India's
power sector is one of the world’s most diverse. Power generating options
include coal, lignite, natural gas, oil, hydro, and nuclear power, as well as
feasible non-conventional options including wind, solar, and agricultural and
household waste. The country's electricity demand has risen fast and is
anticipated to continue to climb in the coming years. To fulfill the country's
growing need for energy, a huge increase in installed generating capacity is
needed.
Advantage to
India of rapidly growing power sector:
1.
ELECTRIFICATION Achievements
• India has been on track to meet the Saubhagya
scheme's goal of 100% home electrification. The Saubhagya project had
electrified around 26.2 million homes as of March 2019.
• In the six years prior to the Union Budget
2021-22, 139 GW of built capacity, 1.41 lakh circuit km of transmission lines,
and 2.8 crore homes were connected, according to the Union Budget 2021-22.
1. RENEWABLE
ENERGY GROWTH IN INDIA
• India has 95.65 GW of installed renewable
energy capacity as of May 2021. By 2022, solar energy is expected to provide
114 GW, followed by wind power at 67 GW and biomass and hydropower at 15 GW. The
renewable energy target has been increased to 227 GW by 2022.
• India is the only country in the G20 that is
on pace to meet the Paris Agreement's goals.
1. AN
APPROPRIATE POLICY ENVIRONMENT
• Under the automatic method, 100 percent FDI
is permitted in the electricity and renewable energy sectors.
The government suggested launching a National
Hydrogen Mission to generate hydrogen from renewable energy sources in the
Union Budget 2021-22.
2. Increasing
demand
• Increased industrial activity will increase
electricity demand.
• Increasing electrification and per-capita
use, as well as a growing population, will offer further momentum.
• In 2022, power consumption is expected to
reach 1,894.7 TWh.
•With a total investment of US$ 90 billion
between 2010 and the second half of 2019, India ranked sixth on the list of
nations that have made substantial investments in renewable energy.
1. Expected
increase in investment
• Between FY19 and FY23, India's power sector
is expected to attract investment worth Rs 9-9.5 trillion (US$ 128.24-135.37
billion).
• Between April 2000 and December 2020, total
FDI inflows into the electricity industry were US$ 15.36 billion.
• Energy sector projects accounted for the
largest part (24 percent) of the overall projected capital expenditure of Rs.
111 lakh crore (US$ 1.4 trillion) according to the National Infrastructure
Pipeline 2019-25.
1. Upcoming
opportunities
• Over the next five years, the government has
set aside Rs. 305,984 crore (US$ 42 billion) in the Union Budget 2021-22 for a
revised, reform-based, and result-linked new electricity distribution sector
program.
• In June 2019, the government issued a series
of US$ 5 billion transmission-line bids in order to meet a target of 175 GW by
2022.
1. Policy
support
• Electrification in the nation is expanding
with the help of initiatives like Deen Dayal Upadhyay Gram Jyoti Yojana
(DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY), and Integrated Power
Development Scheme (IPDS).
Market Size
The Indian electricity sector is now undergoing
substantial changes that are redefining the business. India's electricity
sector is constantly attempting to transition from nonrenewable to renewable
energy sources.
The country's power demand has been driven by
sustained economic development throughout the years. The Indian government's
goal of achieving "Power for All" has spurred capacity expansion in
the country. Power for All (24x7 PFA) is a joint initiative of the Government
of India (GoI) and state governments with the goal of making 24x7 power
available to all homes, industries, commercial companies, public requirements,
and any other energy consuming organization by FY 19.
Both the market and the supply sides are growing
more competitive at the same time (fuel, logistics, finances, and manpower).
Solar energy is expected to generate 114 GW by
2022, followed by wind power at 67 GW and biomass and hydropower at 15 GW. The
renewable energy target has been increased to 227 GW by 2022.
The country's total thermal installed capacity
was 234.05 GW in FY22 (till June 2021). Renewable, hydro, and nuclear energy
installed capacity were 96.95 GW, 46.32 GW, and 6.78 GW, respectively.
Among top four power
generating nations:
·
• India is the world's third-largest producer and user of electricity,
with a total generation of 1,558.7 TWh. Despite the fact that electricity
generation has increased more than 100-fold since independence, consumption has
expanded even faster due to increased economic activity.
·
In the global energy industry,
India's energy companies have achieved considerable success. Reliance
Industries Ltd. and Indian Oil Corp. Ltd. are rated 19th and 25th, respectively,
in the S&P Global Platts Top 250 Global Energy Rankings 2019.
·
The Export-Import Bank of India
(Exim Bank) announced in June 2021 that it had extended a line of credit (LOC)
worth US$ 100 million to the Sri Lankan government for the purpose of funding
solar energy projects and ensuring that renewable energy sources meet 70% of
the country's power needs by 2030.
Investment Scenario
The industry attracted US$ 15.33 billion in
Foreign Direct Investment (FDI) between April 2000 and March 2021, representing
for 3% of total FDI intake into India.
The
following are the major stakeholders in the electricity sector
Power generation: overall fundamentals will remain
strong
Renewable
energy is fast emerging as a major source of power
• According to the Central Electricity Authority (CEA), renewable energy generation will grow from 18 percent to 44 percent by 2029-30, while thermal energy generation would decrease from 78 percent to 52 percent.
• Wind energy is India's most abundant renewable energy source. It contributes for 41.23 percent of total installed renewable capacity (39.44 GW) (95.65 GW). By 2022, there are plans to increase wind power generating capacity to 60 GW.
• Solar energy is the second-largest renewable energy source. It represents for 42.94 percent of total installed renewable capacity (41.08 GW) (95.65 GW). The government has set a goal of 100 gigawatts by 2022.
• Mr. Mukesh Ambani, Chairman of Reliance Industries Ltd., said in June 2021 that the firm planned to invest Rs. 750 billion (US$ 10.10 billion) over the next three years in a new energy sector.
• In July 2021, GAIL, a subsidiary of the Ministry of Petroleum and Natural Gas, agreed to invest Rs 5,000 crore (US$ 671.14 million) in two plants to produce ethanol and compressed biogas (CBG) from municipal waste.
Conclusion
In the present
context, we can observe that major economies are experiencing a big electricity
deficit due to a major coal scarcity caused by severe rains in coal mining
towns, posing a huge short-term problem for major economies such as China,
Europe, and India. This demonstrates how reliant we are on an energy source
that is finite and poses significant environmental risks to economies.
This is why
many big corporations in India and throughout the world are turning toward
renewable energy sources, and governments in many countries have begun to
promote the wider use of renewable energy.
As economies
develop, demand for industrial and home power sources will grow rapidly, and
the power sector's capacity will grow in line. The growing demand for
electricity cannot be met only by nonrenewable energy sources. Companies will
have to rely on renewable energy sources in the future and expand their renewable
energy capacity.
As electric vehicles (EVs) are going more prevalent in
India and throughout the world, the demand for energy is expected to skyrocket
in the coming decade. As a result, now is a wonderful time to invest in firms
that are constantly growing their capacity utilization towards renewable
energy, as they will eventually become a big contributor to the power sector
and general economic development.