Electricity sector in India

Template:Short description {{ safesubst:#invoke:Unsubst||date=__DATE__|$B= Template:Ambox }} Template:Use Indian English Template:Use dmy dates Template:Infobox electricity sector India is the third-largest producer and consumer of electricity globally after China and the United States. In FY 2024-25, the country generated 1824 TWh of power, of which 25% came from non-fossil sources.<ref name=":4">https://cea.nic.in/wp-content/uploads/resd/2025/03/Monthly_RE_Generation_Report_March_2025.docx.pdf Template:Bare URL PDF</ref> India has achieved near-universal household electrification, though the quality and reliability of supply remain uneven across regions.<ref name="downtoearth.org.in">Template:Cite news</ref>

Electricity in India is generated by both public and private sector utilities, transmitted through a unified national grid, and distributed primarily by state-owned distribution companies. The sector has undergone significant reforms since the Electricity Act of 2003, which introduced competition, open access, and independent regulation. Despite rapid growth in generation and transmission capacity, the distribution segment continues to face financial stress due to high technical and commercial losses, tariff constraints, and subsidy burdens.

India has also emerged as a global leader in renewable energy deployment, with renewables accounting for 89% of capacity additions in FY 2024-25.<ref>https://cea.nic.in/installed-capacity-report/?lang=en</ref> The country has set ambitious targets to achieve 500 GW of non-fossil fuel capacity by 2030<ref name="auto">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> as part of its transition toward a low-carbon energy system.

History

Electricity was first introduced in India in 1879 with the demonstration of electric light in Kolkata,<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> followed by the country's first hydroelectric power station at Darjeeling in 1897.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> During the colonial period, electricity supply was largely developed by private companies serving urban centers and industries.

After independence in 1947, the Electricity (Supply) Act, 1948 established CEA for planning at central level and State Electricity Boards (SEBs) at state level. SEBs oversaw generation, transmission, and distribution within each state. The sector expanded rapidly through successive Five-Year Plans, with coal and large hydroelectric projects forming the backbone of India's power system.

However, not every state was rich in coal or hydro resources. This lead them to depend on diesel generators. In 1960s, regional grid was conceptualized to supplement power from neighboring states.

By 1970s, REC was established to finance rural electrification. Generation was not able to keep up with growing demand. This, along with the oil price shocks lead central government to nationalize coal mines<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> and establish CIL, NTPC and NHPC.

In 1980s, rural electrification accelerated. However, due to vote-bank politics by state governments, tariffs were kept low which strained their finances. In order to further develop the sector, PFC was established for financing needs.

By 1990s, the idea of a national grid was conceptualized and lead to establishment of PGCIL. The 1991 economic liberalization led to policy reforms. It allowed private participation in generation (via licenses) and the Electricity Regulatory Commissions Act,1998 created independent regulators at central (CERC) and state level (SERC).

In 2000s, the Electricity Act, 2003 was enacted which consolidated prior legislation, mandated the unbundling of state utilities. Generation and distribution was de-licensed to encourage competition, and open access was introduced in transmission.

In 2010s, all regional grids were fully synchronized to form a single national grid.<ref>https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=108690</ref> Large-scale electrification programmes such as DDUGJY and Saubhagya extended electricity access to nearly all households.<ref name="static.pib.gov.in">https://static.pib.gov.in/WriteReadData/specificdocs/documents/2025/feb/doc2025221507201.pdf Template:Bare URL PDF</ref> India also pursued renewable energy deployment through National Solar Mission, positioning itself as a global leader for renewables.

Generation

Template:See also

India is the third-largest producer of electricity in the world. The nation's utilities produced 1824.2 TWh of power in FY 2024-25 with about 25% generated from non-fossil sources.<ref name=":4" /> Between FY 2014-15 and FY 2024-25, India’s electricity generation (utility only) had a CAGR of 5%.<ref>https://cea.nic.in/annual-generation-report/?lang=en</ref>

Generation was de-licensed in the Electricity Act of 2003, since then private participation has increased from 10% of overall share in FY 2003 to 37% in FY 2023.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Generation and capacity installed in India by source (utilities)
Source	Electricity generated (FY 2024-25)<ref name="plf" /><ref name=":5">https://cea.nic.in/wp-content/uploads/installed/2025/03/IC_March_2025_allocation_wise.pdf Template:Bare URL PDF</ref>	Cumulative installed capacity (as of March 2025)<ref name=":5" />
Coal	1331.6	221.8
Oil	0.4	0.6
Gas	31.4	24.5
Nuclear	56.7	8.2
Hydro	160.2	52.8
Solar	144.2	105.6
Wind	83.4	50
Bio Energy	15.9	11.6
TOTAL	1824.2 TWh	475.2 GW

Electricity generation in India (TWh)
Year	Total Fossil	Coal	Oil	Gas	Nuclear	Hydro	Small Hydro	Solar	Wind	Others	Total Renewables	Utility	Captive<ref>https://cea.nic.in/general-review-report/?lang=en</ref>	Total Domestic
citation	CitationClass=web }}</ref>	708.4	612.5	2.6	93.3	32.3	130.5	51.2				181.7	922.5	134.4	1056.9
2012-13<ref name=":1" />	760.5	691.3	2.4	66.7	32.9	113.7	57.4				171.2	964.5	144.0	1108.5
2013-14<ref name=":1" />	792.1	745.5	2.0	44.5	34.2	134.8	65.5				200.4	1026.6	149.0	1175.6
citation	CitationClass=web }}</ref>	877.9	835.3	1.6	41.1	36.1	129.2	8.1	4.6	33.8	15.3	191.0	1116.9	162.1	1279.0
2015-16<ref name=":1" /><ref name=":2" />	943.8	896.3	0.4	47.1	37.4	121.4	8.4	7.4	33.0	17.0	187.2	1168.4	168.4	1336.8
2016-17<ref name="exmaa" /><ref name=":2" />	993.5	944.0	0.4	49.1	37.9	122.4	7.7	13.5	46.0	14.4	203.9	1235.4	172.0	1407.4
2017-18<ref name="exmaa" /><ref name=":2" />	1037.1	986.6	0.3	50.2	38.3	126.1	7.7	25.9	52.7	15.6	228.0	1303.5	179.8	1483.3
2018-19<ref name="exmaa" /><ref>https://cea.nic.in/wp-content/uploads/2020/03/overview-03-1.pdf Template:Bare URL PDF</ref>	1072.3	1022.3	0.2	49.8	37.7	134.9	8.7	39.3	62.0	16.8	261.7	1371.8	213.1	1584.9
2019-20<ref name="exmaa" /><ref>https://cea.nic.in/wp-content/uploads/resd/2020/08/overview-03.pdf Template:Bare URL PDF</ref>	1042.8	994.2	0.2	48.4	46.5	155.8	9.5	50.1	64.6	14.1	294.1	1383.4	239.6	1623.0
2020-21<ref name="exmaa" /><ref>https://cea.nic.in/wp-content/uploads/resd/2021/03/Broad_overview_March.pdf Template:Bare URL PDF</ref>	1032.6	981.4	0.2	50.9	43.0	150.3	10.3	60.4	60.1	16.4	297.5	1373.2	224.8	1598.0
2021-22<ref name="exmaa" /><ref>https://cea.nic.in/wp-content/uploads/resd/2022/04/Broad_overview_March_2022.pdf Template:Bare URL PDF</ref>	1114.8	1078.6	0.2	36.0	47.1	151.6	10.5	73.4	68.6	18.3	322.5	1484.5	209.3	1693.8
2022-23<ref name="exmaa" /><ref name=":6">https://cea.nic.in/wp-content/uploads/resd/2023/03/Broad_overview_of_RE_Generation_March_2023-1.pdf Template:Bare URL PDF</ref>	1206.4	1182.1	0.4	23.9	45.9	162.1	11.2	102.0	71.8	18.6	365.7	1617.9	211.9	1829.8
citation	CitationClass=web }}</ref><ref>https://cea.nic.in/wp-content/uploads/resd/2024/04/Broad_Overview_of_RE_Generation_March_2024.pdf Template:Bare URL PDF</ref>	1326.6	1294.9	0.4	31.3	47.9	134.1	9.5	116.0	83.4	17.0	359.9	1734.1
citation	CitationClass=web }}</ref><ref name=":7">https://cea.nic.in/wp-content/uploads/resd/2025/04/Broad_Overview_of_RE_Generation_March_2025.pdf Template:Bare URL PDF</ref>	1363.4	1331.6	0.4	31.3	56.6	148.6	11.6	144.2	83.3	15.9	403.6	1824.2

Notes:

Coal includes lignite
Other = Biomass, Bagasse, and Waste to Energy

Historical datasets can be retrieved from here.Template:Sort under Template:Table alignment

Sources

Fossil fuels

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India has huge coal reserves and as such it has been the backbone of India's electricity generation, providing base-load power. The government has indicated that coal will remain significant in the near future, and will likely peak between 2030-35.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Utilization of gas plants has been limited by constrained domestic supply and high prices of imported LNG.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> Oil-fired generation plays a negligible role, used mainly for peaking or emergency power.

Nuclear power

{{#invoke:Labelled list hatnote|labelledList|Main article|Main articles|Main page|Main pages}}India operates a fleet of pressurized heavy-water reactors (PHWRs) managed by the NPCIL. The government has set a target to install 100 GW of nuclear capacity by 2047 and has initiated steps to reach 22.5 GW by 2031-32. It is also aiming to develop at least five indigenously designed and operational small modular reactors (SMRs) by 2033.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Renewable energy

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Renewable energy generation has doubled from 181.7 TWh in FY 2011-12<ref name=":1" /> to 365.7 TWh in FY 2022-23.<ref name=":6" /> However its overall share in total generation has been around 20% for the time span. This share is likely to reach 40% by 2030,<ref name="cea.nic.in">https://cea.nic.in/wp-content/uploads/irp/2023/05/Optimal_mix_report__2029_30_Version_2.0__For_Uploading.pdf Template:Bare URL PDF</ref> due to the government's target of installing 500 GW of non-fossil capacity by then.<ref name="auto"/>

Large Hydro has historically contributed to the bulk of the renewable generation in the country, though solar – with its aggressive growth – has almost caught up with it as of FY 2024-25.<ref name=":7" /> Wind energy has seen a relatively calm but steady growth.

Bio Energy has maintained a somewhat static generation of about 16 TWh in the past decade. However, it might increase as the government has mandated 5% biomass co-firing in Thermal Power Plants from FY 2024-25. This obligation shall increase to 7% from FY 2025-26.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Storage

Energy storage systems (ESS) help in maintaining grid stability from intermittent and variable renewable energy sources and enabling round-the-clock supply of low-carbon electricity.

Energy Storage Capacity in India
	Cumulative Installed (Dec 2024)<ref>https://cea.nic.in/wp-content/uploads/notification/2025/02/Advisory_on_colocating_Energy_Storage_System_with_Solar_Power_Projects_to_enhance_grid_stability_and_cost_efficiency.pdf Template:Bare URL PDF</ref>	Capacity Required (2026–27)<ref name=":10">https://cea.nic.in/wp-content/uploads/irp/2023/06/NEP_2022_32_FINAL_GAZETTE.pdf Template:Bare URL PDF</ref>	Capacity Required (2031–32)<ref name=":10" />
PSH	4.8 GW	7.5 GW / 47.7 GWh	26.7 GW / 175.2 GWh
BESS	0.1 GW	8.7 GW / 34.7 GWh	47.2 GW / 236.2 GWh
Total	4.9 GW	16.1 GW / 82.4 GWh	73.9 GW / 411.4 GWh

Due to high import costs of battery systems, India is currently relying on pumped-storage hydroelectricity. India has identified a potential PSH of 214.6 GW<ref>https://cea.nic.in/wp-content/uploads/pumpedstorage/2025/09/PSP_Potential.pdf Template:Bare URL PDF</ref> and is planning to install at least 50 GW by FY 2030-31.<ref>https://cea.nic.in/wp-content/uploads/pumpedstorage/2025/09/PSP_Capacity_Addition_Plan.pdf Template:Bare URL PDF</ref> In 2020, power tariff from Solar PV clubbed with PSH have fallen below the coal plant tariffs in offering base load and peak load power supply.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref name="stp">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

The government is supporting development of BESS through Viability Gap Funding. The scheme was announced in Sep 2023 and envisages development of 4 GWh of BESS projects by 2030-31.<ref>https://www.pib.gov.in/PressReleasePage.aspx?PRID=1955112</ref> Due to declining battery prices, the target was later increased to 13.2 GWh.<ref>https://www.pib.gov.in/PressReleasePage.aspx?PRID=2118325</ref>

There has been renewed interest in solar thermal because of its energy storage properties. As of 2025, India has an installed capacity of just 329.5 MW of solar thermal, out of which only 101 MW was operational.<ref>Template:Cite news</ref>

Many storage technologies like Flywheel Energy Storage, Compressed Air Storage, Green Hydrogen, etc. are in nascent stages of development.

Transmission and distribution

{{#invoke:Labelled list hatnote|labelledList|Main article|Main articles|Main page|Main pages}}After electricity is generated at power plants, it is stepped up to high voltages (765 kV, 400 kV, 230 / 220 kV) for transmission over long distances with minimal loss. And then stepped down to lower voltages, closer to demand areas for power distribution to end consumers.

The national grid - which was synchronized in 2013 - consists of Inter-State (ISTS) and Intra-state Transmission System (Intra-STS) of 220 kV and above. ISTS is largely managed by Central Transmission Utility (wholly owned by PowerGrid), with private participation through Tariff Based Competitive Bidding route, with a few exceptions.<ref name=":9">https://cea.nic.in/wp-content/uploads/annual_reports/2024/Final_Approved_Annual_Report_2023_24_05032025_1.pdf Template:Bare URL PDF</ref> Intra-STS is managed by State Transmission Utility of each state. Projects are developed by State Government through competitive bidding process for projects costing above a threshold limit which are decided by the SERCs.<ref name=":9" />

In order to increase transmission capabilities in a cost effective way, the government often converts existing lines and substations to higher voltages.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> Further, transmission planning has been aligned with renewable energy targets and is planned to evacuate around 613 GW of renewable capacity by 2032, including large zones in Rajasthan, Gujarat, and Andhra Pradesh.<ref name=":8" />

Transmission Network Expansion<ref name=":8">https://powermin.gov.in/sites/default/files/uploads/National_Electricity_Plan_Volume_II_Transmission.pdf Template:Bare URL PDF</ref>
	2017-22 Results	2022-27 Targets	2027-32 Plans
Transmission Lines (circuit km)	4,56,716	5,71,403	6,48,190
Transformation capacity of substations (GVA) incl HVDC	1104.5	1881.8	2345.1

Electricity distribution remains the most financially stressed part of the sector. Most distribution companies (DISCOMs) are state-owned, with private licensees operating in few areas such as Delhi and Odisha.<ref>Template:Cite news</ref> The distribution segment is characterized by

high aggregate technical and commercial (AT&C) losses (excess of 30% in early 2000s;<ref>Template:Cite news</ref> 22.6% in FY 2013-14<ref>https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2036993</ref>)
a gap between average cost of supply (ACS) and average revenue realized (ARR).

Technical losses stem from transformation losses, line losses, poor Power Factor due to insufficient reactive compensation. Commercial losses are caused by theft, inaccurate / faulty meters, billing inefficiencies (error in billing process), and collection inefficiencies.

Govt has launched several initiatives (IPDS, UDAY, RDSS, etc) to improve the financial health and operational efficiency of DISCOMs. While there have been improvements, chronic issues like high losses, unsustainable tariffs, subsidy dependence, and regional disparities continue to affect the overall performance of the sector.

Overview of DISCOMs Performance<ref>https://pfcindia.co.in/ensite/DocumentRepository/ckfinder/files/GoI_Initiatives/Annual_Integrated_Ratings_of_State_DISCOMs/13th_IR_Report_Final_9_Jul_2025.pdf Template:Bare URL PDF</ref>
	FY 2022-23	FY 2023-24	FY 2024-25
Net Energy Sales (TWh)	1022	1128	1214
Billing Efficiency (%)	85.9	86.8	86.9
Collection Efficiency (%)	97.4	97.6	96.5
AT&C Loss (%)	16.4	15.4	16.1
ACS-ARR Gap (INR/kWh)	0.4	0.6	0.4
Outstanding Debt (INR Cr.)	7,59,741	6,72,282	7,52,677
Accumulated Losses (INR Cr.)	6,06,277	6,59,340	6,92,269

Consumption

India consumed a total electrical energy of 1622 TWh in FY 2023-24, with an estimated figure of 1694 TWh for FY 2024-25.<ref name=":3" />

Per capita consumption reached 1395 kWh for FY 2023-24, with an estimated figure of 1538 TWh for FY 2024-25 (as of Jan 2025).<ref name=":3">Template:Cite news</ref><ref name="static.pib.gov.in"/> This figure is relatively low compared to the global average of 3486 kWh for 2022.<ref name="auto1" /> The nation achieved 100% household electrification as reported by its states as on March 31, 2021. Electricity connection was provided to all willing un-electrified households in rural areas and all willing poor un-electrified households in urban areas.<ref>https://www.pib.gov.in/PressReleasePage.aspx?PRID=1983087</ref>

Between FY 2013-14 and FY 2024-25 (till Jan 2025), power availability has increased from 12.5 hrs to 22.6 hrs in rural areas and from 22.1 hours to 23.4 hrs in urban.<ref>https://www.pib.gov.in/PressReleasePage.aspx?PRID=2105394</ref><ref>https://www.pib.gov.in/PressReleasePage.aspx?PRID=2078460</ref>

Estimated consumption in FY 2026-27<ref name=":0">https://cea.nic.in/wp-content/uploads/ps___lf/2023/02/Volume_I_Report_of_20th_Electric_Power_Survey.pdf Template:Bare URL PDF</ref>
Regions	Consumption (TWh)
Northern	491.3
Western	502.2
Southern	403.1
Eastern	193.7
North Eastern	19.8
Total	1610.1

Note: Energy requirement (accounting for losses) would be 1907.8 TWh.<ref name=":0" /> Further, these estimates were made in 2020 and were based on "Optimistic" scenario where the government achieves its targets for various planned initiatives having potential to impact power demand of the country such as National Hydrogen Mission.

Residential

Residential sector primarily includes use of household appliances such as air conditioners, refrigerators, fans, and other appliances. Rapid urbanization and rural electrification efforts have driven consumption. With rising global temperatures, residential demand will likely be driven by cooling needs. Steps taken by government to shape consumption includes Standards & Labeling (to help consumers identify energy-efficient products), UJALA (LED bulbs), and Go Electric Campaign (to promote electric mobility and electric cooking).

Industrial

Industrial sector encompasses manufacturing (automobiles, textiles, steel, cement), chemicals, mining, and construction. Energy-intensive industries like steel, aluminum, and cement contribute significantly to the demand. As India seeks to become a major manufacturing hub through Make in India and National Green Hydrogen Mission, the demand will likely increase in the future. Perform, Achieve and Trade scheme is the major government step to improve energy efficiency in the sector.

Commercial

The commercial sector includes areas like offices, retail establishments, malls, hotels, and restaurants. With increasing urbanization and the growth of the services sector, demand for electricity in this sector is steadily rising. Adoption of energy-efficient technologies and sustainable building practices is helping manage consumption growth.

Agriculture

Irrigation pumps are the main source of consumption in this sector. In many states, electricity for agriculture is either subsidized or provided for free, which has led to inefficiencies and high consumption levels.<ref>Template:Cite news</ref> The government has been working to reduce energy wastage in this sector by promoting solar-powered irrigation systems (PM-KUSUM) and more energy-efficient pumps (part of AgDSM), which are expected to help curb future demand.

Others

This includes municipal sector which encompasses public lighting, water works and sewage. MuDSM was launched to reduce energy consumption.

Government's efforts on improving energy efficiency across the sectors, resulted in a net energy savings of 210 TWh between FY 2011-12 and 2020-21. For FY 2020-21, 56% of overall yearly savings came from industrial sector, and 40% from residential.<ref name=":10"/>

Foreign electricity trade

Template:Anchor

India's National Grid is synchronously interconnected to Bhutan, and asynchronously linked with Bangladesh, Myanmar and Nepal.<ref name="CERC">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> An undersea interconnector to Sri Lanka (India–Sri Lanka HVDC Interconnection) have been proposed.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> Singapore and UAE are interested to import electricity from India by establishing undersea cable link to reduce carbon emissions as imported electricity would not contribute to carbon emissions upon its use whether it is generated from renewable resources or not in the exporting country.<ref>Template:Cite news</ref>

India has been exporting electricity to Bangladesh, Myanmar and Nepal and importing excess electricity from Bhutan.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> Since 2016–17, India has been a net exporter of electricity with 9,232 Gwh exports and 7,597 Gwh imports, mainly from Bhutan, in 2021–22.<ref name="esi">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> In 2018, Bangladesh proposed importing 10,000 MW power from India.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Electricity (Million kWh) Trade by India.
Fiscal year	Bhutan	Nepal	Bangladesh	Myanmar	Total
citation	CitationClass=web }}</ref> \|\|align="right"\|+3,763 \|\| style="text-align:right;"\|-154\|\| style="text-align:right;"\|-8,413\|\| style="text-align:right;"\|-8\|\| style="text-align:right;"\|-4,812
citation	CitationClass=web }}</ref> \|\|align="right"\|+4,466 \|\| style="text-align:right;"\|+497\|\| style="text-align:right;"\|-8,118\|\| style="text-align:right;"\|-9\|\| style="text-align:right;"\|-3,164

Net exports (-) and Net imports (+). The above exports to Bangladesh are excluding the exports from the 1600 MW Godda Thermal Power Station which is located in India but not connected to Indian electric grid.

To encourage the carbon neutral solar power generation, plans are made to transform the Indian national grid into a transnational grid expanding up to Vietnam towards east and Saudi Arabia towards west spanning nearly 7,000 km wide.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> Being at the central location of the widened grid, India will be able to import the excess solar power available outside its territory at cheaper prices to meet the morning and evening peak load power demands without much costly energy storage.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Governance and regulatory framework

Electricity is a concurrent subject matter in the Constitution of India. As such, central and state governments can both legislate on the Indian power sector. The sector is primarily governed under the Electricity Act, 2003 and the Energy Conservation Act, 2001, which together lay out the regulatory and policy foundations for generation, transmission, distribution, and energy efficiency.

Central level

Ministry of Power is the nodal ministry which oversees the development of the electricity sector in India. It is responsible for planning, policy formulation, processing of projects for investment decisions, monitoring project implementation, training and manpower development, and the administration and enactment of legislation related to thermal and hydro power, as well as the transmission and distribution network. It is also responsible for the administration of India's Electricity Act (2003), the Energy Conservation Act (2001).<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Central Electricity Authority (CEA) is the technical advisory body to the Ministry, which is also responsible for data collection and dissemination, through its National Electricity Plan for a 5 year period.<ref>https://cea.nic.in/functions/?lang=en</ref>

Ministry of New and Renewable Energy (MNRE) is the nodal ministry for the development and promotion of renewable energy technologies. MNRE facilitates research, design, development, manufacture, and deployment, setting technical standards, and aligning domestic renewable energy costs with global benchmarks.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Central Electricity Regulatory Commission (CERC) is an autonomous statutory body responsible for regulating the electricity sector at the national level. It regulates the tariff of generating companies owned or controlled by the Central Government and regulates, issues licenses and determine tariff for inter-State transmission.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

State level

State Electricity Regulatory Commissions (SERCs) function as independent regulators at the state level, determining tariffs, issuing licenses, promoting competition, and ensuring consumer protection. They operate under the guidance of the Electricity Act, 2003, and coordinate with CERC for interstate issues.

Power Market

In the electricity market in India, power can be traded between generators, distributors and large consumers through bilateral contracts or power exchanges. Bilateral contracts are negotiated between two parties and are often for long term, providing stable prices. Power exchanges allow electricity to be traded through collective transactions, where buy and sell bids are anonymously submitted and aggregated. The market is cleared based on supply-demand equilibrium, with the intersection of the demand and supply curves determining the Market Clearing Price (MCP) and Market Clearing Volume (MCV). Power exchanges helps supplement long term arrangements, while allowing discovery of efficient prices.

India has 3 power exchanges: IEX, PXIL, HPX which offer products like Day-Ahead Market, Real-Time Market, Term-Ahead Market, etc. These exchanges are regulated by CERC and also allow trading of Renewable Energy Certificates. In FY 2024-25, out of 1692 TWh supplied, 143.7 TWh (about 8.5%) was transacted via Power Exchanges, with the balance being supplied under long-term or bilateral arrangements.<ref>https://cea.nic.in/wp-content/uploads/annual_reports/2024/AMMR_2024_25.pdf Template:Bare URL PDF</ref> 8.5% is relatively small compared to countries with liberalized markets where exchanges handle a much larger share.

Multiple power exchanges create fragmentation and lead to disparate price discovery. CERC has ordered market coupling to create a single clearing price, simplifying procurement, improving cost predictability, and reducing administrative burdens for DISCOMs and industries while improving price discovery and system efficiency. The coupling would be implemented for Day-Ahead Market by Jan 2026 after a shadow pilot project was conducted which could lead to a savings of ₹1.4 crore per day.<ref>Template:Cite news</ref>

CERC would also couple other segments like Real-time Market and Term-Ahead Market after pilot runs and consultations.

Environmental Concerns

The electricity sector in India has significant environmental implications, primarily due to the continued reliance on fossil fuels, especially coal. While renewable energy capacity is expanding rapidly, coal still dominates the generation mix, contributing to high levels of air and water pollution, land degradation, and greenhouse gas emissions.

Air Pollution

Prior to 2015, thermal power plants were only required to meet the norms for particulate matter (150 mg/ Nm3 for 210 MW and above; 350 mg/ Nm3 for less than 210 MW plant), with standards set for chimney height for proper emission dispersion (220m for less than 500 MW, 275m for above 500 MW).<ref>https://cpcb.nic.in/uploads/thermal_power_plant_overview.pdf Template:Bare URL PDF</ref>

In December 2015, MoEFCC introduced following regulations for thermal power plants.

Emission norms (mg/Nm3)<ref name=":14">https://vindhyabachao.org/embeds/thermal/Thermal_Plant_Emission_Notification_Dec_2015.pdf Template:Bare URL PDF</ref>
Installed Date	PM	SO2	NOx	Mercury
Before Jan 2004	100	600 (< 500 MW)	600	0.03 (≥ 500MW)
Before Jan 2004	100	200 (≥ 500 MW)	600	0.03 (≥ 500MW)
Jan 2004 – Dec 2016	50	600 (<500 MW)	Initially: 300 Revised: 450<ref>Template:Cite news</ref>	0.03
Jan 2004 – Dec 2016	50	200 (≥ 500 MW)	Initially: 300 Revised: 450<ref>Template:Cite news</ref>	0.03
Jan 2017 onward	30	100	100	0.03

The power plants were required to comply with these standards by Dec 2017. Due to techno-economic constraints, this timeline was later extended to 2022.<ref>https://cpcb.nic.in/uploads/direction/Part_6_21.12.2017.pdf Template:Bare URL PDF</ref> Due to persistent challenges related to SO2 emission compliance, in Mar 2021, MoEFCC categorized thermal plants on the basis of location and specified timelines for each.


Categories	Location Criteria	Deadlines for non-retiring plants	Retirement deadlines for compliance exemption
Category A	Within 10 km radius of NCR or cities having 10L+ population (as per 2011 census)	Dec 2022 For SO2: Dec 2022; then Dec 2024;<ref name=":11">{{#invoke:citation/CS1\|citation	CitationClass=web }}</ref> then Dec 2027<ref name=":12">https://images.assettype.com/downtoearth/2025-01-06/lddkaudd/tpp_amendment_2024__1_.pdf Template:Bare URL PDF</ref>	Dec 2022 For SO2: Dec 2030
Category B	Within 10 km radius of critically polluted areas or non-attainment cities (as per CPCB)	Dec 2023 For SO2: Dec 2023; then Dec 2025;<ref name=":11" /> then Dec 2028;<ref name=":12" /> then made discretionary<ref name=":13">Template:Cite news</ref>	Dec 2025 For SO2: Dec 2030
Category C	Remaining plants	Dec 2024 For SO2: Dec 2026;<ref name=":11" /> then Dec 2029;<ref name=":12" /> then exempted<ref name=":13" />	Dec 2025

In case of non-compliance after the stipulated deadlines, an Environmental Compensation of Rs. 0.2 / unit generated will be levied for up to 180 days, Rs 0.3 / unit for 180–365 days, and Rs 0.4 / unit for beyond 365 days.<ref name=":11" />

Water and land impacts

Coal mining, particularly open-cast mining, leads to deforestation, land degradation, and displacement of communities in several parts of the country.

Coal-based power generation requires substantial water for cooling, which can stress local water resources, especially in water-scarce regions. Additionally, the discharge of heated water into rivers and lakes can lead to thermal pollution, affecting aquatic ecosystems. In December 2015, MoEFCC introduced following regulations for thermal power plants with a deadline of Dec 2017. However, compliance remains uneven.<ref name=":15">Template:Cite news</ref>


Installed Date	Specific water consumption<ref name=":14" />
Before Jan 2017	3.5 m3/MWh
Jan 2017 onward	Initial: 2.5 m3/MWh Revised: 3 m3/MWh<ref name=":15" />

Greenhouse gas emissions

India emitted 2959 million tonnes of CO2 equivalent (excluding LULUCF) in FY 2020-21,<ref>https://unfccc.int/sites/default/files/resource/India%20BUR-4.pdf Template:Bare URL PDF</ref> with electricity sector emitting 928.1 MT CO2,<ref name=":16" /> contributing 31% to the total emissions.

The sector emitted 1204.5 MT CO2 in FY 2023-24, with a weighted average emission intensity of 0.703 kg CO2 / kWh of electricity generated.<ref name=":16" />

In its latest NDC under Paris Agreement, India aims to install 50% non-fossil fuel based generation capacity by 2030.<ref>https://unfccc.int/sites/default/files/NDC/2022-08/India%20Updated%20First%20Nationally%20Determined%20Contrib.pdf Template:Bare URL PDF</ref> Total emissions are estimated to reach 1114 MT CO2 in FY 2029-30, with an average emission factor of 0.477 kg CO2 / kWh.<ref name="cea.nic.in"/>

Challenges

India's electricity sector faces many challenges, categorized across generation, transmission, distribution and consumption.

Generation

Dependency on coal: Despite growth in renewables, coal remains dominant in generation, leading to air pollution and carbon emissions fueling climate change. Air pollutants scatter and absorb solar radiation which reduces the amount of light reaching solar PV. Whereas, increased temperatures reduces solar PV efficiency.<ref>Template:Cite news</ref>

Transmission and distribution

High technical losses: Despite improvements under various government schemes, T&D loss stands at 19.2% for FY 2023-24.<ref>https://iced.niti.gov.in/energy/electricity/distribution/pages/operational-performance#transmission-and-distribution-loss</ref>
High commercial losses: Poor billing efficiency (86.9% for FY 2023-24<ref>https://iced.niti.gov.in/energy/electricity/distribution/pages/operational-performance#billing-efficiency</ref>), poor collection efficiency (96.5% for FY 2203-24<ref>https://iced.niti.gov.in/energy/electricity/distribution/pages/operational-performance#collection-efficiency</ref>) and power theft leads to delays, cash flow problems, and loss of revenue for DISCOMs.
Subsidies & political interference: Free/under-priced electricity for certain sectors (like agriculture) burdens state finances.<ref>Template:Cite news</ref> Due to vote-bank politics, electricity prices for farmers are kept artificially low, which often leads to wasteful consumption.

Consumption

Quality of supply: While India has achieved 100% household electrification, most households, especially in rural areas, find the electricity supply intermittent and unreliable.<ref name="downtoearth.org.in"/>

References

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External links

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Electricity sector in India

Contents

History