loader image

India’s Energy Mix and Pathways to Sustainable Development

The demand for primary energy in India has grown along with the GDP and population of the nation. Electricity demand is projected to increase to 1,894.7 Terawatt-hours in 2022 and electricity consumption has increased at a compound annual rate of 7.39 percent and demand is generated throughout the board in the economy, from commercial and industrial usage to agricultural and domestic ones. Over the ensuing decades, this pattern will persist. The reduction of energy intensity will be a major component of demand-side management.

India has enough energy production to meet the present demand, but it lacks high-quality infrastructure, including the conductors, transformers, and other tools needed for power transmission and distribution. India is improving its power supply deficiencies through a number of programs aimed at creating efficient technology and encouraging renewable energy. Over time, both the capacity of electrical installations and the total amount of power produced from various sources have expanded. Additionally, over the past 20 years, the proportion of clean energy has increased. India is gradually moving away from fuel-based energy sources in order to satisfy peak demand. Although its reliance on hydropower has decreased over time, it still relies heavily on coal and oil for energy.

Coal – Over 57 percent of India’s electricity is produced by coal. With a 45 percent ash content and low calorific values, the country’s coal is not of extraordinary grade despite having significant resources in the east and south. As opposed to this, premium coal imported from Indonesia, South Africa, Russia, and Australia only has an ash concentration of 10%–15%.

Oil and Gas – India is heavily dependent on oil and gas imports, which reached 229 million tonnes in 2019 (roughly 85 percent of the total oil and gas consumed domestically). Just over 604 MT of crude oil was contained in the Assam and western offshore resources, while approximately 1,290 billion cubic meters of natural gas were contained in the eastern and western offshore areas as of 2017.

Hydropower – India’s more than twenty hydroelectric dams have a combined hydropower generating capacity of 45.4 GW in 2019. The country’s hydropower potential is estimated by the Ministry of Power to be around 145 GW. However, due to the higher pace of growth of energy from alternative sources and a lack of focus from the public and commercial sectors, the share of hydropower output has been dropping over time.

Nuclear – India’s 22 nuclear reactors had an installed nuclear energy capacity of about 6.8 GW as of 2019. The International Atomic Energy Agency estimates that India generated around 35 TWh of electricity from nuclear power in 2017.

Renewable Energy – As a result of recent expansion in the renewable energy sector, it is anticipated that the share of renewable energy in India’s energy mix will rise by 91 percent from 2017 to 2022, while the share of thermal generation will decrease. The solar and wind energy sectors will see the most expansion.


According to a report by the Climate Policy Initiative, India will need to invest a total of $189.15 billion to reach its renewable energy goals by 2022, of which 27% must go toward wind projects, 37% toward utility-scale solar projects, 32% toward rooftop solar projects, and 4% toward biomass and small hydropower projects. There are several methods for India to get through the four issues mentioned above and satisfy these investment requirements. These consist of Domestic Investment, Financial Incentives, and Foreign Direct Investment (FDI).

Foreign Direct Investment (FDI) – Data from the Department for Promotion of Industry and Internal Trade shows that from 2000 to 2020, cumulative FDI inflows into the power industry totaled about $15 billion, or about 3% of all FDI inflows. In 2012, the government streamlined the clearance procedure by allowing 100% of FDI through the automatic route to the electricity industry. This includes investments in the production and transmission of electricity via hydroelectric dams, thermal power plants using fossil fuels, the production and distribution of renewable energy, the distribution of electricity to homes, businesses, and industries, and power trading. Non-conventional energy sources are now more widely used in India, where there has been a rise in FDI investment.

Domestic Investment – Both the public and private sectors have seen a substantial increase in investments as a result of economic reforms and liberalization policies across sectors put in place since the early 1990s, particularly in the power industry. $411 billion is the total amount of prospective investments that are available for renewable energy projects, which is double the required investment target. India’s energy sector is more dependent than ever on the private sector, despite significant government investments, as public resources are increasingly going toward public health and sustaining livelihoods. As a result, in order to encourage private investment, the government has boosted the bankability of power purchase agreements, encouraged nonfinancial banking organizations to participate, formed a new investment fund, started the process of rationalizing tariffs, and provided subsidies.

Financial Rewards – Alternative debt instruments, including “green” asset-backed securities, may be useful financial tools to promote investment in sustainable energy infrastructure. Banks and other financial institutions can mitigate the risks related to individual renewable energy projects by aggregating renewable energy assets from multiple businesses and regions at various stages of their operational lifecycles. Government-funded green investment banks are organizations that “crowd in” private investment in low-carbon assets, offer debt for initiatives with available resources, and raise money through the issuing of bonds and the development of asset-backed securities.

In conclusion, even though India has made significant commitments to boosting investments in renewable and clean energy, the clean energy sector has not made enough progress due to factors like offtake risk, a lack of infrastructure, a lack of financial intermediaries, and a lack of investor understanding. As a result, in order to shift India’s energy mix toward renewables, the government needs to encourage investment in cleaner energy sources and implement the necessary institutional adjustments.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top