India’s energy development program is under severe pressure due to the ever increasing demand supply gap and a mismatch of resources. With a targeted GDP growth rate of 10 percent, energy demand in India is expected to grow at 6.4 - 8.0 percent. Rapid industrialization and population growth, limited reserves of coal and fossil fuels and (the) consequent burden on foreign exchange due to increasing imports, are some of the factors leading to the challenges faced by the Indian power sector. Coal, oil, and natural gas are the three primary commercial energy sources in India with the country being (amongst) the largest coal producing nations. Coal continues to be one of the most important sources for meeting the domestic energy needs and accounts supplies 55% of the country’s total energy.
According to a report by KPMG and CII brought out in 2007 " India 's power and upstream energy sectors need investments to the tune of $120-150 billion over the next five years". The country’s energy policy is focusing now on developing all forms of conventional and non-conventional energies. To decrease the dependence on energy imports and to reduce green house gas emissions, the National Action Plan on Climate Change, released by the Prime Minister of India on 30th June, 2008 prioritizes the increased use of indigenous renewable energy resources, backed by focused R & D.
The Indian Renewable Energy Development Agency Ltd., (IREDA), is an exclusive financing organization set up under the administrative control of Ministry of Non-Conventional Energy Sources (MNES) to support various renewable energy projects. In its Eleventh Five Year plan IREDA is expected to invest approximately US$ 3.39 billion for the development of renewable energy sector projects.
In addition to the conventional forms of energy, India is adopting generation sources such as biomass, wind, solar and hydro. India has the world’s second largest Bio gas program. Currently, biomass helps to meet 70% of the basic energy needs of the rural areas. The current availability of biomass in India is estimated at about 120-150 million MT per annum covering agricultural and forestry residues corresponding to a potential of 16,000 MW.
The Indian wind energy sector has an installed capacity of 8757.2 MW (as on March 31, 2008). In terms of wind power installed capacity, India is ranked 4th in the World. India today is a major player in the global wind energy market. The Indian Wind Energy Association has estimated that with the current level of technology, the ‘on-shore’ potential for use of wind energy for electricity generation is of the order of 65,000 MW. States with high wind power potential are Tamil Nadu, Gujarat, Andhra Pradesh, Karnataka, Kerala, Madhya Pradesh and Maharashtra. State-of-the-art wind power technologies are now indigenously available in India. Blades, a crucial component of wind turbines, are manufactured in India.
India has the world’s largest decentralized solar energy. Solar Photovoltaic systems have found applications in households, agriculture, telecommunications, defense, and railways among others. The Government intends to develop 60 cities as "Solar Cities". States including Gujarat and Haryana are encouraging private participation in biomass, solar, wind energy, small hydro and co-generation biomass power projects. Companies like Essar, Tata Power, Reliance, Suryachakra are proposing major investments in the solar energy sector in photovoltaic, thermal and hybrid solar projects in Gujarat.
India also ranks fifth in the world in terms of exploitable hydro electricity generation. A report by the World Bank indicates that the Government of India has set the target for India’s optimum power system mix at 40 percent from hydropower and 60 percent from other sources. To ensure that the unserved 40 percent of Indian homes get electricity by 2012, and to meet rising demand from those already being supplied by the power grid, the government estimates that the country will need to install an additional 100,000 MW of generating capacity by 2012, expanding grid-based generation to about 225,000 MW.
