is the driving force of energy production in India and it has been making giant leaps in the last months. In FY 2017, renewable power projects have seen an increased output by 26%, making India’s renewable energy sector the fastest growing in the world. The Government’s target is to achieve 175GW of renewable energy by 2022, by which 60-65% of India’s total installed capacity base has the potential to be green energy. At present, renewable energy accounts for about 16% of the total installed capacity of 315GW.

India is expected to overtake Japan in this year and be the third biggest solar market from 2018 onwards after China and the US. With over 10 billion units of electricity the Indian solar energy sector has crossed a breakthrough. With the Government’s plan to double India’s solar power generation capacity by setting up 50 solar parks, there is even greater need for investment in the solar sector. The Government approved some subsidies for solar and has raised the investment target for solar energy in India to $100 billion. Big foreign companies like Japan’s Softbank or the US-based company First Solar Inc. have already entered the Indian market to invest in the sector and the sector has also become increasingly more important for new entrants as tariffs for solar power have fallen to record lows below Rs3 per kWh.

Further, India has recently put more efforts in strengthening its bilateral ties and cooperation with several countries in the power sector. India and the UK for instance have agreed to add fresh support to the Memorandum of Understanding on Cooperation in the Energy Sector, an agreement to collaborate on power and renewable energy.  Both Governments have formed a joint India-UK fund under the National Investment and Infrastructure Fund (NIIF) to increase current investments of $150 million each with the aim of raising $620 million ultimately. The Indian Power and Renewable Energy Minister Piyush Goyal said, “the focus of this cooperation is to improve performance of the power sector by enhancing innovation in smart technology, reduce power losses, accelerate deployment of renewable energy and its integration with the grid and support several states in renewable energy planning and deployment.” India and the United Kingdom have a strong investment and financial partnership. The UK is the third largest FDI investor in India and British FDI has created 371,000 jobs in India between 2000 and 2016.

During April and February in FY 2016, India has become a net exporter of electricity. It is the first time ever that the country has exported more units than it imported. According to a statement from the power ministry, India has exported around 5,798 million units to Nepal, Bangladesh and Myanmar which is 213 million units more than the import of around 5,585 million units from Bhutan.

The Cabinet Committee on Economic Affairs has approved modifications on the Mega Power Policy from 2009 to give a five-year extension to 25 large power projects to avail tax benefits. Power producers, who previously had up to 60 months to claim benefits, will now have more time to access up to $1.5 billion in incentives, such as an exemption on import duty and income tax. The Power ministry said in a statement, the move will benefit power projects with a capacity of over 30 GW worth about $23 billion, out of which only 11 GW has been commissioned so far. Adding the 20 GW of new capacity could also help India reduce bad loans at banks that have been saddled with $133 billion of stressed loans, mainly from the power sector.

With 1.3 billion people, India is home to about 20% of the world’s population but uses only about 6% of the world’s energy. With the plans to make quality power accessible and affordable for the population, combined with incentives and initiatives from the Government, India’s hunger for energy is expected to drive. The growth in India’s energy demand will increase and likely leaves China behind in the coming years.

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