
- •Foreword
- •Table of contents
- •1. Executive summary
- •India is making great strides towards affordable, secure and cleaner energy
- •Major energy reforms lead to greater efficiency
- •India is making energy security a priority
- •Significant progress in sustainable development
- •Energy technology and innovation enables “Make in India”
- •Key recommendations
- •2. General energy policy
- •Country overview
- •Major energy supply and demand trends
- •Energy consumption
- •Primary energy supply
- •Energy production and self-sufficiency
- •Political system and energy sector governance
- •Electricity sector
- •Coal sector
- •Oil and natural gas sectors
- •Climate and environment
- •Other ministries
- •Governance of public companies in the energy sector
- •Economy and the energy sector
- •Financial health of the power sector
- •Energy and climate policy
- •Energy taxation and subsidies
- •Goods and Services Tax
- •Subsidies
- •Electricity access
- •Clean cooking
- •The way towards a national energy policy
- •Energy data and statistics in India
- •Assessment
- •A co-ordinated national energy policy
- •Access to electricity and clean cooking
- •Economic efficiency
- •Energy security
- •Sustainability
- •Energy data and statistics
- •Recommendations
- •3. Energy and sustainable development
- •Overview
- •Energy, environment and sustainable development: An integrated policy response in the context of SDGs
- •Ensuring sustainable energy for all: SDG 7
- •Access to electricity and clean cooking: SDG 7.1 progress and outlook
- •Electricity access
- •Clean cooking
- •Renewables: SDG 7.2 progress and outlook
- •Energy efficiency: SDG 7.3
- •Energy and air quality: SDG 3
- •Current status of air pollutants
- •Air quality policy framework
- •Transport sector
- •Power sector
- •Industrial sector
- •The outlook for air quality
- •Energy-related CO2 emissions and carbon intensity: SDG 13
- •Sectoral GHG status and stated policy outlook
- •Energy sector role in GHG mitigation policy
- •Pricing of energy sector externalities
- •Energy sector climate change adaption and resilience
- •Assessment
- •Energy access
- •Energy sector and air quality
- •Energy and climate adaptation and resilience
- •Energy sector cost-effective response to climate change
- •Recommendations
- •4. Energy efficiency
- •Overview
- •Supply and demand trends
- •Energy consumption by sector
- •Industry
- •Residential
- •Services and agriculture
- •Transport
- •Policy framework and institutions
- •Policies and programmes
- •Industry
- •Buildings
- •Appliances and equipment
- •Municipalities
- •Agriculture
- •Transport
- •Assessment
- •Co-ordination, institutional capacity and data
- •Leveraging private-sector investments
- •Industry
- •Buildings
- •Appliances and equipment
- •Municipalities
- •Agriculture
- •Transport
- •Recommendations
- •5. Renewable energy
- •Overview
- •Supply and demand trends
- •Renewable energy in TPES
- •Electricity from renewable energy
- •Institutions
- •Policy and regulation
- •Electricity
- •Utility-scale renewables
- •Rooftop solar PV
- •Offshore wind
- •Off-grid solar PV
- •Bioenergy and waste
- •Barriers to investment in renewable energy projects
- •Transport
- •Industry
- •Assessment
- •Electricity
- •Transport
- •Industry
- •Recommendations
- •6. Energy technology innovation
- •Overview
- •Energy technology RD&D and innovation policies
- •Energy technology RD&D landscape
- •Public-sector RD&D actors
- •Public-sector RD&D priorities and co-ordination
- •Public-sector funding for energy RD&D
- •Private-sector energy RD&D landscape
- •International collaboration
- •Assessment framework
- •Non-financial support and policies
- •Direct and indirect financial support
- •Assessment
- •Strategic planning of energy RD&D activities
- •Inter-ministerial RD&D programme co-ordination
- •MI RD&D goals
- •Private-sector engagement to spur energy RD&D investment
- •Leadership in energy RD&D international collaboration
- •Recommendations
- •7. Electricity
- •Overview
- •Supply and demand trends
- •Electricity generation
- •Imports and exports
- •Consumption
- •Electricity access
- •Institutions
- •Market structure
- •Transmission
- •Captive producers
- •System operation
- •Power market reforms
- •Assessment framework
- •A. India’s power system transformation
- •Policies for decarbonisation
- •The role of nuclear power
- •B. Electricity markets to maximise investments and consumer outcomes
- •The wholesale market
- •Wholesale market reforms
- •Investment in the power sector
- •Power assets under financial stress
- •The retail markets in India
- •Retail market rules and regulations
- •Metering and smart meters
- •The financial health of the DISCOMs
- •Tariff reforms
- •Electricity retail pricing
- •C. Ensure power system security
- •Reliability
- •Generation adequacy
- •Network adequacy
- •Quality of supply
- •Flexibility of the power system
- •Assessment
- •Recommendations
- •8. System integration of variable renewable energy
- •Overview
- •Supply and demand trends
- •Penetration of VRE at the state level
- •India’s system integration challenges
- •General considerations for system integration
- •Different timescales of system flexibility requirements
- •System operation and electricity markets
- •System operation – generation dispatch
- •System operation – forecasting of wind and solar output
- •Power market design to support system integration of renewables
- •Flexibility resources in India
- •Power plants
- •Thermal plants
- •VRE sources
- •Electricity networks and grid infrastructure
- •Case study – Green Energy Corridors
- •Distributed resources
- •Demand response and retail pricing
- •Storage
- •Battery storage
- •Future sector coupling, hydrogen (ammonia)
- •IEA flexibility analysis – A scenario outlook to 2040
- •Assessment
- •Advanced system operation
- •Improving electricity market design
- •Flexibility resources
- •Recommendations
- •9. Coal
- •Overview
- •Supply and demand
- •Resoures and reserves
- •Domestic production
- •Imports
- •Coal consumption
- •Institutional framework
- •The public sector
- •The private sector
- •Government policies
- •Royalties and levies
- •Commercial mining
- •Coal and railways
- •Coal supply allocation and pricing
- •Coal washing
- •Local air quality policies
- •India’s climate commitments and the role of coal
- •Carbon capture and storage
- •Assessment
- •Recommendations
- •Overview
- •Supply and demand
- •Oil supply
- •Oil demand
- •Oil trade: imports and exports
- •Crude oil imports
- •Oil products imports and exports
- •Institutions
- •Retail market and prices
- •Market structure
- •Pricing
- •Upstream: Exploration and production policies
- •Infrastructure
- •Refineries
- •Ports and pipelines
- •Storage
- •Security of supply
- •Emergency response policy and strategic stocks
- •Demand restraint
- •Assessment
- •Recommendations
- •11. Natural gas
- •Overview
- •Supply and demand
- •Gas production and reserves
- •Institutions
- •Gas infrastructure
- •Gas policy
- •Markets and regulation
- •Upstream
- •Midstream
- •Downstream
- •Security of gas supply
- •Domestic gas production
- •Diversity of the LNG import portfolio
- •Pipeline import options
- •Availability of additional LNG volumes
- •Availability of seasonal storage
- •Assessment
- •Recommendations
- •ANNEX A: Organisations visited
- •ANNEX B: Energy balances and key statistical data
- •ANNEX C: Acronyms, abbreviations and units of measure

2. GENERAL ENERGY POLICY
Energy taxation and subsidies
The GoI provides large-scale public subsidies to ensure access to electricity, energy and clean cooking for its population. Subsidies are designed for the purpose of social support and economic development, but they are a large financial burden on the GoI budget, notably at times of rising prices for energy commodity imports. The GoI has gradually phased out and rationalised oil product subsidies and streamlined energy taxation. Many subsidies have been reduced and better targeted at vulnerable consumers. Renewable subsidies have been on the rise, while coal subsidies are stable or in decline.
Goods and Services Tax
In 2017 the central GoI introduced the Goods and Services Tax (GST), with the aim of further rationalising taxation and reducing overlapping taxes between state and central governments. Not all energy sectors are covered and not at the same rate. Petroleum products (crude oil, gasoline, diesel and kerosene), natural gas and electricity do not fall under the GST as they incur central excise duty and state value-added tax (VAT). Other fuels such as coal, naphtha, furnace oil, and liquefied petroleum gas (LPG) have been brought under the GST. Both imported and domestic coal are subject to the coal compensation cess (levy) of INR 400 (USD 5.70) per tonne. Prior to the introduction of the GST, the GoI raised a separate Clean Energy Tax (coal cess), with the revenues going to the National Clean Energy Fund. This tax revenue is now redirected to compensate for taxation imbalances caused by the GST reform for states (compensation cess). Renewable energy devices and parts for their manufacturing are supported by a lower GST rate of 5%, while inputs to thermal generation are charged GST of 5% to 18%. At the end of 2019, the GoI proposed to waive the coal compensation cess.
Subsidies
In 2018 India spent a total of USD 25 billion on subsidies for the consumption of fossil fuels, according to the latest IEA data (IEA, 2019b), mostly supporting oil consumption in the form of LPG (USD 17 billion) and gas consumption (USD 4 billion). However, the total value of fossil fuel subsidies is only 1% of GDP.
The diesel subsidy ended in 2014/15. Kerosene and cooking gas (LPG) are the only oil products subsidised by the government in 2019, but the GoI is increasing their price gradually to phase out the subsidies. According to the GoI, the oil subsidy accounted for USD 3.5 billion in 2018/19, a continuous decrease from the level of subsidy of USD 14 billion in 2012/13 and 11 billion in 2014/15.
The government subsidy programmes for access to electricity and clean cooking, which are outlined below, have contributed to a major reduction in kerosene use and related subsidies.
The IISD-CEEW energy subsidies inventory shows a 70% decline in the total amount of India’s fossil-fuel subsidies, driven not only by the decline in global oil prices, but also major reforms of gasoline, diesel, cooking gas and kerosene consumption subsidies (IISD and CEEW, 2018). IISD-CEEW found coal subsidies (support to both mining and power generation), mostly through tax breaks that reduce the cost of coal to power plants, but saw an overall decline with the introduction of the GST. Renewable energy and coal mining and consumption were subsidised in 2017 at a total amount of USD 2.2 billion and USD 2.4 billion, respectively.
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ENERGY INSIGHTS
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2. GENERAL ENERGY POLICY
Electricity access
The GoI has been supporting the expansion of distribution grid infrastructure across India to foster electricity access in villages. It provides budgetary support (grants) to state government DISCOMs under the Deendayal Upadhyaya Gram Jyoti Yojana (in rural areas), the Saubhagya scheme (last-mile connectivity to households) and the Integrated Power Development Scheme (IPDS) (in urban areas). The co-ordinated cross-government schemes focus on strengthening distribution networks and increasing village and household connections by co-funding network upgrades and extensions by the DISCOMs. The GoI announced that India had achieved its goal of providing electricity to every village in India in April 2018, an impressive achievement, delivered ahead of schedule. A village is considered to be electrified when 10% of households and all public buildings are connected to the grid. The final 600 000 villages (and a further 26 million households) had gained access to electricity, according to the latest government data in April 2019.4 IISDCEEW expects consumption subsidies to increase as a greater share of the population now have access to electricity, but not the financial capacity.
Under the National Electricity Policy, electricity is subsidised for the agricultural sector and domestic consumers below the poverty line (BPL). This subsidy is partly recovered through higher tariffs paid by the industrial and commercial sectors and direct subsidies from state governments to the DISCOMs. Electricity tariffs are below the cost of electricity, which impacts the financial health of many DISCOMs. Central government has entered into joint initiatives with individual states to ensure the DISCOMs’ financial viability for delivering universal electricity access.
Under the UDAY scheme, since 2015 state governments (which own the DISCOMs) have been allowed to take over 75% of their DISCOM’s debt and pay back lenders by selling bonds. DISCOMs are to repay the remaining 25% through the issuance of bonds, in exchange for improvements in operational targets. By March 2017, 27 states had entered into memorandums of understanding with the government for the UDAY scheme.
Several support programmes for universal electricity access have included reforms to reduce and better target the subsidy. The Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) programme, with a total budget of USD 10.8 billion, also required the separation of household and agricultural feeders to avoid the overcompensation of agriculture. The Saubhagya scheme allocated a total budget of USD 1.8 billion to support the provision of electricity to individual households.
One of the major reform efforts is the GoI work with states towards tariffs progressively reflecting the cost of supply of electricity, based on roadmaps for the reduction of crosssubsidies, established by the SERCs. Tariffs for all consumer categories are to be brought within ± 20% of the average cost of supply and cross-subsidies reduced. Subsidy to any category of consumers has to be provided through Direct Benefit Transfer5.
Clean cooking
To promote clean cooking, the GoI subsidises the provision of LPG (also known as cooking gas) in order to reduce the exposure to indoor air pollution from burning wood or dung and
4 India’s central online tracking of electricity access can be found at: http://garv.gov.in/dashboard. |
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5 The GoI introduced the direct benefit transfer in 2013 to provide subsidies directly to the people through their bank accounts, |
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thus reducing leakages or delays. The subsidy on LPG cylinders will be credited directly to consumers' Aadhaar-linked bank |
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accounts, as an advance in their bank account as soon as they book the first subsidized cylinder before delivery, so they can |
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purchase the next cylinder at market rate until the cap of 12 cylinders per year is reached. Aadhaar is a 12-digit unique identity |
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number that can be obtained voluntarily by residents of India, based on their biometric and demographic data. |
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