Private Sector's Dominance in India's Power Generation

The private sector controls over 52% of India's total installed power generation capacity, totaling 446GW. As informed to Parliament, private sector investment is crucial for renewable energy projects, often selected via transparent bidding. With rapid economic growth, electricity demand has surged, leading to the expansion of coal-based capacity by 2031-32.

The private sector now owns over 52 percent of India's total installed power generation capacity of 446GW, Parliament was informed on Thursday.

Minister of State for Power Shripad Naik, in a written reply to the Lok Sabha, stated that the private sector plays a crucial role in India's power generation. According to the Electricity Act, 2003, generation is a de-licensed activity, and 100 percent Foreign Direct Investment (FDI) is permitted for power generation from all sources except atomic energy.

As of June 30, 2024, the total installed capacity in the country is 446,190 MW, with the private sector contributing approximately 234,065 MW, or 52.5 percent. Most renewable energy projects are being developed by private sector developers selected through a transparent bidding process.

Naik mentioned that with the Indian economy's rapid growth, the demand for electricity is also increasing at an unprecedented rate. Over 2021-22 and 2022-23, electricity demand in India grew by around 9 percent. Consequently, total emissions have increased in line with the growth in electricity generation, but due to an increasing share of renewable energy, the carbon intensity of the grid is reducing.

There has been a notable 9 percent decrease in the average carbon emission factor of grid electricity in India from 2013-14 to 2022-23. India's Intended Nationally Determined Contributions (INDCs) commit to about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. Currently, India has achieved 45.5 percent installed capacity from these resources.

To meet the estimated electricity demand by 2031-32, the Central Electricity Authority (CEA) has conducted generation planning studies. The studies indicate that the required coal and lignite-based installed capacity would be 283 GW against the present 217.5 GW. The government plans to set up an additional minimum 80 GW of coal-based capacity by 2031-32, with an estimated capital cost of Rs 8.34 crore per MW at the 2021-22 price level. This is expected to result in a minimum expenditure of Rs 6,67,200 crore.

(With inputs from agencies.)