Go Back

Power Sector in India - Renewable Energy, Wind Energy, Solar Power

July, 2014


When India became independent in 1947, the country had a power generating capacity of 1,362 megawatt (MW). Today, India is the sixth largest in terms of power generation and the per capita power consumption in the country is 733.54 kilowatt-hours per year (kWh/yr). It is said that power or electricity is the most critical component of infrastructure, which affects the economic growth and well-being of a nation. Presently, about 65 per cent of the electricity consumed in India is generated by thermal power plants, 22 per cent by hydroelectric power plants, three per cent by nuclear power plants and the rest 10 per centcome from other alternate sources like solar, wind, biomass, etc.

The power sector in India is mainly governed by the Ministry of Power. The Central Sector or Public Sector Undertakings (PSUs) constitute 29.78 per cent (62,826.63 MW) of total installed capacity, i.e., 210,951.72 MW (as on December 31, 2012) in India. Major PSUs involved in the generation of electricity include NHPC Ltd, NTPC Ltd, and Nuclear Power Corporation of India (NPCIL).The responsibility for the inter-state transmission of electricity and the development of national grid is with the PowerGrid Corporation of India.

With major developments in the infrastructure sector and improvement in the standard of living, the demand for power in the country is expected to grow at a rate of 10-12 per cent up till 2017.

Market size

The power sector is mainly divided into these major pillars: Generation, Transmission, and Distribution. The generation is divided into these three sectors: Central Sector, State Sector, and Private Sector.

Electricity production in India (excluding captive generation) stood at 911.6 terawatt-hours (TWh) in FY 13. Presently, about 53.7 per cent of India's commercial energy demand is met through the country's vast coal reserves. India has also invested heavily in recent years on renewable sources of energy such as wind energy. As of March 2011, India's installed wind power generation capacity stood at about 12,000 MW. The government has also committed massive amount of funds for the construction of various nuclear reactors which would generate at least 30,000 MW. In July 2009, India unveiled a US$ 19 billion plan to produce 20,000 MW of solar power by 2020 under National Solar Mission.

Indian solar installations are forecasted to be approximately 1,000 MW in 2014, according to Mercom Capital Group, a global clean energy communications and consulting firm.


The investment climate is positive in the power sector. Due to policy of liberalisation, the sector has witnessed higher investment flows than envisaged. The Ministry of Power has sent its proposal for the addition of 76,000 MW of power capacity in the 12th Five Year plan (2012-17), to the Planning Commission. The Ministry has set a target of adding 93,000 MW in the 13th Five Year Plan (2017-2022).

The industry has attracted FDI worth Rs 43,530.99 crore (US$ 7.24 billion) during the period April 2000 to May 2014.

Some of the major investments made into the Indian power sector are as follows:

  • Suzlon Group has received a 100.8 MW order from ReNew Wind Power. The project is scheduled for execution at the Bhesada wind site in Jaisalmer district of Rajasthan.
  • Tata Power Renewable Energy Ltd, a subsidiary of Tata Power, has successfully commissioned a 25 MW solar photovoltaic (PV) power project at Mithapur, Gujarat, under Gujarat's Solar Power Policy 2009.
  • Jakson Group won engineering, procurement and construction (EPC) orders aggregating US$ 34.21 million for its electrical contracting and solar businesses for FY14.
  • Bharat Heavy Electricals Ltd (BHEL) has commissioned a 160 MW gas-based power plant at Jaisalmer in Rajasthan for the state's power generation company.
  • Swelect Energy Systems (SWEES) has commissioned its 15 MW solar energy park set up with an investment of Rs 106 crore (US$ 17.63 million) near Vellakoil, Tamil Nadu.

Government Initiatives

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.

Some of the initiatives taken by the Government of India to boost the power sector of India are as follows:

  • The Government of India plans to buy the equity of Power System Operation Corporation Ltd (Posoco), a wholly-owned subsidiary of the PowerGrid Corporation of India, at a book value of around Rs 35 crore (US$ 5.82 million).
  • Agence Francaise de Development (AFD) is extending a Line of Credit (LoC) of € 100 million (US$ 134.73 million) for a tenure of 15 years to M/s Indian Renewable Energy Development Agency Ltd (IREDA) to finance renewable energy and energy efficiency projects in India.
  • Mr Prakash Javadekar, Minister for Information and Broadcasting and Minister of State (Independent Charge) of Environment, Forest and Climate Change, Government of India, has introduced new online forms for submission of applications, which would help the Ministry function in a more transparent manner.
  • The Electricity Supply Companies (ESCOM) of Karnataka and Andhra Pradesh Power Generation Corporation (APGENCO) have signed a power purchase agreement (PPA) for sharing 230 MW power generated from the Priyadarshini Jurala hydro power project.
  • The Government of India has joined hands with IIT Bombay to implement cost-effective solar powered lighting solutions for the rural population, which will help save 36 million litres of kerosene.

Road Ahead

India currently operates 19 atomic reactors which produce 4,780 MW of electricity and has set an ambitious target of generating 63,000 MW nuclear power by 2032. With many bilateral nuclear agreements in place, India is expected to become a major hub for manufacturing nuclear reactors and associated components.

Market-oriented reforms, such as the target of 'Power for all' by 2012 and plans to add 88.5gigawatts (GW) of capacity by 2017 and 100 GW by 2022, provide high incentives for capacity addition in power generation, which would increase the demand for electrical machinery. Foreign participation in the development and financing of generation and transmission assets, engineering services, equipment supply and technology collaboration in nuclear and clean coal technologies is expected to increase.

Power transmission in India, which is currently carried out largely in the 220 kilovolts (KV) and 400 kV range, is expected to move up to a higher range of 765 KV and high-voltage (HV) direct current. This presents a significant opportunity to manufacturers with capabilities in high-voltage to develop technology that can handle such requirements in the country.

Exchange Rate Used: INR 1 = US$ 0.0166 as on July25, 2014

References: Ministry of Power, Press Information Bureau, Media Reports