POWER SECTOR

Published on 01 Mar 2025

India’s power sector is crucial for economic development, with over 400 GW of installed capacity. It features a mix of coal, gas, hydro, solar, and wind power. The country aims to reach 500 GW of non-fossil fuel-based capacity by 2030. Challenges include infrastructure limitations and financial issues in distribution companies. Efforts are ongoing to improve efficiency and sustainability in the sector.

Power Sector Reforms in India

• Electricity Act, 2003:

• Objective: Restructuring the power sector to promote competition and private investment.

• Key Aspects: Establishment of State Electricity Regulatory Commissions (SERCs), separation of generation, transmission, and distribution functions, and fostering competition by allowing private players in generation and distribution.

• National Electricity Policy, 2005:

• Objective: Providing electricity to all and enhancing sector performance.

• Key Aspects: Emphasis on increasing generation capacity, modernizing transmission and distribution networks, and promoting renewable energy sources. It set targets for universal access to electricity and improving power quality.

• Integrated Power Development Scheme (IPDS), 2014:

• Objective: Strengthening the power distribution system in urban areas.

• Key Aspects: Upgrading substations, laying underground cables, installing smart meters, and reducing losses. The scheme has allocated ₹32,000 crore for these improvements.

• Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), 2014:

• Objective: Providing 24x7 power supply to rural areas.

• Key Aspects: Developing separate feeders for rural and urban areas, enhancing distribution infrastructure, and reducing transmission losses. The scheme has a budget of ₹76,000 crore.

• Ujwal Discom Assurance Yojana (UDAY), 2015:

• Objective: Improving the financial health of Distribution Companies (DISCOMs).

• Key Aspects: States to take over DISCOMs' debt, and improve operational and financial efficiency. As of 2023, 27 states and UTs have adopted UDAY, leading to a reduction in DISCOM losses.

• National Clean Energy Fund (NCEF):

• Objective: Financing clean energy projects and technology innovation.

• Key Aspects: Supports projects on carbon capture, renewable energy technology, and other innovative clean energy solutions. The fund has an allocation of ₹20,000 crore.

• Renewable Purchase Obligation (RPO):

• Objective: Mandating a percentage of power from renewable sources.

• Key Aspects: States are required to set RPO targets, aiming for 50% of total capacity from renewables by 2030. This drives investment in solar, wind, and other renewable energies.

• Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya), 2017:

• Objective: Ensuring universal household electrification.

• Key Aspects: Electrification of all households, including remote areas. By 2023, over 99% of households in India have been electrified under this scheme.

India’s Energy Policy to ensure Inclusive Growth

• Universal Energy Access: Over 99% of households were electrified by 2023, with ongoing efforts to cover the remaining areas.

• Example: The Saubhagya scheme, launched in 2017, aimed to electrify all households by providing free connections to economically weaker sections.

• Renewable Energy Expansion: India aims to achieve 500 GW of non-fossil fuel capacity by 2030, with solar capacity alone targeted to reach 280 GW.

• Example: The Solar Park Scheme supports the development of solar parks, with a goal to install 20 GW of solar power capacity across the country by 2022.

• Infrastructure Development: Investments in upgrading transmission and distribution networks, including a ₹32,000 crore allocation for urban power infrastructure under the Integrated Power Development Scheme.

• Example: The Integrated Power Development Scheme (IPDS) allocates ₹32,000 crore to modernize urban power infrastructure, including smart metering and grid upgrades.

• Energy Efficiency Improvements: Implementation of energy efficiency programs projected to save about ₹1.05 lakh crore by 2030 through reduced energy consumption.

• Example:  The Perform, Achieve, and Trade (PAT) scheme under the National Mission for Enhanced Energy Efficiency (NMEEE) is expected to save 10.4 million tons of oil equivalent by 2030.

• Support for Clean Technologies: The National Clean Energy Fund, with an allocation of ₹20,000 crore, supports advancements in clean technologies like carbon capture.

• Example: The National Clean Energy Fund (NCEF) funds projects like the Carbon Capture and Storage (CCS) initiative, with an allocation of ₹20,000 crore for clean technology advancements.

• Economic Development and Job Creation: The renewable energy sector is expected to create over 2 million jobs by 2030, supporting economic growth.

• Example: The National Solar Mission aims to create around 2 million jobs in the solar sector by 2030 through large-scale solar projects and manufacturing.

• Regional Disparities Reduction: Continued focus on bridging the energy access gap between rural and urban areas, with programs targeting remote regions.

• Example: The Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) focuses on providing reliable power supply to rural areas, addressing disparities in energy access between rural and urban regions.

• Affordability and Access: Subsidies and support mechanisms aim to keep energy costs manageable, particularly for low-income households.

Example: The Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) includes subsidies for low-income households to ensure affordable electricity access.

Tags:
Economy

Keywords:
Power sector Power sector reforms Energy policy Electricity

Syllabus:
General Studies Paper 3

Topics:
Infrastructure Development