India has the fifth largest power generation capacity in the world. India’s installed capacity stood at 272.5 gigawatts (GW), as of FY15. Thermal power, the largest component, was 189.3 GW, followed by hydro 41.6 GW, renewable energy 35.8 GW and nuclear 5.8 GW. India’s total power generation capacity has increased at a Compound Annual Growth Rate (CAGR) of 9.4 per cent over FY09–15.
India is the third largest producer of electricity in the world. In FY15, India generated 1,048.7 terawatt-hours (TWh) of electricity. Over FY10–15, electricity production expanded at a CAGR of 6.3 per cent.As per the 12th Five Year Plan, India is targeting a total of 88.5 GW of power capacity addition by 2017, of which, 72.3 GW constitutes thermal power, 10.8 GW hydro and 5.3 GW nuclear.
Renewable energy is fast emerging as a major source of power in India. Wind energy is the largest source of renewable energy in India. It accounts for an estimated 60 per cent of total installed capacity (21.1GW). There are plans to double wind power generation capacity to 20GW by 2022. India has also raised the solar power generation capacity addition target by five times to 100GW by 2022.
The Government of India has been supportive to growth in the power sector. It has de-licensed the electrical machinery industry and also allowed 100 per cent Foreign Direct Investment (FDI) in the sector. Total FDI inflows in the power sector touched US$ 9.7 billion during the period April 2000 to May 2015.
With many bilateral nuclear agreements in place, India is expected to become a major hub for manufacturing nuclear reactors and associated components. 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 also expected to increase.