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India has the world's fifth largest wind power industry, with an annual power production of 8,896 MW.[1] Shown here is a wind farm in Kayathar, Tamil Nadu.
India has the world's 3rd largest coal reserves.[2] Shown here is a coal mine in Jharkhand.

In recent years, India’s energy consumption has been increasing at one of the fastest rates in the world due to population growth and economic development. During the 5-year period ended March 31, 2007, the CAGR of consumption of petroleum products was approximately 3.6%, compared to a CAGR for GDP of 7.6% for the same period. Despite the overall increase in energy demand, per capita energy consumption in India is still very low compared to other developing countries.

Today, India has one of the highest potentials for the effective use of renewable energy. India is the world’s fifth largest producer of wind power after Denmark, Germany, Spain, and the USA. There is a significant potential in India for generation of power from renewable energy sources-, small hydro, biomass, and solar energy. The country has an estimated SHP (small-hydro power) potential of about 15000 MW.[3]

The energy policy of India is characterized by tradeoffs between four major drivers:

  • Rapidly growing economy, with a need for dependable and reliable supply of electricity, gas, and petroleum products;
  • Increasing household incomes, with a need for affordable and adequate supply of electricity, and clean cooking fuels;
  • Limited domestic reserves of fossil fuels, and the need to import a vast fraction of the gas, crude oil, and petroleum product requirements, and recently the need to import coal as well; and
  • Indoor, urban and regional environmental impacts, necessitating the need for the adoption of cleaner fuels and cleaner technologies.

These trade-offs are often difficult to achieve. For example, the supply of adequate, yet affordable electricity generated and used cleanly is a continuing challenge because expansion of supply, and adoption of cleaner technologies, especially renewable energy, often means that this electricity is too expensive for many Indians, particularly in rural areas.

In recent years, these challenges have led to a major set of continuing reforms and restructuring.


Energy conservation

Energy conservation has emerged as a major policy objective, and the Energy Conservation Act 2001, was passed by the Indian Parliament in September 2001. 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

Some rural areas in India remain to be connected to the electricity grid. Shown here villagers heating tea with the help of firewood.
  • 5.1.1 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.
  • 5.1.2 Reliable rural electrification system will aim at creating the following:

(a) 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

(b) Emanating from REDB would be supply feeders and one distribution transformer at least in every village settlement.

(c) Household Electrification from distribution transformer to connect every household on demand.

(d) Wherever above is not feasible (it is neither cost effective nor the optimal solution to provide grid connectivity) decentralized 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 utilized even where grid connectivity exists provided it is found to be cost effective.

(e) 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.

  • 5.1.3 Particular attention would be given in household electrification to dalit bastis, tribal areas and other weaker sections.
  • 5.1.4 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.
  • 5.1.5 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 subsidized. Subsidies should be properly targeted at the intended beneficiaries in the most efficient manner. Government recognizes 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 organizational support would need to be created for timely implementation. The Central Government would assist the State Governments in achieving this.
  • 5.1.6 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 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.
  • 5.1.7 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.

Electricity industry

Several new capacity additions have been facing various problems, resulting in severe power shortage in India

The electricity industry has been restructured by the Electricity Act 2003, which unbundles 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.


The former President of India, Dr. Abdul Kalam, is one of the strong advocaters of Jatropha cultivation for production of bio-diesel.[4 ] 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 the plant has a useful lifespan of several decades. During it life Jatropha requires very little water when compared to other cash crops. For plan for supplying incentives to encourage the use of Jatropha has been implemented.

Wind power showcase

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.[5][6] The village had been selected as the showcase for India's $2 billion clean energy program 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.[7] The suitability of Muppandal as a site for wind farms stems from its geographical location as it has access to the seasonal monsoon winds.[5]


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.[8] 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 lead 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

India boasts a quickly advancing and active nuclear power program. 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 program, 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 program has been domestically developed, much like their nuclear weapons program. 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 centered 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 utilized 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 program has been separate from the power program, using Uranium from scant indigenous reserves.

Solar Energy

India's theoretical solar potential is about 5000 T kWh per year (i.e. ~ 600 TW), far more than its current total consumption.[9][10] 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.[11][12] 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 regions 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

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.




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