Electricity sector in India

Installed capacity by source in India as on 31 March 2020[16]

•   Coal: 205,134.5 MW (55.4%)
•   Large Hydro: 45,699.22 MW (12.3%)
•   Small Hydro: 4,683.16 MW (1.3%)
•   Wind Power: 37,693.75 MW (10.2%)
•   Solar Power: 34,627.82 MW (9.4%)
•   Biomass: 10,022.95 MW (2.7%)
•   Nuclear: 6,780 MW (1.8%)
•   Gas: 24,955.36 MW (6.7%)
•   Diesel: 509.71 MW (0.1%)

The first demonstration of electric light in Calcutta (now Kolkata) was conducted on 24 July 1879 by P.W. Fleury & Co. On 7 January 1897, Kilburn & Co secured the Calcutta electric lighting license as agents of the Indian Electric Co, which was registered in London on 15 January 1897. A month later, the company was renamed the Calcutta Electric Supply Corporation. The control of the company was transferred from London to Calcutta only in 1970. The introduction of electricity in Calcutta was a success, and power was next introduced in Bombay (now Mumbai).[17] The first electric lighting demonstration in Mumbai was in 1882 at Crawford Market and the Bombay Electric Supply & Tramways Company (BEST) set up a generating station in 1905 to provide electricity for the tramway.[18]

The first hydroelectric installation in India was installed near a tea estate at Sidrapong for the Darjeeling Municipality in 1897.[19] The first electric street light in Asia was lit on 5 August 1905 in Bangalore.[20] The first electric train in the country ran on the Harbour Line between Bombay's Victoria Terminus and Kurla on 3 February 1925.[21] On 18 August 2015, Cochin International Airport became the world's first fully solar powered airport with the inauguration of a dedicated solar plant.[22][23]

India began using grid management on a regional basis in the 1960s. Individual State grids were interconnected to form 5 regional grids covering mainland India, the Northern, Eastern, Western, North Eastern and Southern Grids. These regional links were established to enable transmission of surplus electricity between states in each region. In the 1990s, the Indian government began planning for a national grid. Regional grids were initially interconnected by asynchronous high-voltage direct current (HVDC) back-to-back links facilitating the limited exchange of regulated power. The links were subsequently upgraded to high capacity synchronous links.[24]

The first interconnection of regional grids was established in October 1991 when the North Eastern and Eastern grids were interconnected. The Western Grid was interconnected with these grids in March 2003. The Northern grid was also interconnected in August 2006, forming a Central Grid that was synchronously connected and operating at one frequency.[24] The sole remaining regional grid, the Southern Grid, was synchronously interconnected to the Central Grid on 31 December 2013 with the commissioning of the 765 kV Raichur-Solapur transmission line, establishing the National Grid.[24][25]

By the end of the calendar year 2015, despite poor hydroelectricity generation, India had become a power surplus nation with huge power generation capacity idling for want of demand.[26][27][28] The calendar year 2016 started with steep falls in the international price of energy commodities such as coal, diesel oil, naphtha, bunker fuel, and liquefied natural gas (LNG), which are used in electricity generation in India.[29][30][31][32][33] As a result of the global glut in petroleum products, these fuels became cheap enough to compete with pit head coal-based power generators.[34] Coal prices have also fallen.[35] Low demand for coal has led to coal stocks building up at power stations as well as coal mines.[36] New installations of renewable energy in India surpassed installations of fossil fuel for the first time in 2016-17.[37]

On March 29, 2017, the Central Electricity Authority (CEA) stated that for the first time India has become a net exporter of electricity. India exported 5,798 GWh to neighbouring countries, against a total import of 5,585 GWh.

The total installed power generation capacity is the sum of utility capacity, captive power capacity, and other non-utilities

Demand trend

During the fiscal year 2018-19, the utility energy availability was 1,267.5 billion KWh, a short fall relative to requirements of 7.07 billion KWh (-0.6%). Peak load met was 175,528 MW, 1,494 MW (-0.8%) below requirements. In the 2019 Load Generation Balance report, India's Central Electricity Authority anticipated energy surplus and peak surplus to be 5.8% and 8.4%, respectively, for the 2019–20 fiscal year.[47] Power would be made available to few states expected to face shortages from states with a surplus, through regional transmission links.[48] From calendar year 2015 onwards, power generation in India has been less of a problem than power distribution.[49][27][28][50][51]

Demand drivers

Nearly 0.28% of Indian households (0.6 million) have no access to electricity.[1] The International Energy Agency estimates India will add between 600 GW to 1,200 GW of additional new power generation capacity before 2050.[52] This added new capacity is similar in scale to the 740 GW total power generation capacity of the European Union (EU-27) in 2005. The technologies and fuel sources India adopts as it adds this electricity generation capacity may have a significant impact on global resource usage and environmental issues.[53] The demand for electricity for cooling (HVAC) is projected to grow rapidly.[54]

About 136 million Indians (11%) use traditional fuels – firewood, agricultural waste and dry animal dung fuel – for cooking and general heating needs.[55] These traditional fuels are burnt in cook stoves, sometimes known as chulah or chulha.[56] Traditional fuel is an inefficient source of energy, and its burning releases high levels of smoke, PM10 particulate matter, NOX, SOX, PAHs, polyaromatics, formaldehyde, carbon monoxide and other air pollutants, affecting outdoor air quality, haze and smog, chronic health problems, damage to forests, ecosystems and global climate.[57][58][59] The World Health Organization estimates that 300,000 to 400,000 people in India die of indoor air pollution and carbon monoxide poisoning every year because of biomass burning and use of chulahs.[60] Burning traditional fuel in conventional cook stoves is estimated to release 5–15x more pollutants than industrial combustion of coal, and is unlikely to be replaced until electricity or clean-burning fuel and combustion technologies become reliably available and widely adopted in rural and urban India. The growth of the electricity sector in India may help find a sustainable alternative to traditional fuel burning.

In addition to air pollution problems, a 2007 study finds that discharge of untreated sewage is the single most important cause for pollution of surface and groundwater in India. The majority of government-owned sewage treatment plants remain closed most of the time in part because of the lack of a reliable electricity supply to operate the plants. Uncollected waste accumulates in urban areas, causing unhygienic conditions, and release heavy metals and pollutants that leaches to surface and groundwater.[61][62] A reliable supply of electricity is required to address India's water pollution and associated environmental issues.

Other drivers for India's electricity sector are its rapidly growing economy, rising exports, improving infrastructure and increasing household incomes.

* Data from fiscal year ending on 31 March of each year.
** Refers to fiscal year ending on 31 December.

Note: Per Capita Consumption=(gross electricity generation by all sources plus net import) / mid year population. 'Consumption' is 'gross electricity generation by all sources plus net import' after subtracting transmission loses and auxiliary consumption in electricity generation.

The per capita annual domestic electricity consumption in India during the year 2009 was 96 kWh in rural areas and 288 kWh in urban areas for those with access to electricity. Globally the per capita annual average is 2,600 kWh and in the European Union it is 6,200 kWh.[63]

Per-Capita consumption

Electricity Generation from 1985 to 2012

Electricity generation in India from 2009 to 2019 (data source: powermin.nic.in)

Electricity generation (utility sector) by source in India in FY 2018-19

•   Coal: 1,021,997 GWh (74.5%)
•   Large Hydro: 135,040 GWh (9.8%)
•   Small Hydro: 8,703 GWh (0.6%)
•   Wind Power: 62,036 GWh (4.5%)
•   Solar Power: 39,268 GWh (2.9%)
•   Biomass & other RE: 16,750 GWh (1.2%)
•   Nuclear: 37,706 GWh (2.7%)
•   Gas: 49,886 GWh (3.6%)
•   Diesel: 129 GWh (0.0%)

Per-Capita Electricity consumption (kWh) in 2016-2017[66]

State/Union territory	Region	Per-Capita Consumption (kWh/year)
Dadra and Nagar Haveli	Western	15,783
Daman and Diu	Western	7,965
Goa	Western	2,466
Gujarat	Western	2,279
Chhattisgarh	Western	2,016
Maharashtra	Western	1,307
Madhya Pradesh	Western	989
Puducherry	Southern	1,784
Tamil Nadu	Southern	1,847
Andhra Pradesh[67]	Southern	1,319
Telangana	Southern	1,551
Karnataka	Southern	1,367
Kerala	Southern	763
Lakshadweep	Southern	633
Punjab	Northern	2,028
Haryana	Northern	1,975
Delhi	Northern	1,574
Himachal Pradesh	Northern	1,340
Uttarakhand	Northern	1,454
Chandigarh	Northern	1,128
Jammu and Kashmir	Northern	1,282
Rajasthan	Northern	1,166
Uttar Pradesh	Northern	585
Odisha	Eastern	1,622
Sikkim	Eastern	806
Jharkhand	Eastern	915
West Bengal	Eastern	665
Andaman and Nicobar Islands	Eastern	370
Bihar	Eastern	272
Arunachal Pradesh	North Eastern	648
Meghalaya	North Eastern	832
Mizoram	North Eastern	523
Nagaland	North Eastern	345
Tripura	North Eastern	470
Assam	North Eastern	339
Manipur	North Eastern	326
National		1,122

Note: Per capita consumption = (gross electricity generation + net import) / mid year population.

India has recorded rapid growth in electricity generation since 1985, increasing from 179 TW-hr in 1985 to 1,057 TW-hr in 2012.[6] The majority of the increase came from coal-fired plants and non-conventional renewable energy sources (RES), with the contribution from natural gas, oil, and hydro plants decreasing in 2012-2017. The gross utility electricity generation (excluding imports from Bhutan) was 1,384 billion kWh in 2019-20, representing 1.0 % annual growth compared to 2018-2019. The contribution from renewable energy sources was nearly 20% of the total. In the year 2019-20, all the incremental electricity generation is contributed by renewable energy sources as the power generation from fossil fuels decreased.[68]

Notes: Coal includes lignite; Misc: includes contributions from emergency diesel generator sets; ^*Hydro includes pumped storage generation; na = data not available.

Mean wind speed India.[105]

India's renewable energy sector has been growing vigorously for the last decade.[106] As of 31 March 2018, India had grid-connected installed electricity generation capacity of about 69.02 GW from non-conventional renewable technologies[107] and conventional renewable power or major hydroelectric power capacity of 45.29 MW.[108]

Bids have been invited for installation of a further 115 GW, to achieve a total of 175 GW total installed capacity of non-conventional renewable power by 31 March 2022. The government has set up a fund of US$350 million to finance solar projects.[109]

Hydro power

Indira Sagar Dam partially completed in 2008

Nagarjuna Sagar Dam and the 810 MW hydroelectric power plant on the Krishna River.

The hydro-electric power plants at Darjeeling and Shivanasamudram were among the first in Asia, and were established in 1898 and 1902 respectively.

India's potential for hydro power has been assessed to be about 125,570 MW at 60% load factor.[110] India is ranked fourth globally by underutilized hydro power potential. The estimated amount of viable hydro power varies with improved technology and the cost of electricity generation from other sources. In addition, there is an estimated 6,740 MW of potential for small, mini, and micro-hydro generators, and 56 sites for pumped storage schemes with an aggregate installed capacity of 94,000 MW have been identified.[111][112] In 2020, the power tariff from Solar PV clubbed with pumped storage hydro have fallen below the coal based power plant tariffs in offering base load and peak load power supply.[113]

The installed hydro power capacity as of 31 March 2018 was approximately 45,293 MW, 13.17% of total installed utility capacity at the time.[3] Small, mini, and micro-hydro generators add another 4,486 MW capacity.[3] The share of this sector operated by public companies is 97%.[114] Companies engaged in the development of hydroelectric power in India include the National Hydroelectric Power Corporation (NHPC), Northeast Electric Power Company (NEEPCO), Satluj Jal Vidyut Nigam (SJVNL), Tehri Hydro Development Corporation, and NTPC-Hydro.

Pumped storage schemes offer the potential for centralized peak power stations for load management in the electricity grid.[115][116] They also produce secondary /seasonal power at no additional cost when rivers are flooding with excess water. Storing electricity by alternative systems such as batteries, compressed air storage systems, etc. is more costly than electricity production by standby generator. India has already established nearly 4,785 MW pumped storage capacity as part of its installed hydro power plants.[117][118]

Solar power

Global Horizontal Irradiation in India.[119]

Price history of silicon PV cells (not modules) since 1977. The great thing about solar power is that it is a technology and not a fuel. It is unlimited and the more it is deployed the cheaper it would be.[120] While the more limited fossil fuels are used, the more expensive they become.

The solar energy sector in India offers potentially enormous capacity, though little of this potential has so far been exploited. Solar radiation of about 5,000 trillion kWh per year is incident over India's land mass, with average daily solar power potential of 0.25 kWh/m² of used land area with available commercially proven technologies.[121] As of 31 December 2019, the installed capacity was 33.73 GW, or 2% of utility electricity generation.[69]

Solar power plants require nearly 2.4 hectares (0.024 km²) land per MW capacity, which is similar to coal-fired power plants when life cycle coal mining, consumptive water storage and ash disposal areas are taken into account, and hydropower plants when the submergence area of the water reservoir is included. Solar plants with 1.33 million MW capacity could be installed in India on 1% of its land (32,000 square km). Large tracts of land that is unproductive, barren and devoid of vegetation exist in all parts of India, exceeding 8% of its total area. These are potentially suitable for solar power.[122] It has been estimated that if 32,000 square km of these waste lands were used for solar power generation,2,000 billion kWh of electricity could be produced, twice the total power generated in the year 2013-14. At a price of 4 Rs/kWh, this would result in a land annual productivity/yield of ₹1.0 million (US$14,000) per acre, which compares favorably with many industrial areas and is many times more than the best productive irrigated agriculture lands.[123] Building solar power plants on marginally productive lands offers the potential for solar electricity to replace all of India's fossil fuel energy requirements (natural gas, coal, lignite, nuclear fuels, and crude oil),[124] and could offer per capita energy consumption at par with USA/Japan for the peak population expected during its demographic transition.[125]

The cost of power generated by solar photovoltaics fell to ₹2.44 (3.4¢ US) per kWh in May 2017, lower than any other type of power generation in India.[126][127] In the same year, the levelised tariff in US$ for solar electricity fell to 1.79 cents/kWh, far below the fuel cost for coal-based power plants in India.[128] In 2020, the power tariff from Solar PV clubbed with pumped storage hydro or battery storage have fallen below the coal based power plant tariffs in offering base load and peak load power supply.[113]

Canal Solar Power Project in Kadi, Gujarat

Land acquisition is a challenge for solar farm projects in India. Some state governments are exploring innovative ways to address land availability, for example, by deploying solar capacity above irrigation canals. This allows solar energy to be harvested while simultaneously reducing the loss of irrigation water by solar evaporation.[129] The state of Gujarat was first to implement the Canal Solar Power Project, using solar panels on a 19,000 km (12,000 mi) long network of Narmada canals across the state to generate electricity. It was the first such project in India.

Synergy with other types of power generation

A major disadvantage of solar power is that it produces electricity only in daylight, and not during night time or cloudy daytime. This disadvantage can be overcome by installing grid storage, such as pumped-storage hydroelectricity.[130] A proposed large-scale engineering project to interlink Indian rivers envisages coastal reservoirs for river waters that would double as pumped-storage hydroelectricity reservoirs.[131] Existing and future hydropower stations can also be expanded with additional pumped-storage hydroelectricity units to cater for night time electricity consumption. Most of the groundwater pumping power required can be met directly by solar power during the day time.[132]

Solar thermal power plants with thermal storage are also emerging as cheaper (US 5¢/kWh) and cleaner load following power plants than fossil fuel power plants. They can respond to demand round the clock, and work as base load power plants when there is excess solar energy. A mix of solar thermal and solar photovoltaic plants offers the potential to match load fluctuations without requiring costly battery storage.

Wind power

Wind farm in Rajasthan.

Wind turbines midst India's agricultural farms.

Wind farms midst paddy fields in India.

Biomass pellet fuel from India

India has the fourth largest installed wind power capacity in the world. The development of wind power in India began in the 1990s in Tamil Nadu and significantly increased in the last decade. As of 31 March 2018, the installed capacity of wind power was 34.05 GW, spread across many states of India.[3][133] The largest wind power generating state is Tamil Nadu, accounting for nearly 23% of installed capacity, followed in decreasing order by Gujarat, Maharashtra, Rajasthan and Karnataka.[133][134]

In 2015-16, wind power accounted for 8.5% of India's total installed power capacity, and 2.5% of the country's power output. India aims to install a total 60 GW of wind power capacity by 2022.[135][136] The wind power tariff of around 2.5 INR/kWh is the cheapest of all power generation sources in India.[137]

Kudankulam Nuclear Power Plant (2 x 1000 MW) under construction in 2009.

As of 31 March 2019, India had 6.78 GW of installed nuclear power generation capacity or nearly 2% of total installed utility power generation capacity. Nuclear plants generated 37,812 million kWh at 63.67% PLF in 2018-19.[172]

India's nuclear power plant development began in 1964. India signed an agreement with General Electric (United States) for the construction and commissioning of two boiling water reactors at Tarapur. In 1967, this effort was placed under India's Department of Atomic Energy. In 1971, India set up its first pressurized heavy water reactors with Canadian collaboration in Rajasthan.

In 1987, India created the Nuclear Power Corporation of India Limited to commercialize nuclear power. The Nuclear Power Corporation of India is a public sector enterprise, wholly owned by the Government of India, under the administrative control of the Department of Atomic Energy. The state-owned company has ambitious plans to establish plants totalling 63 GW generation capacity by 2032.[173]

India's nuclear power generation effort is subject to many safeguards and oversights. Its environmental management system is ISO-14001 certified, and it undergoes peer review by the World Association of Nuclear Operators, including a pre-start-up peer review. The Nuclear Power Corporation of India Limited commented in its annual report for 2011 that its biggest challenge is to address public and policymaker perceptions about the safety of nuclear power, particularly after the Fukushima Daiichi nuclear disaster in Japan.[174]

In 2011, India had 18 pressurized heavy water reactors in operation, with another four projects launched totalling 2.8 GW capacity. India is in the process of launching its first prototype fast breeder reactor using plutonium-based fuel obtained by reprocessing the spent fuel of first-stage reactors. The prototype reactor is located in Tamil Nadu and has a capacity of 500MW.

India has nuclear power plants operating in the following states: Maharashtra, Gujarat, Rajasthan, Uttar Pradesh, Tamil Nadu and Karnataka. These reactors have an installed electricity generation capacity of between 100 MW and 540 MW each. The Kudankulam nuclear power plant (KNPP) is the single largest nuclear power station in India. KNPP Unit 1 with a capacity of 1,000  MWe was commissioned in July 2013, while Unit 2, also with a capacity of 1,000  MWe, attained criticality in 2016. Two additional units are under construction.[175] The plant has suffered multiple shutdowns, leading to calls for an expert panel to investigate.[176]

In 2011, uranium was discovered in the Tummalapalle uranium mine, the country's largest uranium mine and possibly one of the world's largest. The reserves were estimated at 64,000 tonnes, and could be as large as 150,000 tonnes.[177] The mine began operation in 2012.[178]

India's share of nuclear power plant generation capacity is 1.2% of worldwide nuclear power production capacity, making it the 15th largest nuclear power producer. India aims to supply 9% of its electricity needs with nuclear power by 2032 and 25% by 2050.[174][179] Jaitapur Nuclear Power Project, India's largest nuclear power plant project, is planned to be implemented in partnership with Électricité de France under an agreement signed on 10 March 2018.[180]

India's government is developing up to 62 additional nuclear reactors, mostly using thorium fuel, which it expects to be operational by 2025. It is the "only country in the world with a detailed, funded, government-approved plan" to focus on thorium-based nuclear power.[179]

Electricity transmission grid in eastern India.

A tower supporting 220 kV line near Ennore, Chennai

As of 2013, India has a single wide area synchronous grid that covers the entire country except distant islands.[181]

The total length of high voltage direct current (HVDC) transmission lines (220kV and above) would be enough to form a square matrix of area 266 km² (i.e. a square grid 16.3 km on a side, so that on average there is at least one high voltage line within a distance of 8.15 km) over the entire area of the country. This represents a total of almost 20% more high voltage transmission lines than that of the United States (322,000 km (200,000 mi) of 230 kV and above). However the Indian grid transmits far less electricity.[184] The installed length of transmission lines of 66 kV and above is 649,833 km (403,788 mi) (on average, there is at least one ≥66 kV transmission line within 4.95 km across the country).[5] The length of secondary transmission lines (400 V and above) is 10,381,226 km (6,450,595 mi) as of 31 March 2018.[5] The spread of total transmission lines (≥400 V) would be sufficient to form a square matrix of area 0.36 km² (i.e. on average, at least one transmission line within 0.31 km distance) over the entire area of the country.

The all-time maximum peak load met was 182,610 MW on 30 May 2019.[185] The maximum achieved demand factor of substations is nearly 60% at the 220 kV level. However the operational performance of the system is not satisfactory in meeting peak electricity loads.[186][187] This has led to the initiation of detailed forensic engineering studies, with a plan to make capital investments in a smart grid that maximises the utility of the existing transmission infrastructure.[42]

The introduction of an availability based tariff (ABT) originally helped to stabilise the Indian transmission grids. However, as the grid transitions to power surplus the ABT has become less useful. The July 2012 blackout, affecting the north of the country, was the largest power grid failure in history as measured by the number of people affected.

India's aggregate transmission and commercial (ATC) losses were nearly 21.35% in 2017-18.[188][5][189] This compares unfavorably to the total ATC loss in the electricity sector of the United States, which was only 6.6% out of 4,404 billion kWh electricity supplied during the year 2018.[190] The Indian government set a target of reducing losses to 17.1% by 2017 and to 14.1% by 2022. A high proportion of non-technical losses are caused by illegal tapping of lines, faulty electric meters and fictitious power generation that underestimates actual consumption and also contributes to reduced payment collection. A case study in Kerala estimated that replacing faulty meters could reduce distribution losses from 34% to 29%.[52]

The Ministry of Power is India's top central government body regulating the electrical energy sector in India. The ministry was created on 2 July 1992. 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 in regard to power generation, transmission and distribution.[191] It is also responsible for the administration of India's Electricity Act (2003), the Energy Conservation Act (2001) and has the responsibility of undertaking amendments to these Acts when necessary to meet the Indian government's policy objectives.

Electricity is a concurrent list subject at Entry 38 in List III of the seventh Schedule of the Constitution of India. In India's federal governance structure, this means that both the central government and India's state governments are involved in establishing policy and laws for the electricity sector. This requires the central government and individual state governments to enter into memoranda of understanding to help expedite projects in the individual states.[192] To disseminate information to the public on power purchases by the distribution companies (discoms), the government of India recently started posting data on its website on a daily basis.[193]

Funding of power infrastructure

Borrowings by state owned discoms & commercial losses of discoms

India's Ministry of Power administers the Rural Electrification Corporation Limited and the Power Finance Corporation Limited. These central-government-owned public sector enterprises provide loans and guarantees for public and private electricity sector infrastructure projects in India. Excessive plant construction loans at 75% of overestimated costs on overrated plant capacities have led to stranded assets of US$40 to 60 billion.[198][199] The central and state-owned power generators escaped this crisis as they had entered PPAs with state-owned monopolistic discoms on a cost-plus basis at higher than prevailing market power tariffs, without undergoing competitive bidding process. Many direct and indirect subsidies are given to various sectors.[200]

India's electricity sector faces many issues, including:

1. Inadequate last mile connectivity. The country already has adequate generation and transmission capacity to meet the full consumer demand, both temporally and spatially.[5] However, due to the lack of last-mile link-up between all electricity consumers and a reliable power supply (to exceed 99%), many consumers depend on diesel generators.[42] Nearly 80 billion kWh of electricity is generated annually in India by diesel generator sets that consume nearly 15 million tons of diesel oil. Over 10 million households use battery storage UPS as back-ups in case of load shedding.[203] India imports nearly US$2 billion worth of battery storage UPS every year.[204] As overhead lines cause distribution problems during rain and wind storms, there is a plan to lay buried cables from low voltage substations to supply cheaper emergency power in cities and towns and thus reduce diesel oil consumption by diesel generator sets and the installation of UPS systems.
2. Demand build up measures. Electricity-intensive industries consume the cheaper electricity (average price Rs 2.5 per kWhr) available from the grid instead of running their own coal/gas/oil fired captive power plants.[205][206] The captive power generation capacity by such plants is nearly 53,000 MW, and they are mainly established in steel, fertilizer, aluminium, cement, etc. industries.[207][5] These plants can draw cheaper electricity from the grid on short term open access (STOA) basis, avoiding their own higher cost of electricity generation and diverting power from other consumers.[208][209] Some of these idling captive power plants can be used for ancillary services or grid reserve service and earn extra revenue.[210][211]
3. Unequal electricity distribution. Almost all households have access to electricity.[1] However, most households find the electricity supply intermittent and unreliable.[212] At the same time, many power stations are idling for lack of electricity demand and the idling generation capacity is sufficient to supply the needs of households lacking electricity three times over.
4. Erratic power pricing. In general, industrial and commercial consumers subsidize domestic and agricultural consumers.[213][214] Government giveaways such as free electricity for farmers, created partly to curry political favor, have depleted the cash reserves of state-run electricity-distribution system and led to debts of ₹2.5 trillion (US$35 billion).[215] This has financially crippled the distribution network, and its ability to pay to purchase power in the absence of subsidies from state governments.[216] This situation has been worsened by state government departments that do not pay their electricity bills.
5. Over-rated capacity. Many coal-fired plants are overrated above the actual maximum continuous rating (MCR) capacity.[217] to allow the plant cost to be inflated.[218] These plants operate 15 to 10% below their declared capacity on a daily basis and rarely operate at declared capacity, undermining grid stability.
6. Lack of timely information on load and demand. Intraday graphs at 15-minute or more frequent intervals are required to understand the shortcomings of the power grid with respect to grid frequency, including comprehensive data collected from SCADA for all grid-connected generating stations (≥ 100 KW) and load data from all substations.[219]
7. Lack of adequate coal supply: Despite abundant reserves of coal, power plants are frequently under-supplied. India's monopoly coal producer, state-controlled Coal India, is constrained by primitive mining techniques and is rife with theft and corruption. Poor coal transport infrastructure has worsened these problems. Most of India's coal lies under protected forests or designated tribal lands and efforts to mine additional deposits have been resisted.
8. Poor gas pipeline connectivity and infrastructure. India has abundant coal bed methane and natural gas potential. However a giant new offshore natural gas field has delivered far less gas than claimed, causing a shortage of natural gas.
9. Transmission, distribution and consumer-level losses. Losses exceed 30%, including the auxiliary power consumption of thermal power stations and fictitious electricity generation by wind generators, solar power plants & independent power producers (IPPs), etc.
10. Resistance to energy efficiency in the residential building sector. Continuous urbanization and the growth of population result in increased power consumption in buildings. The belief still predominates among stakeholders that energy-efficient buildings are more expensive than conventional buildings, adversely affecting the "greening" of the building sector.[220]
11. Resistance to hydroelectric power projects. Hydroelectric power projects in India's mountainous north and northeast regions have been slowed down by ecological, environmental and rehabilitation controversies, coupled with public interest litigation.
12. Resistance to nuclear power generation. Political activism since the Fukushima disaster has reduced progress in this sector. The track record of executing nuclear power plants is also very poor in India.[221]
13. Theft of power. The financial loss due to theft of electricity is estimated at around $16 billion yearly.

Key implementation challenges for India's electricity sector include efficient performance of new project management and execution, ensuring availability and appropriate quality of fuel, developing the large coal and natural gas resources available in India, land acquisition, obtaining environmental clearances at state and central government level, and training skilled manpower.[222]

India's National Grid is synchronously interconnected to Bhutan, and asynchronously linked with Bangladesh and Nepal.[223] An interconnection with Myanmar,[224] and an undersea interconnection to Sri Lanka (India–Sri Lanka HVDC Interconnection) have also been proposed.

India has been exporting electricity to Bangladesh and Nepal and importing excess electricity from Bhutan.[225][226] In 2015, Nepal imported 224.21 MW of electric power from India, and Bangladesh imported 500MW.[227][228] In 2018 Bangladesh proposed importing 10,000 MW power from India.[229]

Bangladesh, Myanmar and Pakistan produce substantial amounts of natural gas for electricity generation. Bangladesh, Myanmar and Pakistan produce 55 million cubic metres per day (mcmd), 9 mcmd and 118 mcmd respectively, out of which 20 mcmd, 1.4 mcmd and 34 mcmd are consumed for electricity generation.[230][231] Natural gas production in India is not even adequate to meet non-electricity requirements.[232] There is thus an opportunity for mutually beneficial trading in energy resources with these countries.[233] India could supply surplus electricity to Pakistan and Bangladesh in return for the natural gas imports by gas pipelines. Similarly, India can develop hydro power projects in Bhutan, Nepal and Myanmar on a build-operate-transfer basis. India might also be able to enter into long term power purchase agreements with China for developing the hydro power potential of the Yarlung Tsangpo Grand Canyon in the Brahmaputra River basin of Tibet. India could also supply its surplus electricity to Sri Lanka by undersea cable link.[234]

India's net import of liquefied petroleum gas (LPG) is 6.093 million tons and the domestic consumption is 13.568 million tons with Rs. 41,546 crores subsidy to domestic consumers in 2012-13.[235] The LPG import content is nearly 40% of total consumption in India.[236] The affordable electricity retail tariff (860 Kcal/Kwh at 90% heating efficiency) to replace LPG (net calorific value 11,000 Kcal/Kg at 75% heating efficiency) in domestic cooking is 6.47 Rs/Kwh, while the retail price of LPG cylinder is Rs 1000 (without subsidy) with 14.2 kg LPG content. Replacing LPG consumption with electricity would reduces imports substantially.

The domestic consumption of kerosene is 7.349 million tons with Rs. 30,151 crores subsidy to the domestic consumers in the year 2012-13. The subsidised retail price of kerosene is 13.69 Rs/litre whereas the export/import price is 48.00 Rs/litre. The affordable electricity retail tariff (860 Kcal/Kwh at 90% heating efficiency) to replace kerosene (net calorific value 8240 Kcal/litre at 75% heating efficiency) in domestic cooking is 6.00 Rs/kWh when the kerosene retail price is 48 Rs/litre (without subsidy).

In 2014-15, the plant load factor (PLF) of coal-fired thermal power stations was only 64.46%. These stations can run above 85% PLF if there is adequate electricity demand.[237] The additional electricity generation at 85% PLF is nearly 240 billion units, enough to replace all the LPG and kerosene consumption in domestic sector.[238] The incremental cost of generating additional electricity is only the coal fuel cost, less than 3 Rs/Kwh. Enhancing the PLF of coal-fired stations and encouraging domestic electricity consumers to substitute electricity in place of LPG and kerosene in household cooking would reduce government subsidies. It has been proposed that domestic consumers who are willing to surrender subsidized LPG/kerosene permits should be given a free electricity connection and a subsidized electricity tariff.[239]

Since 2017, IPPs have offered to sell solar and wind power below 3.00 Rs/Kwh to feed into the high voltage grid. After considering distribution costs and losses, solar power appears to be a viable economic option for replacing the LPG and kerosene used in the domestic sector.

The retail prices of petrol and diesel are high enough in India to make electricity driven vehicles relatively economical.[240] The retail price of diesel was 65.00 Rs/litre in 2017-18, and the retail price of petrol was 70.00 Rs/litre. The electricity retail price to replace diesel would be 12.21 Rs/Kwh (860 Kcal/Kwh at 75% input electricity to shaft power efficiency versus diesel's net calorific value of 8572 Kcal/litre at 40% fuel energy to crank shaft power efficiency), and the comparable number to replace petrol would be 17.79 Rs/Kwh (860 Kcal/Kwh at 75% input electricity to shaft power efficiency versus petrol's net calorific value at 7693 Kcal/litre at 33% fuel energy to crank shaft power efficiency). In 2012-13, India consumed 15.744 million tons of petrol and 69.179 million tons of diesel, both mainly produced from imported crude oil.[235]

Electricity driven vehicles are expected to become popular in India when energy storage/battery technology offers improved range and lower maintenance.[241][242] Vehicle to grid options are also attractive, potentially allowing electric vehicles to help to mitigate peak loads in the electricity grid. The potential for continuous charging of electric vehicles through wireless electricity transmission technology is being explored by Indian companies and others.[243][244][245]

India has abundant potential solar wind, hydro and biomass power. In addition, as of January 2011 India had approximately 38 trillion cubic feet (Tcf) of proven natural gas reserves, the world's 26th largest reserve.[246] The United States Energy Information Administration estimates that India produced approximately 1.8 Tcf of natural gas in 2010 while consuming roughly 2.3 Tcf of natural gas. India already produces some coalbed methane and has major potential to expand this source of cleaner fuel. India is estimated to have between 600 and 2000 Tcf of shale gas resources (one of the world's largest reserves).[102][247]

• National electricity Plan - 2012, CEA, Government of India
• Electricity grid maps of the southern region
• India's Energy Policy and Electricity Production