India’s power sector is vital in driving the country’s economy and supporting its growing population. It is responsible for generating and distributing electricity nationwide, serving industries, businesses, and households. Over the years, India has made significant progress in expanding its power capacity, relying on both traditional energy sources like coal and newer, renewable options such as solar and wind. Despite these advancements, the power sector faces challenges like demand-supply gaps, outdated infrastructure, and the need for cleaner energy solutions. With continued reforms and investments, India aims to make its power sector more efficient, sustainable, and accessible.
Tags: GS-3, Economy- Growth & Development- Inclusive Growth
Why in the news?
- Competitive bidding based price discovery leveraged rapid technological advancements to achieve efficient pricing for the power sector.
- It combines the procurement of multiple energy sources, such as coal and solar, in a single tender, creating a more complex bidding environment.
Important Facts About India’s Power Sector:
- Global Rank: India is the third-largest producer and consumer of electricity globally.
- Installed Capacity: As of March 31, 2024, India’s total installed power capacity was 442.0 GW.
- Renewable Energy: Renewable energy capacity reached 168.4 GW, constituting 40.9% of total capacity.
Systemic Issues in India’s Power Sector:
- High Fuel Cost: Delays in environmental clearances, land acquisition, and lack of investment in coal extraction technology increase fuel costs.
- Reliance on Imported Coal: Despite abundant reserves, India imported 60 million tonnes of coal in 2023, adding costs of around $2 billion.
- Non-Renewable Dependency: Approximately 80% of India’s power generation is reliant on thermal power plants.
- Aged Power Plants: Many plants are outdated and inefficient, leading to increased operational costs.
- Technical and Commercial Losses: The average technical and commercial losses are 27%, with some states experiencing losses as high as 40%.
- DISCOM Financial Health: Poor financial health discourages private investment. For example, Andhra Pradesh DISCOMS reported losses exceeding ₹20,000 crore in 2022.
- Lack of Competitiveness: High industrial tariffs and cross-subsidies affect the competitiveness of India’s power sector.
- Fragmented Governance: Multiple agencies managing energy resources create inefficiencies. For example, overlapping roles between the Ministry of Power, Central Electricity Authority, and state utilities.
Government Policies & Initiatives:
- Green Energy Corridor: Projects aimed at enhancing renewable energy evacuation with 8,651 km of transmission lines and 19,558 MVA substations.
- Rooftop Solar National Portal: A streamlined process for residential consumers to apply for solar installations.
- Smart Meters: Over 51.62 lakh smart meters deployed under the National Smart Grid Mission.
- PLI Scheme: ₹19,500 crore allocated for high-efficiency solar PV modules.
- Competitive Bidding: Introduced to increase transparency and lower costs in power generation, especially for renewable energy.
- Saubhagya Scheme: 2.82 crore households electrified as of March 2021 under this scheme.
- KUSUM Scheme: Promotes solar pumps and allows selling surplus power to local DISCOMS.
- LED Distribution: Over 36.86 crore LED bulbs and other energy-efficient devices distributed, saving 48,411 million kWh annually.
Way Forward:
- Separate Bidding: Conduct separate tenders for solar and coal power to avoid complexity and ensure specialisation in renewable or conventional energy.
- Encourage Smaller Developers: Create tenders with lower entry barriers to include smaller players, fostering competition and better price discovery.
- Annual Procurement Calendar: Implement an annual procurement schedule to help developers plan investments and bids efficiently.
- Cross-Subsidy Rationalisation: Gradually reduce cross-subsidies to create a more equitable tariff structure, reducing industrial financial burdens while protecting vulnerable groups.
- Improved Metering: Implement 100% net metering, smart meters, and agricultural power metering to enhance revenue collection and reduce losses. Example: smart meters in Delhi.
- Cross-Border Trade: Promote cross-border electricity trade with neighbouring countries to utilise surplus capacity. Example: India exports power to Bangladesh and Nepal through grid integration.
- Hybrid Power Solutions: Encourage tenders for hybrid energy projects combining solar, wind, and battery storage for a stable power supply.
- Grid Infrastructure Enhancement: Upgrade transmission networks in remote, energy-rich areas to ensure smoother power flow and improve energy security. Example: Upgrading networks in Gujarat.
- Develop Energy Storage: Expand capacity for energy storage to complement renewable sources, ensuring a steady power supply. Example: Energy storage systems developed alongside solar projects in Tamil Nadu.
UPSC Civil Services Examination Previous Year Question (PYQ)
Prelims
Q:1 The term ‘Intended Nationally Determined Contributions’ is sometimes seen in the news in the context of (2016)
- pledges made by the European countries to rehabilitate refugees from the war-affected Middle East
- plan of action outlined by the countries of the world to combat climate change
- capital contributed by the member countries in the establishment of the Asian Infrastructure Investment Bank
- plan of action outlined by the countries of the world regarding Sustainable Development Goals
Ans: (b)
Mains:
Q:1 Describe the benefits of deriving electric energy from sunlight in contrast to conventional energy generation. What are the initiatives offered by our government for this purpose? (2020)
Source: (IE)
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