Power has been considered one of the most important components of economic growth for nations across the globe. The booming power sector is one the many reasons for the continuous growth of the Indian economy, which accounts for the highest contributions to its GDP with more than 700 units per 1000$ of contribution. India is also simultaneously undergoing a rapid change from reliance on traditional fossil fuels towards a future powered by clean and renewable energy sources. This shift positions India as a potential powerhouse in the global power sector, not just for its own energy needs, but also for its role in combating climate change.
Consequently, the government of India has been playing a significant role in re-shaping the sustainable energy sector and had already pledged back in the UN Assembly 2019 a target of 450 GW of renewable energy (RE) to be achieved by 2030, which translates into about 60% of the power capacity being renewables. We hence discuss how the Indian power sector is moving towards a “re-newed” future.
Market Size Analysis
Let us now look at the market size of the power sector. With an installed power capacity of 426.13 GW as of November 30, 2023, India stands as the third-largest producer and consumer of electricity. Based on a report by Mordor Intelligence, this sector is expected to grow from 492.86 gigawatts in 2024 to 752.90 gigawatts by 2029, at a CAGR of 8.80% during the forecast period (2024-2029).
Market Trends
The government has already set ambitious targets for renewable energy deployment. This includes 450 GW by 2030. With solar and wind energy at the forefront, supportive government policies are not only increasing production but also leading to a reduction in technology costs. The dependency on fossil fuels is being reduced with the surge in renewable energy deployment, helping to restructure the country’s energy mix.
The Government has been working on various initiatives to attract foreign investments through supportive policies and a sustainable energy sector. Based on a report by the IEA, with a projected capacity of 280 GW by 2025, India has surpassed its target of installing 175 GW of renewable energy capacity by 2022.
Government Policies and Initiatives
The policies and initiatives by the government in the power sector are directed towards planning a structured renewable production expansion for the future ahead.
We will take a look at some of them:
- Several policies including the National Solar Mission, the National Wind Energy Mission, and various state-level policies encourage renewable expansion. However, the end goal remains the same – promoting sustainability and attracting foreign investments to support and develop more similar projects.
- Achieving ‘Power for All’ is a central goal. Programs such as SAUBHAGYA and DDUGJY concentrate on electrifying rural areas, whereas IPDS aims to enhance urban distribution networks. The goal of the Indian government’s Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or “Saubhagya,” is to electrify every home. 2.82 crore households had been electrified under this scheme as of March 2021.
- The objective of achieving 500 GGW of installed renewable energy capacity by 2030, established by the government, has now been directly related to the Green Revolution plan by installing 280 GW of solar power and 140 GW from wind power sources.
- Initiatives like UDAY aim to restructure debt-laden power distribution companies, improving their financial health and efficiency. Smart meter deployment under NSGM is another step towards reducing power theft and improving revenue collection.
- Speaking of international investments, back in 2021, the United Kingdom announced that it would invest it will invest US$ 1.2 billion through public and private investments in green projects and renewable energy in India to support the latter’s target of 450 GW of renewable energy by 2030. There was no current update as to whether the project has started or not.
- India is in discussions with Brazil for a technological partnership aimed at expanding the utilization of ethanol, as part of efforts to promote alternative fuels and reduce carbon emissions, aiming for a facilitated Brazil Market Entry in the process.
The Big Players
The Power Sector in India is competitive and highly consolidated. The leading industry players include – NTPC Ltd, NLC India Ltd, SJVN Ltd, JSW Group, Power Grid Corporation India Ltd, Adani Power, Reliance Power, etc.
Some of the major players in the transmission line power sector include Power Grid Corporation of India Limited (POWERGRID), Adani Transmission Limited (ATL), Sterlite Power Transmission Limited, L&T Power Transmission & Distribution Limited,
NTPC, Toshiba Transmission & Distribution Systems (India) Private Limited, Reliance Infrastructure Limited and CESC.
NTPC Ltd is one of the largest power generation companies in India and is one of the top 5 power plant companies in India by capacity as of March 31, 2022.
Major Investments and Developments in the Power Sector:
Based on an article by the Indian Brand Equity Foundation, there have been a lot of investments in this sector, providing a quick overview of some of the most important ones below:
- India’s high ranking in renewable energy investment (ranked 4th globally between 2015-2022).
- Significant investments by companies like NTPC, Tata Power, and SJVN in solar projects across the country.
- Investment plans outlined in the National Electricity Plan for grid expansion and strengthening.
- Dedicated projects for building transmission systems to handle the influx of renewable energy.
- The signing of MoUs between government bodies and private companies for clean energy development.
- Government approval for investments in hydro and renewable projects.
- Investment agreements worth billions of dollars for building large-scale solar projects.
- Increased year-on-year investment in the renewable energy sector.
The Path Ahead:
India’s power sector is expected to undergo a significant transformation in the current decade(2020-2029), with a rise in demand growth, energy mix, and market operations. The Indian government is also planning to establish a renewable energy capacity of 500 GW by 2050. A more sustainable and effective power sector is being made possible by the growing importance of renewable energy sources, the emphasis on energy security, and ongoing reforms.
By overcoming the existing challenges through technologies and innovative solutions, India has the potential to become a self-sufficient and sustainable leader in the power sector and inspire other nations in their shift towards a cleaner energy future.
Resources and Links:
https://www.ibef.org/industry/power-sector-india
https://www.mordorintelligence.com/industry-reports/india-power-market
