Indian energy sector is a study in contrast. It is undergoing transformation and disruption at the same time. A record capacity of over 75 GW was added in the last three years and yet, the PLF fell drastically leading to a huge unused capacity. India has the fifth largest power generation capacity in the world. The country ranks third globally in terms of electricity production. In May 2018, India ranked 4th in the Asia Pacific region out of 25 nations on an index that measures their overall power. And yet, the per capita consumption of power is just about a third of the world average. If the per capita consumption has increased over the years, many houses are still without power. Every Indian village has power connection now, yet an estimated 16.3 crore Indians are still without power. Since a village is considered electrified if 10% of its households have an electricity connection, there is fear that many families may not have electricity despite living in an electrified village. As per data on Pradhan Mantri Sahaj Bijli Har Ghar Yojana — Saubhagya — 17.4% rural households are yet to be electrified despite the achievement of 100% village electrification. Installed capacity and generation rise
The Indian power sector has had eventful developments in not only generation and transmission capacity addition, but also in distribution reforms. The sector has seen tremendous growth in capacity addition during the last few years. During the Twelfth Plan period, cumulative capacity addition of 99,209.5 MW was achieved against a target of 88,537 MW.
Much of this growth has come through increasing capacity addition by the private sector. The Electricity Act 2003 created conducive environment to promote private sector participation and competition in the sector by providing a level playing field. This has led to a significant investment in generation, transmission, and distribution areas. The share of private sector in overall installed capacity has grown from 13% in March, 2007 to 45% in March, 2018. During the last ten years till 2017, the public sector (both central and states combined) contributed 73,402 MW while private sector alone contributed 77,891 MW capacity addition.
India has traditionally been dependent on coal for its power generation. Much of this is because of an abundance coal reserves in the country. This trend is continuing — since 2011, coal power plants have accounted for more than two-thirds of capacity additions, and thermal plants now account for about two-thirds of the country’s total power generation. Gas also plays a part in flexibly expanding power supply, and India’s Hydrocarbon Exploration Licensing Policy is an important step to encourage necessary investment in energy exploration and production.