Power or electricity is one of the most critical components of infrastructure, affecting economic growth and wellbeing of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy. With a production of 1,006 terawatt hours (TWh), India is the fifth largest producer and consumer of electricity in the world after US, China, Japan and Russia.
The Indian power sector is one of the most diversified in the world. Sources for power generation range from commercial sources such as coal, lignite, natural gas, oil, hydro and nuclear power to other viable non-conventional sources such as wind, solar, and agriculture and domestic waste. The demand for electricity in the country has been growing at a rapid rate and is expected to grow further in the years to come. In order to meet the increasing requirement of electricity, massive addition to the installed generating capacity in the country is required.
Electricity production in India (excluding captive generation) stood at 911.6 TWh in FY 13, a 4 per cent growth over the previous fiscal. Over FY 07–13, electricity production expanded at a compound annual growth rate (CAGR) of 5.5 per cent. The Planning Commission’s 12th Plan projects that total domestic energy production would reach 669.6 million tonnes of oil equivalent (MTOE) by 2016–17 and 844 MTOE by 2021–22.
As of October 2013, total thermal installed capacity stood at 156.5 gigawatt (GW), while hydro and renewable energy installed capacity totalled 39.8 GW and 28.2 GW, respectively. Nuclear energy capacity remained broadly constant from that in the previous year, at 4.8 GW.
Indian solar installations are forecast to be approximately 1,000 megawatt (MW) in 2014, according to Mercom Capital Group, a global clean energy communications and consulting firm.
The growth in energy demand in India would be the highest among all countries by 2030–35, beating even China, according to the 2014 energy outlook report by British oil giant BP.
The investment climate is very positive in the power sector. Due to policy liberalisation, the sector has witnessed higher investment flows than envisaged. The power ministry has set a target for adding 76,000 MW of electricity generation capacity in the 12th Plan (2012–17) and 93,000 MW in the 13th Plan (2017–2022).
The Working group on power for formulation of the 12th Five Year Plan has estimated total fund requirement of Rs 1,372,580 crore (US$ 227.98 billion) for the power sector. The industry attracted foreign direct investment (FDI) worth Rs 40,417.6 crore (US$ 6.72 billion) during April 2000 to January 2014.
The following are some of the major investments made into the Indian power sector:
India has emerged as one of the fastest growing economies in the world. Its current economic performance reflects a healthy trend based on increased consumption, investment and exports. Over the next five years, this growth is expected to continue. The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth.
The following are some of the initiatives taken by the Government of India to boost the power sector:
Wind energy is the largest renewable energy source in India; projects like the Jawaharlal Nehru National Solar Mission (aims to generate 20,000 MW of solar power by 2022) is creating a positive environment among investors keen to tap into India’s potential.
The country offers unlimited growth potential for solar photovoltaic (PV) industry as well. India is endowed with vast potential of solar energy and is quickly developing itself as a major manufacturing hub for solar power plants. Besides, it is expected that the annual PV-installed capacity will grow at a CAGR of around 49.5 per cent during 2010–2014 to reach 1,500 MW by end of 2014, according to a RNCOS research report titled, 'Indian Solar Energy Market Analysis'.
Exchange Rate Used: INR 1 = US$ 0.01658 (as on April 8, 2014)
References: Ministry of Power, Press Information Bureau, Media Reports