Energy policy of India

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The energy policy of India is to increase the locally produced energy in India and reduce energy poverty,^[1] with more focus on developing alternative sources of energy, particularly nuclear, solar and wind energy.^[2][3] Net energy import dependency was 40.9% in 2021-22.^[4]

The primary energy consumption in India grew by 13.3% in FY2022-23 and is the third biggest with 6% global share after China and USA.^[5][6][7] The total primary energy consumption from coal (452.2 Mtoe; 45.88%), crude oil (239.1 Mtoe; 29.55%), natural gas (49.9 Mtoe; 6.17%), nuclear energy (8.8 Mtoe; 1.09%), hydroelectricity (31.6 Mtoe; 3.91%) and renewable power (27.5 Mtoe; 3.40%) is 809.2 Mtoe (excluding traditional biomass use) in the calendar year 2018.^[8] In 2018, India's net imports are nearly 205.3 million tons of crude oil and its products, 26.3 Mtoe of LNG and 141.7 Mtoe coal totaling to 373.3 Mtoe of primary energy which is equal to 46.13% of total primary energy consumption. India is largely dependent on fossil fuel imports to meet its energy demands – by 2030, India's dependence on energy imports is expected to exceed 53% of the country's total energy consumption.^[9] About 80% of India's electricity generation is from fossil fuels. India is surplus in electricity generation and also a marginal exporter of electricity in 2017.^[10] Since the end of the calendar year 2015, huge power generation capacity has been idling for want of electricity demand.^[11] India ranks second after China in renewables production with 208.7 Mtoe in 2016.^[12] The carbon intensity in India was 0.29 kg of CO₂ per kWh_e in 2016 which is more than that of USA, China and EU.^[13] The total manmade CO₂ emissions from energy, process emissions, methane, and flaring is 2797.2 million tons of CO₂ in CY2021 which is 7.2% of global emissions.^[6] The energy intensity of agriculture sector is seven times less than industrial sector in 2022-23 (see Table 8.9^[5])

In 2020-21, the per-capita energy consumption is 0.6557 Mtoe excluding traditional biomass use and the energy intensity of the Indian economy is 0.2233 Mega Joules per INR (53.4 kcal/INR).^[14][15] India attained 63% overall energy self-sufficiency in 2017.^[12][16][17] Due to rapid economic expansion, India has one of the world's fastest growing energy markets and is expected to be the second-largest contributor to the increase in global energy demand by 2035, accounting for 18% of the rise in global energy consumption.^[18] Given India's growing energy demands and limited domestic oil and gas reserves, the country has ambitious plans to expand its renewable and most worked out nuclear power programme.^[19] India has the world's fourth largest wind power market and also plans to add about 100,000 MW of solar power capacity by 2022.^[20][21] India also envisages to increase the contribution of nuclear power to overall electricity generation capacity from 4.2% to 9% within 25 years.^[22] The country has five nuclear reactors under construction (third highest in the world) and plans to construct 18 additional nuclear reactors (second highest in the world) by 2025.^[23] During the year 2018, the total investment in energy sector by India was 4.1% (US$75 billion) of US$1.85 trillion global investment.^[24]

Indian solar power PV tariff has fallen to ₹2.44 (2.9¢ US) per kWh in May 2017 which is lower than any other type of power generation in India.^[25] In the year 2020, the levelized tariff in US dollars for solar PV electricity has fallen to 1.35 cents/kWh.^[26][27] Also the international tariff of solar thermal storage power plants has fallen to US$0.063/kWh, which is cheaper than fossil fuel plants.^[28][29][30] The cheaper hybrid solar power (mix of solar PV, wind power, and solar thermal storage power) need not depend on costly and polluting coal/gas fired power generation for ensuring stable grid operation.^[31] Solar electricity price is going to become the benchmark price for deciding the other fuel prices (petroleum products, natural gas/biogas/LNG, CNG, LPG, coal, lignite, biomass, etc.) based on their ultimate use and advantages.^[32][33][34]

The energy policy of India is characterized by trade-offs between four major drivers: A rapidly growing economy, with a need for dependable and reliable supply of electricity, gas, and petroleum products;^[35] Increasing household incomes, with a need for an affordable and adequate supply of electricity, and clean cooking fuels; limited domestic reserves of fossil fuels, and the need to import a vast fraction of the natural gas, and crude oil, and recently the need to import coal as well; and indoor, urban and regional environmental impacts, necessitating the need for the adoption of cleaner fuels and cleaner technologies. In recent years, these challenges have led to a major set of continuing reforms, restructuring, and a focus on energy conservation.