The Indian power sector has seen substantial developments over the past year, reflecting both progress and challenges in its ongoing energy transition. Power demand has been growing and the peak demand has risen to 250 GW. Meanwhile, coal availability has been effectively managed through increased mining and transportation efforts. Renewable energy continues to expand, with solar capacity growing significantly, supported by government policies and competitive bidding. Power Line invited industry experts to discuss the sector’s progress over the past year and share their views on the challenges and the way forward…
What is your assessment of the power sector’s progress during the past year?
Pankaj Batra
Peak demand reached 250 GW, a 3 per cent increase from 243 GW in 2023, which is lower than last year’s 12 per cent growth. The government ensured coal availability through increased mining and transportation, with thermal plants starting the year with 50.5 million tonnes of coal, a 37 per cent year-on-year increase. The India Meteorological Department predicted a good monsoon, likely reducing power needs for irrigation. Imported coal- and gas-based plants were directed to operate at full capacity until September 2024 and June 2024 respectively. Despite heatwaves, there was no electricity shortage, and day-ahead market prices dropped to Rs 4.90 per unit compared to Rs 5.20 per unit last year.
Renewable generation increased by 5 per cent between April 2024 and June 2024, with solar up by 18 per cent and wind down by 3 per cent. Meanwhile, solar capacity grew by 15 GW and wind by 3 GW. The Ministry of New and Renewable Energy set a target of 9 GW for renewable plus storage bids in 2023, yielding competitive results. Solar Energy Corporation of India Limited’s March 2024 tender for solar photovoltaic (PV) and battery storage registered low bids, highlighting the cost-effectiveness of renewable energy compared to coal. The government continues to promote energy storage and offshore wind, with significant tenders and policy initiatives under way.
Offshore wind projects are being developed in Gujarat and Tamil Nadu, with a 4 GW tender launched in February 2024. The government also approved a VGF scheme for offshore wind, with a total outlay of Rs 74.53 billion. The PM Surya Ghar Muft Bijli Yojana, launched in February 2024, aims to increase rooftop solar PV adoption, benefiting 10 million households and resulting in savings of Rs 750 billion annually.
The National Electricity Plan 2023 projects significant energy storage capacity requirements by 2031-32, driven by renewable energy growth. The Ministry of Power’s (MoP) 2023 framework and pumped storage policy aim to boost energy storage installations. Nuclear power is also being promoted, with NTPC Limited and Nuclear Power Corporation of India Limited collaborating on new projects and the development of a prototype fast breeder reactor at Kalpakkam, Tamil Nadu.
The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles scheme continues to encourage EV adoption, with increasing charging station usage. Transmission and distribution losses have decreased from 34 per cent in 2001-02 to 17.68 per cent in 2022-23, supported by the Revamped Distribution Sector Scheme (RDSS). Cybersecurity in the power sector is also being strengthened, with new regulations and guidelines issued by the Central Electricity Authority (CEA) in 2024.
Somit Dasgupta
The sector’s achievements can be measured in various ways and one traditional approach is to track performance in relation to the targets set or compare growth to the previous year. In terms of capacity additions in 2023-24, there have been massive shortfalls in both the thermal and hydro sectors, with only 42 per cent and 2.7 per cent of the targets achieved respectively. However, the nuclear target of 1,400 MW was achieved. In the case of renewables, although there was no target set, additions were about 20 per cent higher than the previous year (2022-23). Meanwhile, generation has grown by about 7 per cent in 2023-24 compared to 2022-23. While there has been positive growth for the thermal (10 per cent), nuclear (5 per cent) and renewable (11 per cent) sectors, generation from large hydro has reduced substantially, by about 17 per cent.
Another parameter to assess the performance of the sector is to measure the peak and energy deficit. The peak and energy deficit in 2023-24 was (-)1.4 per cent and (-)0.3 per cent respectively, which is better than the figures of 2022-23. There are other parameters as well, such as the reduction in aggregate technical and commercial losses and the plant load factor of thermal plants, but no comments are being offered in this respect as they keep fluctuating due to various factors, including the time of year when they are measured. While comparing these parameters against targets is a somewhat crude exercise, a more comprehensive understanding can be gained by studying the policy measures initiated during the year. From this point of view, a number of measures were announced and some of the major ones include the Carbon Credit Trading Scheme (June 2023), Tariff-based Competitive Bidding for the Procurement of Firm and Despatchable Power from the Grid (June 2023), the National Framework for Promoting Energy Storage (August 2023), the VGF scheme for the development of battery energy storage systems (March 2024), guidelines for promoting pumped storage plants (PSPs) (April 2023) and tariff-based guidelines for PSPs (August 2024). While these guidelines will reap benefits in the future, there are no immediate gains. So, overall, the achievement in the past one year or so has been a mixed bag.
Satyajit Ganguly
The vision of our policymakers, as well as the intent of our regulators towards expanding the role of power markets in our country, is very clear. This has been made evident in the MoP report titled “Development of Electricity Market in India”, which provides a road map for transforming the power market/transaction structure of the country.
India adopted a “multi-power exchange” model in 2008 with the aim of encouraging competition among the exchanges and catering to the growing and varying requirements of market participants. Over the past 15 years, the transacted volumes on the power exchanges have increased substantially through the introduction of various contracts in multiple segments, such as the day-ahead market (DAM), real-time market (RTM), contingency markets, term-ahead market, green-day ahead market, high price day-ahead market, renewable energy certificate (REC) market, and energy savings certificate and (ESCert) market. As a result, nearly 8 per cent of electricity was transacted on power exchange platforms in 2023-24.
However, the multi-power exchange model has resulted in different prices being discovered in the same market due to varying order books at each power exchange. To overcome this situation, the Central Electricity Regulatory Commission (CERC) introduced “market coupling” provisions in the CERC (Power Market) Regulations, 2021, enabling uniform price discovery on power exchanges. Later, the CERC, in an order dated February 6, 2024, directed Grid Controller of India Limited to implement a shadow pilot on the power system and cost optimisation through market coupling, involving the coupling of the RTM with RTM, security constrained economic despatch (SCED) and DAM of three power exchanges for a period of four months after the development of necessary algorithm.
Long-term goals to enhance sectoral efficiencies, such as the National Green Hydrogen Mission and the Energy Conservation Amendment Act, 2022, have been taken up. The latter has been notified, with a time-bound programme for introducing carbon markets being one of the goals, as highlighted by the notification of the Carbon Credit Trading Scheme (CCTS).
On February 29, 2024, the government approved the PM Surya Ghar Muft Bijli Yojana to increase the share of solar rooftop capacity and empower residential households to generate their own electricity. The scheme has an outlay of Rs 750.21 billion and will be implemented till FY 2026-27 by a national programme implementation agency at the national level alongside state implementation agencies at the state level. Distribution utilities will serve as the implementing agencies. With various initiatives in the pipeline, the breadth and depth of markets are expected to substantially increase over the next few years.
Tarun Katiyar
The Indian power sector has shown remarkable resilience and innovation. Power demand has surged, with the country surpassing 450 GW of installed capacity, nearly 200 GW of which comes from renewable energy sources. In May, we set a record by meeting 250 GW of peak demand, with non-solar demand reaching an all-time high of 234.3 GW. This reflects the increasing energy consumption across both industrial and residential sectors.
The sector is undergoing a sea change, driven by advancements in renewable energy, smart grids, energy storage systems, and digitalisation. Solar and wind power are now more competitive, while smart grids and storage are enhancing reliability. These innovations are pushing India towards an efficient energy future.
Tata Power Trading Company Limited (TPTCL) is at the forefront of this transformation. By expanding its renewable energy portfolio and delivering smart energy solutions, TPTCL continues to play a key role in strengthening the country’s energy landscape and positioning itself as a leader in the sector.
How do you rate India’s energy transition so far? What more needs to be done?
Pankaj Batra
India is successfully balancing energy adequacy with carbon reduction efforts. The country is rapidly transitioning to renewable energy, EVs and solar agricultural pumps. As of June 30, 2024, India’s installed renewable energy capacity is 195.01 GW, making up 43.71 per cent of the total installed capacity of 446.1 MW.
India has awarded over 8 GW of grid-scale energy storage as of November 2023, with significant growth projected. By 2047, energy storage needs are expected to reach 2,380 GWh due to increased renewable energy adoption.
The push for nuclear energy, including fast breeder reactors and small modular reactors (SMRs), is a step forward. SMRs are a promising solution due to their smaller footprint and cost efficiency, with ongoing projects in Argentina, China and Russia.
Despite existing frameworks for demand response, implementation at the state level remains lacking. Engaging state regulators and implementing pilot projects could unlock significant potential for balancing renewable
energy intermittencies.
Cross-border power interconnections and trade, including ongoing projects with Nepal, Bhutan and Bangladesh, are key to balancing intermittencies. Future connections with Sri Lanka and Myanmar, along with the global “One Sun, One World, One Grid” vision, could reduce the need for energy storage globally.
Somit Dasgupta
India has significantly expanded its renewable capacity and we take pride in this achievement. However, we tend to forget that much more is needed to meet our demand by 2029-30 and to decarbonise the power sector in a manner that allows us to reach net zero by 2070. The fact is that we are currently trying to increase our coal-based generation by importing coal and postponing the retirement of coal-based plants because renewable generation alone cannot meet the increase in demand. Therefore, our energy transition is not on the desired path. At present, our renewable generation is about 12 per cent of total generation, and we are carrying out grid balancing by ramping up/down our coal generation. Beyond a certain point, this approach will not be sustainable, with studies indicating that challenges arise when renewable generation is about 60 per cent (or more) of the total generation. Once that happens, storage becomes essential if the technical minimum of coal plants is reached. On the issue of storage, be it batteries or PSPs, we are poorly placed. Moreover, given the economics and other technical issues, there is not much point in talking about green hydrogen or carbon capture and storage. Hopefully, the various policy measures announced in the past one year will bear fruit in the near to medium term.
Satyajit Ganguly
Energy is a vital part of national and state programmes. Schemes related to rooftop solar, decentralised renewable power, smart grids, waste-to-energy plants, solar water pumps, electric mobility programmes and clean cooking fuel are among the many energy schemes that the central and state governments are using to engage people across the rural and urban areas.
The Indian government is prioritising the transition to sustainable and clean energy sources to support its Nationally Determined Contributions (NDCs) and net zero goals. This transition includes integrating renewables, exploring nuclear energy and utilising biofuels despite challenges such as renewable intermittency, waste management and the impact of biofuels on food security. The government has set the target to achieve at least 500 GW of non-fossil fuel installed capacity, which includes 280 GW of solar power and 140 GW of wind power projects, by 2030. This means that India will need an average annual addition of approximately 40-50 GW of installed renewable capacity over the next few years.
Tarun Katiyar
India’s energy transition has been remarkable, propelled by ambitious renewable energy targets, supportive policies, and a conducive growth ecosystem. Over the past decade, energy capacity has expanded significantly, positioning India as a potential global leader. Advanced technologies such as pumped hydro and battery storage are being implemented to address grid integration challenges. Although coal remains a major energy source, its share in the total electricity mix is gradually declining. The country’s investments in green hydrogen and energy efficiency initiatives further demonstrate a strong commitment to building a sustainable, resilient power system.
To sustain this momentum, it is essential to establish a fully integrated regional energy market and foster strategic collaborations with neighbouring countries like Nepal and Bhutan. Increased research and development in grid integration, energy storage, and renewable technologies will be crucial for innovation. Additionally, infrastructure development, particularly, transmission lines, substations and storage facilities, will ensure reliable and efficient integration of renewables into the grid. TPTCL is committed to facilitating this transition by developing grid infrastructure, promoting advanced storage solutions, and deploying technologies to help meet India’s target of 500 GW of non-fossil fuel capacity by 2030.
What are the key challenges that remain unaddressed?
Pankaj Batra
Despite the government’s commendable policies and schemes for advancing the energy transition and ensuring power sector efficiency, some initiatives have yet to fully take off, likely due to insufficient promotion, awareness and stakeholder engagement.
For instance, the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme, aimed at solarising agriculture pumps, offers significant benefits to farmers and reduces the state government’s subsidy burden. However, its impact could be greater with better implementation.
Similarly, the RDSS focuses on improving distribution infrastructure, which could drastically reduce technical losses and theft, thereby boosting efficiency. Accelerating its implementation could yield significant savings for
the country.
Somit Dasgupta
We need to do a bit of soul searching here. Are we really committed to the energy transition and decarbonisation? If we are, the government has to do a lot more and derisk the renewable generation sector. It must share the risk burden, which means that it should undertake land acquisition on behalf of the developers, arrange for statutory clearances, do whatever is needed to obtain right of way for transmission lines, ensure that payments to renewable generators are not delayed and provide seamless grid connectivity. Over and above this, we need to take a fresh look at policies such as the imposition of basic customs duty on solar modules and panels, as well as the enforcement of restrictive practices under the Approved List of Models and Manufacturers (ALMM).
Satyajit Ganguly
To address the challenges in transitioning to sustainable and clean energy sources, a diversified energy strategy is essential. This includes a smart mix of renewables combined with storage systems, nuclear, biofuels and thermal power, ensuring energy security while minimising operational risks.
The early adoption of clean coal technologies, such as coal gasification, carbon capture and storage, will be crucial in the coming decade to reduce emissions and improve efficiency. Further, operating on three other fronts would provide significant headway in meeting the energy transition goal:
Avoiding import dependency on solar panels and critical minerals
Multilateral cooperation in new areas such as green hydrogen and small modular reactors
Adopting green financing measures by exploring new lending trends and assessing financing needs for innovative clean energy technologies to enable India’s green transition.
Tarun Katiyar
While significant progress has been made, key challenges persist on the supply side, such as coal output constraints, fluctuating prices and difficulties in integrating renewable energy into the grid. Achieving India’s ambitious climate goals will require substantial investments in advanced grid infrastructure, the development of cost-effective energy storage solutions, streamlined regulatory processes, and greater collaboration to foster innovation.
Further, there is a growing market for environmental attribute certificates (EACs), energy audits, and sustainability consulting. We are addressing this gap by providing integrated energy management solutions that focus on energy optimisation for businesses and communities.
At TPTCL, we understand that grid stability and managing the intermittency of renewables will demand significant infrastructure upgrades. Through our integrated offerings, we are committed to supporting the energy transition and the sustainability goals of businesses and communities.
What is your outlook for the sector in the near to medium term?
Pankaj Batra
The sector outlook is promising, with energy recognised as the driving force of the nation’s progress. Annual preparations by the MoP, the CEA, state governments and the private sector ensure power demand is met during peak months. There is a strong focus on expanding renewable energy and storage to meet NDC commitments. PSP capacity, especially closed-loop systems, is set to grow, with increasing renewable-plus-storage bids and declining tariffs. Offshore wind, nuclear power and EV adoption are expected to rise, while solarisation of pumps under the PM-KUSUM scheme has gained momentum. Energy storage and demand response will soon feature in ancillary service bids. The Resource Adequacy in Grid Code Regulations will require states to plan generation and transmission enhancements, guided by the CEA’s resource adequacy guidelines.
Somit Dasgupta
From the energy transition point of view, one can see very little happening in the near to medium term. If we continue at the current pace, the net result would be an ongoing reliance on coal-based generation to meet our demand. Unless we can triple our renewable capacity alongside a commensurate increase in storage, there will not be any major change. We have to make sure that we first capitalise on the low-hanging fruit, which is renewable generation capacity, because beyond this, things will only get tougher. Handling the energy transition in the power sector is considerably easier than the challenges involved in decarbonising the transport and industrial sectors, especially the latter.
Satyajit Ganguly
We are at a pivotal stage, with significant policy initiatives being undertaken to advance the power sector in the country. There is also a focused effort to enhance sector efficiency by utilising market frameworks. Power markets, especially power exchanges, are an important instrument in this drive towards enhancing efficiency for all consumers across the country.
Various power sector reforms are being introduced by the government to bring efficiency, promote decarbonisation and ensure 24×7 reliable and affordable power supply. The shadow pilot on market coupling will eventually be implemented for the coupling of the RTM with SCED, and the coupling of DAM with security constrained unit commitment in the near future.
To advance towards a greener economy, the CCTS was notified by the MoP in June 2022 to engage the corporate and private sectors in energy savings and carbon emission reductions. The Bureau of Energy Efficiency notified the “Detailed Procedure for Compliance Mechanism under CCTS” in July 2024. The CCTS will facilitate the large-scale promotion of clean energy technologies in India, leading to the decarbonisation of the Indian economy through active participation by various stakeholders. With the successful operation of the REC and ESCert markets by power exchange over the past 13 years, the exchanges are poised to play a significant role in the development of the carbon market.
We have a highly supportive policy and regulatory environment that offers numerous opportunities to serve the marketplace through a wide variety of contracts of various tenures, catering to different segments. Furthermore, the market-based economic despatch and regulatory provisions like market coupling, once implemented, will further enhance the competitive efficiencies of the power market.
Tarun Katiyar
The power sector is set for significant growth, fuelled by the rising energy demand, economic expansion, and urbanisation. The government’s strong push for renewables, backed by technological advancements and supportive policies, will continue to accelerate the shift towards cleaner energy sources. While solar and wind will dominate, other renewables like hydropower and biomass will also play an increasingly important role.
Key to addressing intermittency and ensuring grid stability will be advancements in battery technology and pumped hydro storage. However, bringing down the cost of renewable energy generation and storage remains a bottleneck in achieving cost-competitiveness with conventional fossil fuels.
Tata Power is well-positioned to lead this energy transition, with a comprehensive “cell-to-electricity” approach that addresses the full spectrum of energy needs. At the core of our offerings is decarbonisation, empowering customers to reduce their carbon footprint through renewable energy adoption, advanced energy management solutions, electric mobility, and cutting-edge energy-efficient technologies – all of which are paving the way for a sustainable, low-carbon future.
