INDIAN ENERGY

SECTOR: AN 1
OVERVIEW

AT A GLANCE
Energy indicators* The annual growth rate of GDP (advanced estimates
for 2011/12) was 6.4%.
As per estimates by the International Energy Agency,
fossil fuels accounted for 73% of the primary The per capita annual income at factor cost (current
energy supply in India in 2010/11. This percentage year prices for 2011/12) was `60 972.
was 29.9% in low-income countries and 80.7% in Sectoral share of GDP was 14.4% for agriculture and
middle-income and high-income countries that allied activities, 27.9% for industry, and 57.7% for
are members of the Organization for Economic the services sector in 2010/11 (RBI 2012).
Cooperation and Development (OECD).
Social indicators
Per capita energy consumption in India in 2010/11 was
about 500 kilograms of oil equivalent (kgoe). The annual The population of India was 1.22 billion as of March
increase from 2009/10 to 2010/11 was 3.65%. 2012.†

The gross domestic product (GDP) per unit of energy The decadal rate of growth of population was
use in India in 2009 was 5.6 (constant 2005 purchasing 17.64 % for 2001–11 and the population density
power parity [PPP] $/kgoe). The GDP per unit of was 372 persons per km2 in 2011.‡
energy use during the same period was 3.6 (constant The urban population of the country was
2005 PPP $/kgoe) in low-income countries, 4.5 (constant 377.1 million in 2011.‡
2005 PPP $/kgoe) in middle-income countries, and
About 69% of the population of the country lived in
7.6 (constant 2005 PPP $/kgoe) in high-income countries.
rural areas in 2011.‡
Economic indicators# Of the total population of India, 33.7% people do
The GDP at factor cost as per 2004/05 prices was not have access to electricity.
`71 574 120 million (quarterly estimates for 2011/12). The net energy imports accounted for 30% of the
total energy use in India in 2009/10 (TERI 2012).

*
High-income Organization for Economic Cooperation and Development countries and low-income countries refer to the World Bank classification used in World Bank
Indicators
#
As per Economic Survey 2011/12
†
Details available at <http://censusindia.gov.in>
‡
Details available at <www.censusindia.gov.in/2011-prov-results/PPT_2.html>
Indian energy sector: an overview
Introduction
India is the fourth largest consumer of primary
energy in the world. Primary commercial energy
consumption in the country for 2009/10 was around
316.29 million tonnes of oil equivalent (MTOE).
The gross domestic product (GDP) of India grew
at 8.6% per annum in 2010/11, and targets of 8.2%
and 9% per annum were set for 2011/12 and the
Twelfth Five-year Plan,1 respectively, making energy
a critical component for fuelling economic growth.
Energy is also needed for human development. The
positive correlation between human development
(indicated by the human development index
[HDI], which measures life expectancy, literacy,
education, and standards of living for countries
worldwide) and energy consumption has been well
established (Figure 1).
As of 2011, about 400 million people did not have
access to electricity in India and about 836 million
people (72% of population) relied on traditional
biomass for cooking (IEA 2012). A large proportion
of the population still lacks access to modern and
cleaner forms of energy. Also the average level
of energy consumption in India is low with a per
capita energy consumption of 585 kilograms of oil
equivalent (kgoe) per capita compared to a world
Figure 1 Energy consumption as a prime driver of the
human development index
Source Compiled from World Bank Indicators, 2010 and UNDP
HDI statistics, 2010
1
Approach paper to Twelfth Five-year Plan “Faster, Sustainable, and More Inclusive Growth: an approach to the Twelfth Five-year Plan 2012–17” (Planning Commission
2011)
2 TERI Energy Data Directory and Yearbook 2012/13
average of 1802 kgoe per capita in 2009 and per
capita electricity consumption of 751 kWh per
capita compared to a world average of 2900 kWh
per capita in 2009. Therefore, we expect that the
energy consumption in India will increase steadily
over the years as we strive to meet the minimum
energy demands of the entire population. According
to the Report of the Expert Committee on Integrated
Energy Policy (Planning Commission 2006), to
achieve the sustained rate of growth of 8% per
annum through 2031/32, India needs to increase
its primary energy supply by three to four times and
electricity generation capacity or supply by five to
six times over the 2003/04 levels.
Over the years there has been increasing concern
about climate change. With strong economic
growth and rising energy consumption, India’s
greenhouse gas (GHG) emissions have also been
increasing. India is now the fourth largest emitter
of GHGs in the world, after the USA, China, and
Russia. However, India’s emissions intensity (which
reflects GHG emissions per unit of GDP) has been
declining. Emissions intensity declined from 66.8
g of CO2 equivalent per rupee of GDP in 1994 to
56.2 g of CO2 equivalent per rupee of GDP. In
2009, India also voluntarily pledged to reduce its
energy intensity by 20%–25% by 2020 over the
2005 levels. Several other initiatives have also
been undertaken and are planned to tackle climate
change and reduce energy consumption without
compromising on the country’s development
objectives.
Salient features of energy demand and
supply in India
The energy sector in India is unique both in
terms of its organization as well as complexity,
which results from the fact that India is a rapidly
growing economy with huge disparity in incomes
and lifestyles. Some salient features of the energy
demand and supply sectors in India are as follows.
Energy demand
• The Indian energy sector is complex due to a
wide variation in lifestyle and use of different
forms of energy by various sections of society.
 Indian energy sector: an overview

About 68% of India’s population still lives
in rural areas and depends largely on non-
commercial sources of energy such as fuelwood,
biomass, and agricultural residue for their
energy requirements for lighting and cooking.
According to the 66th round of Consumer
Expenditure Survey2 in 2009/10, 76% of
households in rural areas still use firewood as
the primary cooking fuel and 33.54% of rural
households used kerosene as a primary lighting
fuel (MoSPI 2011). While an accurate estimate
of non-commercial energy is not reported, by one
estimate of the Ministry of New and Renewable
Energy (MNRE), the availability of agricultural
residue in India is about 539 million tonnes
(MT). Therefore, the total energy consumption
in India, including biomass, would be much
higher than that indicated by the consumption
figure of only commercial fuels.
• Energy consumption has been increasing
steadily in India to meet the requirements of
economic growth and different development
objectives. Table 1 shows the final commercial
energy consumption in different sectors in India
over the years.
• Retail energy prices in India are subsidized
to support low-income households. End-
use energy prices in India are lower than
international prices, but in purchasing power
parity terms, prices seem much higher. The high
subsidies have resulted in distorted allocation of
energy and financial resources, and high under-
recoveries have burdened domestic companies.
The 13th Finance Commission recommended
that energy prices in India be brought in line
with international energy prices. The Report
of the Expert Group on a Viable and Sustainable
System of Pricing of Petroleum Products,
commissioned by the Government of India,
recommended strategies for rationalization and
phasing out of inefficient fossil fuel subsidies. In
June 2010, the price of petrol was deregulated,
and between May 2011 and August 2012, the
price of petrol increased by almost 8% because
of depreciation of the rupee and rising prices of
imported crude oil. The price of diesel, which is
partially deregulated, was also increased by `5/L,
while that of kerosene and domestic liquefied
petroleum gas (LPG) was also revised upwards
as of October 2012. In a recent announcement,
the government also restricted the supply of
subsidized LPG for domestic cooking to six
cylinders per household in a year.
• Various demand-side management and energy
efficiency improvement measures are being
undertaken in various sectors in India. These

Table 1 Final commercial energy consumption (in MTOE) in India by sector

Sector 1980/81 1985/86 1990/91 1995/96 2000/01 2005/06 2010/11
Agriculture 1.6 (2.3%) 2.4 (2.6%) 4.9 (3.9%) 8.4 (5.3%) 15.2 (7.9%) 15.1 (6.9%) 23.14 (7.32%)
Industry 36.9 (53.7%) 49.2 (53.0%) 62.9 (50.4%) 77.5 (48.6%) 77.4 (40.4%) 96.2 (44.4%) 137.98 (43.62%)
Transport 17.4 (25.3%) 21.7 (23.4%) 28 (22.4%) 37.2 (23.4%) 33.5 (17.5%) 36.5 (16.8%) 55.34 (17.5%)
Residential and 5.6 (8.1%) 8.9 (9.6%) 12.6 (10.1%) 15.3 (9.6%) 24.1 (12.6%) 32.6 (15.1%) 43.43 (13.73%)
commercial
Other energy 1.9 (2.8%) 2.7 (2.9%) 3.9 (3.1%) 6.8 (4.3%) 13.4 (7.0%) 18.7 (8.6%) 30.25 (9.56%)
uses
Non-energy 5.3 (7.7%) 7.9 (8.5%) 12.6 (10.9%) 14.1 (8.8%) 28 (14.6%) 17.5 (8.1%) 26.15 (8.27%)
uses
Total 68.7 (100%) 92.8 (100%) 124.9 (100%) 159.3 (100%) 191.6 (100%) 216.6 (100%) 316.29 (100%)
MTOE – million tonnes of oil equivalent
Note Figures in parentheses indicate the percentage share of each sector.
Sources MoC (2011); MoPNG (2010); TERI (Various years)

2
The Ministry of Statistics and Programme Implementation conducts a household expenditure survey annually to measure changes in household incomes and expenditure
patterns.

TERI Energy Data Directory and Yearbook 2012/13 3

Indian energy sector: an overview

include the Perform, Achieve, and Trade private sector players. Until 2006, pipeline gas
mechanism (which aims to promote the cost transport was wholly public owned by the Gas
effectiveness of energy efficiency improvements Authority of India Ltd. However, now more
in energy-intensive large industries), a National private participation may be forthcoming.
Standards and Labelling Programme for various A Group of Ministers (GoM), headed by the
appliances and buildings, and the Bachat Lamp Finance Minister, has been constituted to
Yojana for replacement of incandescent lamps consider reintroduction of a bill to amend the
by CFL lamps. Coal Mines (Nationalization) Act, 1973, which
currently allows only public sector undertakings
Energy supply (PSUs) to undertake mining besides permitting
private firms to extract coal for captive use.
• The commercial energy supply in India is
largely dependent on fossil fuels. Coal, oil and
natural gas oil accounted for 91.74% of the total Sources and uses of energy
primary commercial energy supply in 2011. in India
As on 31 March 2010, India has an estimated
Energy is a key driver of growth and development
renewable power potential of 90 313 MW, but a
(Figure 3). Given India’s growing demand for
large part of this potential remains untapped and
energy, high dependence on fossil fuels and limited
renewable energy accounts for only 1.65% of the
reserves of fuels, India uses all the main sources of
total primary energy supply. Large hydropower
energy such as coal, lignite, crude oil, petroleum
accounts for 5.331% of the total primary energy
products, natural gas, hydropower, nuclear power,
supply (BP 2012).
and wind.
• Resource augmentation and growth in domestic
energy supply have not kept pace with the
increasing demand for energy. There are acute Coal and lignite
shortages of electricity, inadequate supply of The Indian economy is highly dependent on coal. In
good quality coal, and gas shortages. In 2011/12, the financial year 2010/11, coal contributed to about
the peak and total deficits of electricity were 52.87% of the total primary energy consumption
9.8% and 8.5%, respectively, an improvement in the country. In energy terms, India accounts
from 2010/11 where the corresponding deficits for 8% of the world coal consumption and is the
were 10.2% and 8.5%, respectively. third largest consumer of coal in the world after
• India’s energy sector is dominated by the public China and USA (Figure 2, BP 2012). In 2011, coal
sector and state-operated companies, although
the number of private companies is slowly
increasing. For instance in 2009/10, public
sector companies accounted for 91% of the Rest of world (29%)
total coal production in the country with the
Coal India Ltd (CIL) alone accounting for 81% USA (14%)
of the production. The Oil and Natural Gas
Corporation Ltd (ONGC) and Oil India Ltd
(OIL) are the dominant players in the upstream India (8%)
oil sector, and the Indian Oil Corporation Ltd is
the largest player downstream. China (49%)
• The New Exploration and Licensing Policy
(NELP) was formulated in 1997/98 to provide
a level playing field to public and private sectors
by allocating acreages based on competitive
Figure 2 Distribution of coal consumption in the
bidding rather than nomination. Recent rounds
world, 2012
Source Compiled from BP Statistics, 2012
of NELP have seen participation from some

4 TERI Energy Data Directory and Yearbook 2012/13

 Indian energy sector: an overview

consumption in India was 295.6 MTOE. This is an The power sector with massive capacity creation
increase of 9.2% over the consumption in 2010 (BP and increase in power generation plans envisions
2012). This dominance of coal in India’s energy that the coal-based power generation will grow at
mix is expected to continue in the coming decades the rate of 10% during the Twelfth Five-year Plan.
(Planning Commission 2006; TERI 2010). With the increase in import of coal, requisite coal
The current resources of coal are estimated at movement and infrastructure facilities need to
293.5 billion tonnes (BT) (as of April 2012). Out be created. The port capacities need to be built
of this, 40% constitutes proven reserves, while the to handle the increasing volumes of coal imports
rest of the 60% falls into the category of indicated and ensuring a smooth movement of imported
and inferred resources.3 Coal deposits are coal from the ports to consuming centres. The
chiefly located in Andhra Pradesh, Chhattisgarh, commercial energy flow in India is shown in the
Jharkhand, Madhya Pradesh, Maharashtra, following Sankey diagram (Figure 3).
Odisha, and West Bengal. The estimated reserve of
lignite as on 31 March 2011 was 41 BT, of which Oil and gas
80% was in the southern state of Tamil Nadu. The
After coal, oil and gas are the next most important
increase in the estimated reserve of lignite during
fuels in India. Oil and gas account for 39.3% and
2010/11 was 2.4%, Tamil Nadu accounting for
9% of the primary commercial energy supply in
the maximum increase of 2.7% (MoP 2012).
India, respectively (TERI 2012).
The coal production was 540 MT in 2011 all
In 2011/12, 147.9 MT of petroleum products
over India, which is an increase from 533 MT in
were consumed in India, an increase of 4.93% over
2010 (MoC 2012). Lignite production in 2011/12
2010/11 (PPAC 2012). In 2011/12, 203.7 MT
increased to 43 MT, an increase of 11.62% over
of crude oil was processed by refineries in India.
2010/11 (MoC 2012). India is the fourth largest
This was an increase of 3.7% over 2010/11 (PPAC
coal producer in the world after China, USA, and
2012). In 2011, India was the fourth largest
Australia (BP 2012). CIL constitutes a major share
consumer of oil in the world after USA, China,
in the total coal production in the country. Its
and Japan and accounted for 4% of the world oil
share in 2011/12 has been estimated at 80.7% of
consumption (Figure 4, BP 2012).
the total production followed by 9.7% by Singareni
In terms of consumption of petroleum
Collieries Company Ltd. The share of production
products, the transport sector is the largest and the
by private sector constitutes 9.1% in 2011/12 and
fastest-growing consumer in India, accounting for
has remained more or less stagnated during the last
39% of petroleum products consumed, followed
four years.
by residential and commercial and industry sectors
The overall consumption of coal in the country
(TERI 2012). Consumption of petroleum products
in 2011/12 was 696 MT (Government of India
has increased by 17.4% since 2006/07. India has
2011). The major consuming sector, that is, the
the fifth largest refining capacity in the world and is
power sector, both utilities and captive, grew at the
emerging as a major refining hub.
rate of 8.36% and 7.29%, respectively, with the
India’s growing dependence on oil imports
overall consumption of coal by the power sector
can be seen from the increasing volume of net
increasing from 336.05 MT in 2006/07 to about
crude oil imports and also rising share of net
500 MT in 2011/12.
crude oil imports as a proportion of refinery
The overall coal imports for the year 2011/12
crude throughput. Imports accounted for 44%
were originally projected at 51.1 MT; however,
of crude oil processed (in terms of refinery crude
with the mid-term appraisal, it was realized that the
throughput) in 1990, 83% in 2010/11, and 84%
domestic supply will not be able to meet the growing
in 2011/12. There also exists consumption of
demand and, hence, the figures were revised to
export oriented refineries. Crude oil imports have
83.3 MT. However, as per the Ministry of Coal, the
increased in 2011/12 to 171.73 MT, registering a
coal import figures have crossed the 83.3 MT figure
growth of 5% over the previous year. The prices
and stand at 98.92 MT for 2011/12 (MoC 2012).

3
Details available at <www.cmpdi.co.in/coalinventory.php>

TERI Energy Data Directory and Yearbook 2012/13 5

 6
Nuclear 1.6 1.6
3.23
Renewable 3.23 #
143.39 Energy loss from
8.96 power generation
Hydro 8.96 Electricity
143.39 MTOE
19.23 generation
195.72
MTOE
Natural gas
48.18 5.07 Commercial
48.98
12.20 6.13 MTOE
10.2
23.4 7
28.95 Residential
37.30 MTOE
0.22 21.
34

1.0
0.15

7
156.50
Indian energy sector: an overview

0.42

2.3
Agriculture

8
23.14 MTOE
Coal and lignite 4.1
0 9
252.19 6.2

Industry
87.43 137.98

*Net availability (MTOE)

MTOE

TERI Energy Data Directory and Yearbook 2012/13

23
8.26 6 .97
1.0 9
.8
**Final consumption (MTOE)

24
.72 Transport
12 55.34
28.80
MTOE

Crude oil 54.28

142.99 139.32 Other energy
30.25 MTOE

15.41 Non-energy
2.18 26.15 MTOE

Figure 3 Commercial energy flow in India for 2009/10

#
Energy loss from generation is a sum of conversion losses in power generation (this takes into account the thermal efficiency of different power plants), transmission and distribution
losses and auxiliary consumption in power stations.
* Net availability refers to the availability of the fuel for conversion to power, other products or for final consumption. Thus, the net availability of coal and lignite is the availability of coal and
lignite net of washery rejects that is used for power generation and for final consumption, net availability of natural gas is the availability net flaring of gas, and the net availability of crude
oil refers to crude oil that is available for conversion to petroleum products or used for power generation.
** Final consumption refers to the energy available for the final demand sectors—residential, commercial, agriculture, industry, transport, other energy and non-energy sectors. There are
energy losses even in these sectors depending on the efficiency of appliance and processes that differ from sector to sector and between industries. However, no ballpark estimate of
these is available.
 Indian energy sector: an overview

Commercial energy flows in India: explanation for the Sankey diagram (Figure 3)
1. The net availability of natural gas refers to the availability of gas net of flaring and liquefied petroleum gas (LPG) extraction.
The formula for estimating the net availability of natural gas in million tonnes of oil equivalent (MTOE) is given in
Table A.

Table A Formula for estimating net availability of natural gas

Production 42.75
+ Imports 8.86
– LPG extraction from natural gas 2.53
– Flaring of natural gas 0.89
Net availability of natural gas 48.18
Source MoPNG (2010)

2. The net availability of coal and lignite refers to the total availability of coal and lignite net of own use and washery rejects.
The formula for net availability of coal and lignite in MTOE is given in Table B.

Table B Formula for estimating net availability of coal and lignite

Production of coal and lignite 212.24
+ Imports of coal 47.61
– Exports of coal 1.47
– Stock changes* 3.86
#
– Own use 0.26
– Coal washery rejects 2.06
Net availability of coal and lignite 252.19
*Stock changes are to be added, but since the amount for stock changes is negative for coal and lignite for 2009/10, a negative sign is shown.
#
Own use refers to the amount of coal consumed in collieries for their own consumption.
Source MoC (2010)

3. The net availability of petroleum products refers to the crude oil converted to petroleum products and available for final
consumption. The formula for net availability of crude oil in MTOE is given in Table C.
Table C Formula for estimating net availability of crude oil
Crude throughput 192.77
– Refinery boiler fuel 11.42
+ Imports of petroleum products 14.68
– Exports of petroleum products 53.04
+ LPG extracted from natural gas 2.53
Net availability of petroleum products 145.52
Source MoPNG (2010)

4. Energy loss from generation is the sum of conversion losses in power generation (taking into account the thermal efficiency
of different power plants), auxiliary consumption in power stations, and transmission and distribution losses (Table D).

Table D Calculation of energy loss from generation

Conversion losses in power generation 122.20
+ Auxiliary consumption in power stations 4.53
+ Transmission and distribution losses 16.66
Total energy loss from power generation 143.39
Source CEA (2011)

TERI Energy Data Directory and Yearbook 2012/13 7

Indian energy sector: an overview

The final consumption of electricity across commercial, residential, agriculture, industry, transport, and other energy and
non-energy sectors is 52.33 MTOE.
5. The net availability of nuclear, renewable, and hydro is the total electricity generated from these sources. The generation of
electricity through nuclear, renewable, and hydro sources of energy is 1.6, 3.23, and 8.96 MTOE, respectively (CEA 2011).
6. Final consumption refers to the energy available for the final demand sectors—residential, commercial, agriculture,
industry, transport, and other energy and non-energy sectors. Table E shows the calculation for the estimation of final
energy consumption for each of these six sectors. Final energy consumption is the sum of consumption of coal and lignite,
natural gas, petroleum products, and electricity consumption.

Table E Final energy consumption across various sectors in India

Sector Coal and lignite Natural gas Petroleum products Electricity/power Final consumption
Agriculture — 0.15 12.72 10.27 23.14
Industry 87.43 0.42 28.80 21.34 137.98
Transport — — 54.28 1.07 55.34
Residential — 0.22 24.89 12.20 37.30
Commercial — — 1.06 5.07 6.13
Other energy uses 8.26 4.19 15.41 2.38 30.25
Non-energy uses — 23.97 2.18 — 26.15
Sources CEA (2011); MoC (2010); MoPNG (2010)

of the Indian basket of crude oil increased to $123
per barrel in March 2012 as against $110.72 per
barrel a year ago. The value of imports in Indian
rupees increased by nearly 50% in the past one
year due to a combination of increase in the
prices of crude oil and the depreciation of rupee
(PPAC 2012).
In response to this, exploratory activities are being
undertaken to enhance domestic oil production.
Oil consumption (million tonnes, %)
25
20
15
10
5 western offshore regions, especially the Mumbai
0 High gas fields. The onshore fields in Assam,
A
ina
These include improving the recovery factor from
existing major fields by implementing enhanced oil
recovery/improved oil recovery schemes. Efforts are
also being made to acquire equity stake in oilfields
abroad. In the last few years, India has made equity
acquisitions in Angola, Australia, Brazil, Colombia,
Indonesia, Nigeria, Russia, Sudan, Syria,Venezuela,
and Vietnam.
Natural gas accounts for 10% of primary energy
consumption in India (BP 2012). In 2011/12, 46.3
billion cubic metres (BCM) of gas was consumed
in India (PPAC 2012), a decrease of 10% over
2010/11. According to BP Statistics 2012, India
ranks 11th among natural gas consumers of the
world (Figure 5).
At the end of 2011, India had 1.2 trillion cubic
metres of natural gas reserves (BP 2012). The bulk
of India’s natural gas production comes from the

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producers of natural gas. Reliance’s Krishna–

Godavari (D6) basin is India’s largest gas field.
The gross production decreased by 9% to 47.5
Figure 4 Distribution of oil consumption across the BCM in 2011/12 from 52.2 BCM in 2010/11. In
world (2011) 2011/12, 82.1% of the natural gas production in
Source BP (2012)
the country was offshore production. In 2011/12,

8 TERI Energy Data Directory and Yearbook 2012/13

 Indian energy sector: an overview

Oil consumption (million tonnes, %) Power

25
The total installed generating capacity of utilities
20
in India has increased from 173 GW (as on
15 31 March 2011) to 199 GW (as on 31 March
2012) representing an increase of 15.1%. The
10
installed capacity comprises 56% from coal, 20%
5 from hydropower, 12% from renewable energy
sources, and 9% from gas. Out of the total installed
0
capacity, the highest share is contributed by the
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state sector (43%), followed by the central sector

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(29.8%), while the private sector contributed the

Figure 5 Distribution of gas consumption across the
world (2012)
Source BP (2012)
ONGC and OIL accounted for 54.5% of the gross
gas production in India. In 2011/12 (provisional
figures), the share of private companies and joint
venture companies (JVCs) in total gross production
was 44%. Private companies and JVCs accounted
for 53% of offshore gross production in 2011/12
(PPAC 2012).
In 2011/12, India imported 13.2 MT of
liquefied natural gas (LNG) of which 10.7 MT
was imported by Petronet LNG Ltd (PLL) and
2.5 MT by Hazira LNG Pvt. Ltd (HLPL). The
countries from where the gas was imported include
Abu Dhabi, Algeria, Australia, Egypt, Equatorial
Guinea, Malaysia, Nigeria, Norway, Oman, Qatar,
Trinidad and Tobago, USA, and Yemen. Presently,
three LNG terminals—Dahej terminal of PLL,
Hazira terminal of HLPL, and Dabhol terminal of
Ratnagiri Gas and Power Pvt. Ltd—are operational
in the country.
As India imports nearly 80% of its crude demand,
increasing international prices result in escalation
of under-recoveries to oil-marketing companies.
The largest component of under-recovery is diesel,
representing $8 billion or almost 44% of the total
amount in 2010/11.4 Therefore, to address the
rising burden of diesel under-recovery, the retail
prices of diesel have been revised as mentioned
earlier.
4
Details available at <www.iea.org/publications/freepublications/publication/India_study_FINAL_WEB-1.pdf>
rest (27.1%). But capacity addition in the country
has always fallen short of the planned targets.
The capacity addition target set for the Eleventh
Five-year Plan was 78 700 MW, but the capacity
addition was only 53 922 MW, having a slippage
of about ~25 000 MW approximately (CEA 2011).
Achievement was 47% of the target set for the
Ninth Five-year Plan and 51.5% for the Tenth
Five-year Plan (Figure 6).
During the financial year 2011/12, major power
generation was from thermal sources, contributing
nearly 81% (709 billion units [BU]) of the total
power generated. Hydropower (130 BU) and
nuclear power (32 BU) contributed the remaining
share in electricity generation (Figure 7). The
electricity generation for 2011/12 was targeted
around 850 BU, and electricity generation of
871 BU was achieved during the year, that is, 2.5%
more than the target.
The demand is growing in terms of both energy
and peak demand. Although there has been
an improvement in the energy and peak deficit
situation since 2008/09, it has remained constant
in 2011/12 at 8.5% as the previous year. As on
31 March 2012, 557 439 villages were electrified,
representing 94% of the 593 732 inhabited villages
(as per Census 2001).
As on 31 March 2012, network of transmission
lines showed a growth of around 5.5% in 2011/12
as compared to 2010/11, covering a total of
268 693 circuit kilometres. The electricity lost in
transformation, transmission, and distribution
system, including electricity unaccounted, was
around 194 BU representing 25.4% of the total
available electricity in 2009/10 as against 25.4%
in 2008/09, showing that the percentage loss
remained constant in 2009/10.

TERI Energy Data Directory and Yearbook 2012/13 9

Indian energy sector: an overview

MW GWh
200 000 900 000
180 000 800 000
160 000 700 000
140 000 600 000
120 000
500 000
100 000
80 000 400 000
60 000 300 000
40 000 200 000
20 000 100 000
0 0
En d of nd an
f ir n
d o r th an
En nd o Fifth lan
En Sev xth p n
En f Ei th p n
Se F En of N th p n
co irs d o int lan
Th yea ear Tent plan
ur ea El 1th an
a r le t h n
Ele nth n
nt an
lan
d o Th pla

f i la
d o en la
d gh la

ye f E en la
of ve pla
En eco t pl

En Fou d pl

Fo ird y r of of 1 h pl

ve pl
E f p
do fS p

th r o ev p

hp
nd t y f h
f S F ir s
d o of
En nd
E

Installed electrical energy generation capacity (MW)

Gross electrical energy generation (GWh)

Figure 6 Growth of installed capacity and electricity generation in India over plan periods
Source CEA (2011)

2010, was 407 501 MW, up from 381 804 MW as

Thermal (81%) on 31 March 2009, recording an increase of 6.7%.
The domestic category, which accounted for 38%
of the total connected load, emerged as the single
biggest consumer category in terms of connected
Hydro (15%) load followed by industrial (26%), agriculture
(20%), and commercial (11%) during 2009/10.

Nuclear (4%) Renewable energy sources

Figure 7 Electricity generation by source as on
31 March 2012
Source CEA (2011)
All-India electricity consumption at the end of
the Eleventh Five-year Plan is 772 603 GWh. The
industrial category continues to be the biggest
consumer category accounting for 45% of the
total consumption followed by domestic (22%)
and agriculture (17%), respectively. The total
connected load in the country, as on 31 March
Renewable energy comprises small hydropower,
wind, solar, and geothermal energy and modern
biomass energy, including ethanol. Globally,
renewable energy in power generation grew by
17.7% in 2011 over 2010 (the highest since
1990) and accounted for 1.5% of primary energy
consumption. Despite high growth rates, renewable
energy still represents only a small fraction of
today’s global energy consumption. Renewable
forms of energy account for 3.9% of the global
power generation, with the highest share (7.1%) in
Europe and Eurasia (BP 2012).
India was among the first countries in the world
to set up a separate ministry for non-conventional
energy resources in the early 1980s. At present,
the MNRE and other public organizations are
promoting renewable energy sources through

10 TERI Energy Data Directory and Yearbook 2012/13

 Indian energy sector: an overview

collaborative public–private involvement by were introduced. At present, the government

providing financial and fiscal incentives such as has withdrawn certain fiscal incentives such as
tax holidays and depreciation allowances and generation-based incentives (GBI) and 80%
providing guidelines to state utilities for favourable accelerated depreciation—both have been
purchase of power from renewable energy-based discontinued from April 2012. However, according
power producers. The MNRE has been pursuing a to an official statement, the MNRE is working on a
three-fold strategy for the promotion of renewables proposal to continue GBI.
in the country: (1) providing budgetary support
for research, development, and demonstration of Nuclear power
technologies; (2) facilitating institutional finance;
Consumption from Nuclear energy has increased
and (3) promoting private investment through
from 5.2 MTOE in 2010 to 7.3 MTOE in 2011,
fiscal incentives.
comprising 1.2% of the total consumption in the
The Jawaharlal Nehru National Solar Mission
world (BP 2012). There has been an interest in
(JNNSM) was formally launched in January
nuclear energy because of increasing fossil fuel
2010. It aims to generate 20 GW of solar power
prices and concerns over energy security and
by 2022. Grid solar power projects are set up
rising GHG emissions. Since the accident at the
by solar project developers on build, own, and
Fukushima Daiichi Nuclear Power Plant in Japan,
operate basis. The projects under JNNSM Phase
which led to a series of equipment failures, nuclear
1 were selected through international competitive
meltdowns, and releases of radioactive materials
bidding. The projects for entire capacity for the
following the Tohoku earthquake and tsunami on
target of 1100 MW under JNNSM Phase 1 have
11 March 2011, several governments are reviewing
been allocated. To mitigate the energy problems
their policies towards nuclear power.
of cities and to provide alternative energy solutions
India has a largely indigenous nuclear power
for industrial and commercial establishments,
programme and expects to have 20 000 MWe of
there is focus on the development and application
installed nuclear capacity by 2020 and 63 000 MWe
of renewable energy technologies and energy-
by 2032. Since India is not a signatory to the Nuclear
efficient systems, such as solar energy programmes
Non-proliferation Treaty, it was largely excluded
and technologies, energy recovery from urban and
from trade in nuclear plant or materials, which
industrial wastes, biomass energy, and cogeneration
hampered its development of civil nuclear energy
(non-bagasse) in industry. Indian Renewable
until 2008. Following the Nuclear Suppliers Group
Energy Development Agency Ltd and other
agreement, which was achieved in September
national, private, and cooperative banks and non-
2008, the scope for supply of both reactors and fuel
banking financial companies are complementing
from suppliers in other countries opened up. Civil
the ministry’s role in facilitating the deployment of
nuclear cooperation agreements have been signed
renewable energy systems by providing term loans.
with the USA, Russia, France, UK, South Korea,
As on 31 August 2012, grid-interactive renewable
and Canada, as well as Argentina, Kazakhstan,
power contributed about 25 858 MW of electricity,
Mongolia, and Namibia.6
which is around 12% of total installed capacity in
The gross generation from nuclear power in
the country and off-grid/captive power contributing
2011/12 was 32 455 MU with an availability factor
to about 757 MW. Wind power consisted of 17 967
of 91%,7 an increase of 22.6% from 2010/11. As
MW, followed by small hydropower at 3434 MW,
on 31 March 2012, India had nuclear reactors
biomass at 3319 MW, solar at 1044 MW, and
at six locations with a total installed capacity of
waste to power at 94 MW.5 A capacity of around
4780 MWe.8 Ten new nuclear power projects
2827 MW was installed during the year.
are planned during the Twelfth Five-year Plan
In order to foster the growth of wind power
(2012–17) period.9 The Unit 1 of Kudankulam
in India, several financial and fiscal incentives

5
Details available at <www.mnre.gov.in>
6
Details available at <www.world-nuclear.org>
7
Details available at <www.npcil.nic.in/main/AllProjectOperationDisplay.aspx>
8
Details available at < www.npcil.nic.in/main/AllProjectOperationDisplay.aspx >
9
Details available at <http://articles.economictimes.indiatimes.com/2011-11-23/news/30433349_1_nuclear-power-india-plans-kudankulam-nuclear-plant>

TERI Energy Data Directory and Yearbook 2012/13 11

Indian energy sector: an overview

“Cash transfers” as a delivery mechanism for energy subsidies

The Government of India has historically subsidized four major petroleum products (petrol, diesel, kerosene, and liquefied
petroleum gas [LPG]) with the primary objective of increasing their affordability and protecting domestic consumers from
international price volatility. However, burgeoning subsidies have had a number of adverse consequences, including loss of
revenues for the government and for oil companies, as well as inefficient consumption of fossil fuels. In 2011/12 alone, oil-
marketing companies incurred under-recoveries to the order of `1 385 410 million ($27.06 billion). This burden increased
by more than 75% from that in 2010/11 and has increased three times from the 2009/10 figures. Highly dependent on
imported crude (almost 80% of crude consumed is imported), it is crucial for India to consider an appropriate delivery
mechanism of petroleum product subsidies. The growing cost of under-recoveries and the economy-wide ramifications of the
ad hoc pricing policy have made it imperative to bring about a reform in the pricing of petroleum products since every year
it adds significantly to the costs borne by the government, the oil sector, and the economy in general. Although a number of
government committees and academic papers have examined the issue of subsidies, the actual progress on rationalizing
prices has been limited.
Taking into consideration the issues discussed above, there have been reviews of the existing mechanism of subsidy
delivery through the public distribution system (PDS), and the possibility of using cash transfers as an option for fossil
fuel subsidy reform has been suggested. In an era of rapid technological change, it would be worthwhile to explore new
technology-aided options not just to improve the mechanism of subsidy delivery, but to ensure that the subsidies reach the
intended beneficiaries. Such measures would also minimize inefficient and illegal usage of subsidized fuels. Cash transfers
as a subsidy delivery mechanism are being primarily considered for domestic LPG and kerosene.
For domestic LPG, calculations have been made based on the amount of subsidies accruing to each expenditure decile on
the basis of household-level National Sample Survey Organization data for 2009/10 (MoSPI 2011). The figures show that the
approximate amount that could be saved by capping subsidized cylinders at eight per year per household works out to more
than `40 000 million ($897.21 million), which is 17% of the total subsidies and under-recoveries on LPG incurred in 2010/11
(TERI 2012).
One of the priorities that have emerged recently is the need to strengthen India’s social safety net and to improve the
delivery mechanisms of poverty alleviation programmes. This is to ensure that vulnerable groups can withstand unforeseen
shocks to income and continue to access basic goods and services at affordable prices. The 2011/12 Budget has accordingly
planned for increases in expenditure to meet these goals and has also recommended direct subsidy transfers to improve the
efficiency and reach of welfare benefits for the underprivileged.
The Direct Cash Transfer Programme has had mixed reactions with respect to its efficiency and impact.
Advantages
Families in the low-income spectrum get cash in hand, which they can use according to their needs. In case of cash flow
problem, they may not have to borrow from money lenders or microcredit institutions, which charge high interest rates.
Cash transfer programmes reduce dependence on government functionaries.
With conditional cash transfers, other social goals such as school attendance, immunization, and registration of births
can be achieved. Cash transfer programmes eliminate the cost of managing the PDS and prevent leakages. According to
a Planning Commission study, the government spends about `3.65 to transfer `1 of food to eligible recipients under the
PDS.
Cash transfers programmes can be more sharply targeted so that they benefit only the eligible recipients.
Disadvantages
Critics fear that poor families may waste the cash on non-essential items. Also adult members of a family may tend to
rely on cash handouts rather than search for gainful employment. The government may withdraw resources from schemes
that complement the social goals that the government wants to achieve through conditional cash transfers. For instance,
the introduction of a conditional cash transfer scheme aimed at increasing school enrolment may lead to resources being
withdrawn from a programme focusing on improving the quality of teaching in schools. Contd...

12 TERI Energy Data Directory and Yearbook 2012/13

 Indian energy sector: an overview

The success of cash transfer programmes depends on correctly identifying and targeting beneficiaries, which is the
responsibility of the central and state governments. According to the N C Saxena committee on below poverty line (BPL)
census, about 61% of the eligible population is excluded from the BPL list.
Cash transfers work only with a well-functioning private sector system, which may not be available for a number of services.
The fundamental challenge for any subsidy framework is to ensure effective targeting of beneficiaries. Accurate beneficiary
identification has traditionally been a complex task for social security and welfare programmes. Targeting errors within
social and welfare programmes are of two types—errors of inclusion and errors of exclusion. The former involves the wrongful
inclusion of beneficiaries ineligible for the subsidy, while the latter concerns the exclusion of eligible beneficiaries.
In future, there is a need to conduct more pilot studies with appropriate sampling and complete involvement of local
authorities. There is also a need to look at the value for money of the programme and a cost-benefit analysis including all
costs of the programme from administration to monitoring. In the long run, it is critical for India to improve the supply chain
with regards to LPG and other modern fuels to ensure access.

atomic power plant of capacity 1000 MWe is
expected to get commissioned in December 2012
and the Unit 2 of capacity 1000 MWe in July 2013.
Unit 1 and Unit 2 of the Kakrapar Atomic Power
Project, each of capacity 700 MWe, are expected
to be commissioned in June 2015 and December
2015, respectively, while Unit 1 and Unit 2 of the
Rajasthan Atomic Power Project, each of capacity
700 MWe, are expected to be commissioned in
June 2016 and December 2016, respectively.
After the Fukushima accident, India’s atomic
energy regulator has decided to renew the
operational licence of all the 20 atomic power
plants in the country on a short-term basis till
the installation of additional safety measures as
suggested by the Nuclear Power Corporation of
India Ltd.

TERI Energy Data Directory and Yearbook 2012/13 13

Indian energy sector: an overview
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