Energy sector of India- Renewable and Non-renewable Energy IAS Target

Energy Sector of India- Renewable and Non-renewable Energy

29 Jul 2020

Category : Environmental Issue

Topic: Energy Sector of India- Renewable and Non-renewable Energy

India is known to be the world's third largest producer and third largest consumer in terms of “electricity”. The national electric grid in India has an installed capacity of 360 and 788 GW in August 2019. Renewable power plants accounts of large hydroelectric plants constitute 34.86% of India's total installed capacity. During the 2018-19 fiscal year, the gross electricity produced by utilities in India was 1,372 TWh, while the total electricity generation (utilities and non-utilities) in the country was 1,547 TWh.
The gross electricity consumption in 2018-19 was 1,181 kWh per capita. The per capita electricity consumption is low compared to most other countries despite India having a low electricity tariff. India holds excess power generation capacity but lacks sufficient distribution infrastructure. To address this, the Government of India launched a program called "Power for All" in 2016. This program was completed by December 2018 in providing the essential infrastructure to ensure uninterrupted electricity supply to all industries, households and commercial establishments. Funding is supplied through alliance between the Government of India and its constituent states.
The electricity of India is dominated by fossil fuels, in particular coal, which during the 2018-19 fiscal year generated three-quarters of the country's electricity. The government is striving to increase investment in renewable energy. Energy is integral for every single person and collective progress of the society. It has become a strategic commodity considering the implications it has on sustained growth of human development and economy. Hence, it doesn’t come as a wonder that it has obtained centre stage of policy formulation for e.g. India Technology Vision 2035. International Energy Agency considers, it as “an uninterrupted availability of energy source at a reasonable price.

Energy Sources are divided into two types :

Conventional or Non-renewable Energy Sources The conventional energy sources also called non-renewable energy sources like coal, petroleum, and electricity. They are also called commercial energy sources because they come with a price that the consumer bears.
  • For example:- Crude oil, Natural gas, Uranium, coal and so on
However, being conventional, these sources will ultimately run out. Further, they release a lot of pollutants in the environment.
Non-Conventional or Renewable Energy Sources Due to the increasing population and a rapid increase in demand for energy, the energy industry of India has been facing a crisis for many years. As a result, there has been a sudden rise in oil prices, making it costlier for the common people. It is apparent, that conventional sources alone can’t solve India’s energy crisis. Therefore, in such a situation, it is important that we explore another sources of energy – renewable energy sources.
  • For example :-Bio-Energy, electric power, bio gas, solary energy, small hydropower, wind power and last but not least is Biomass

  • Conventional Energy Sources
    • Coal
      Coal is created from plants and vegetation buried, ‘in situ’ or drifted in from outside to a place, which get covered by deposits of sediments. Actually, Coal is a solid fossil fuel and a sedimentary rock composed of carbon. There are three basic grades of coal:
      • lignite (brown coal)
      • bituminous (soft coal)
      • anthracite (hard coal).

      As this plant material croaked and gathered, peat also called peat bog was formed. The heft of these sediments and the heat of the earth slowly changed the composition of the peat bog and coal was formed. The percentage of carbon in the lignite is higher than in peat. Continued heat from the earth and pressure turned the lignite into bituminous soft. If the pressure and heat were great enough then anthracite coal (hard coal) would be generated which has the highest contains highest heat and carbon. There is a great importance of sulphur contained coal because on burning low sulphur coal radiates less sulphur dioxide (SO2) so more desirable as a fuel for power plants.

    • Petroleum or Mineral oil
      Oil and gas were formed from the residues of plants and animals that once lived in the sea. For over millions of years these residues remained buried under rock and mud under great pressure and at high temperatures. Under these environments marine biomass slowly changed into oil and gas. Actually, Oil and gas are primarily found with geologically young tectonic belt at plate boundaries, where large depositional basins are possibly to occur. In refineries oil is heated and then distilled to divide it into components with different boiling points. The main components are gases, gasoline, aviation fuel, kerosene, diesel oil, grease, naphtha and wax and asphalt. Some of the products of oil distillation are called petro-chemicals which are utilized as a raw material for manufacturing pesticides, plastics, synthetic, paints, medicines and fibers etc.

    • Natural Gas
      Natural gas, mainly, consist of methane, is often seen above reservoirs of crude oil. The natural gas is a blend of 50 to 90 % by volume of methane (CH4), the simplest hydrocarbon. It contains lesser amount of heavier gaseous hydrocarbons like ethane (C2H6), propane (C3H8) and butane (C4H10) and also lesser amount of highly toxic hydrogen sulphide (H2S). Natural gas is produced with the help of geological processes similar to the processes of crude oil formation elaborated earlier except the organic material gets changed to more volatile hydrocarbons than those found in oil.
      • Conventional natural gas
        It is found above most reservoirs of crude oil. These deposits can be tapped or used only through pipeline. But the natural gas that comes out along with oil is often looked as unwanted by product and is burned off.
      • Unconventional natural gas
        It is found by itself in other underground reservoirs. So far it is very costlier to get natural gas from such unconventional sources but technology is being developed to extract the gases economically. When a natural gas field is tapped, propane and butane gases, present in natural gas are liquefied and removed as liquefied petroleum gas (LPG). LPG is deposited in pressurized tanks or cylinders for use as cooking gas. At a very low temperature natural gas can be converted into liquefied natural gas (LNG). Natural gas is used as a source of carbon used in tyre industry. When natural gas is strongly heated, then methane gets in it decomposed to form carbon and hydrogen. The carbon thus formed is called carbon black and used as filler in the manufacture of tyres.

    Concerns related to oil and gas

    Methane is a component of natural gas leads to greenhouse gas and its leakage introduce global warming. Extracting out of gas and oil may lead to sink of subsidence or land. Another problem in the past was with on-shore oil wells has been salt water. Mostly, for every barrel of oil production, around 10 barrels are also extracted. Those brine/salty water was discharged in the close streams, but today the brine is re-discharged into the well. Though, brine may pollute fresh water aquifers, if casing lining well is corrode.

    Growing Energy Demand

    India is the fastest growing economy with FY16 recording a 7.6 % GDP growth. A strategic component of this growth is the cheap and easy accessibility of the energy. The CAGR in India’s primary energy demand for the period 2006-10 was around 8.3% and confirms an increase corresponding to the needs of an expanding economy. Owing to sector wise energy demand, the largest has been from industry, which doubled in value addition with increase in commercial energy usage share at 45%. The overall speed of growth in energy sector that once had high share of renewables (mainly from large hydro projects) in its energy mix has over time tilted towards a larger increasing fossil fuel-based share in its generation capacity to meet the rapid increasing demand. Moreover, the data of FY 14 show that India’s net energy import bill was around 6.3% of GDP to strengthen the supply shortages, and it can spike significantly in the next decade.
    According to Indian Energy Security Scenarios (IESS) which has been developed as energy scenario building tool, India’s norm and demand at 2047 remains grim. Sector specific statistics predicted that energy demand from the Industry will jump 5 times from the current level. Equally with increased economic development, there is predicted to be an increase in mobility and demand for both inter-city and intra-city passenger transport in India over the next few decades. This will put an extra pressure. Other than this Agriculture, Cooking, Electricity, Telecom are other areas where the demand is more likely to increase gradually. The government aims accomplish rural electrification by 2020. So far the energy demand of rural population has met traditional sources like fire wood, or kerosene. The shift that is underway is towards conventional sources of energy that invariably has increased pressure in the demand of the fossil fuel based energy.

  • Non-conventional or Renewable energy
    • Bio-Energy:
      Bio- Energy is obtained from organic matter. Two forms of bio-energy are Biogas and Biomass.
      • Biogas:
        Biogas is where we put cow dung into a Gobar Gas Plant to get Bio Gas. There are over 4.5 million household biogas plants primarily for producing cooking fuel in our country. India is considered the second largest producers of biogas plants throughout the world.
      • Biomass:
        For India, this is an important source of energy. This fuel is obtained from organic materials. Around 32% of our country’s total primary energy comes from biomass and more than 70% of our population depends on it for their energy requirements.

    • Solar Energy:
      Sunlight is the natural source of energy. As on December 31, 2018, India has an installed solar energy capacity of 25.21 GW. With around 300 clear sunny days in India every year, the solar energy incidence on the Indian soil is around 5000 trillion kilowatt hours. To put it into viewpoint, the solar energy available in one year exceeds the possible output of all the fossil fuel energy reserves in the country.

    • Small Hydro-Power:
      Hydropower projects are divided into small and large hydropower projects. Small hydropower projects are with a capacity of up to 25 MW and this is the generation of hydroelectric power on a scale suitable for a local community and industry. Moreover, in India, the estimate for power generation from such plants is about 20,000 MW.

    • Wind Power:
      Windmills harness the power of wind and convert it into wind energy. India has the fourth largest wind power capacity in the world of 34.293 GW. Many investors, including NRIs, are taking up renewable energy projects in states like Karnataka, Gujarat, Andhra Pradesh, and also Kerala.

    • Electric Power:
      Electric power is an important phase of the economic development of a country. It has both commercial and non-commercial uses. Commercially, electric power is utilized in agriculture, industries, transport etc. while the non-commercial uses are domestic lighting, cooking, and also the use of domestic appliances, etc.

    • Ocean:
      Takes advantage of rising and falling of tides to generate electricity

    • Geothermal:
      Leverages heat from underneath the earth to generate electricity.

Problems Associated with Energy Security

Gulf Crisis of 1990 introduced the concept of energy security. Identifying the susceptibility associated, India framed policies and directives to protect the country from deficit situation. In spite of the measures taken, energy security is still a question lurking in front of policy makers due to various dimensions associated that complexes this problem further.
  • Firstly, Dependence on Fossil Fuel continues to be a worrying trend about India’s energy profile. A large fragment of commercial energy consumption is driven by fossil fuel despite India being deficit in terms of supply and resource availability. This dependence has directly fuelled increasing import bill for the country.
  • Secondly, Geo-politic vulnerability, transfers the shock directly to import dependent country like India. Variation in prices, war, breakdown in international supply and other issues constantly ruin the prospects.
  • Thirdly, Use of obsolete technology, has increased the production, mining and exploration costs. Increased cost in the unit of power has made many dealers/providers to switch over to imports than developing India’s own resources. The other issue associated is delay it has caused to shift towards clean energy. Indigenous production of such instruments is also costly compared to other countries.
  • Fourthly, Climate Burden, of the energy production is a significant factor. A large dependence on fossil fuel has already placed India among highest CO2 emitter. Besides, issues like impact to ecology by hydro projects, clearing of forest areas, inundations, danger of radiation etc. have to be considered.
  • Fifthly, Infrastructure gaps, negatively affects the capacity generation, its transmission and distribution. In a situation when India is already striving relentlessly to push the generation potential, inadequacy of infrastructure leads to huge losses and pushes back the effort to meet the deficit.

India's Strategic Oil Reserve Programme

Indian Strategic Petroleum Reserves Limited (ISPRL) is an Indian company responsible for maintaining the country's strategic petroleum reserves. ISPRL is a wholly owned subsidiary of the Oil Industry Development Board (OIDB), which functions under the administrative control of the Ministry of Petroleum and Natural Gas. ISPRL maintains an emergency fuel contains total 5.33 MMT (million metric tons) or 36.92 MMbbl of strategic crude oil enough to provide 10 days of consumption.

Strategic crude oil storages are at three underground locations:-

  • Mangalore,
  • Visakhapatnam
  • Padur (Udupi, Karnataka)

All these are located on eastern and western coasts of India which are readily accessible to the refineries. These strategic storages are in addition to the existing storages of crude oil and petroleum products with the oil companies and serve in response to external supply disruptions.
Supercritical coal plants are a kind of coal-fired power plant utilized in modern designs. They vary from traditional coal power plants because the water running through it acts as a supercritical fluid, meaning it is neither a gas nor a liquid. This happens when water reaches its acute point under high temperatures and pressures. As a liquid approaches its critical point, its latent heat of vaporization initiates to decrease until it reaches zero at the acute point. This means that the amount of energy requires to change the water into vapor becomes less and less, and in the end water's vaporization phase changes instantly. This decreases the amount of heat transfer to the water that is normally required in a conventional coal plant, so less coal is used to heat the same amount of water. This increases the thermal efficiency of the plant by a considerable amount.


These plants are the standard for new coal power plants, as their efficiencies can reach at 44%, than that of older coal power plants that operate around 33%. Even higher pressure and temperature power plants are under research and development, known as ultra-supercritical, potentially reaching an efficiency of near 50%. Improved efficiency corresponds to fewer greenhouse gas emissions, and pollutants like SOx, NOx, and particulate matter leads to adverse health effects. A supercritical coal plant (as opposed to a traditional coal plant) will diminish waste heat produced by 25%, and cut pollution and CO2 by coarsely the same amount.

Why Renewable Energy is more important today than ever?

Renewable energy is well-renewable This means it has never-ending sustainability and we will never run out of it. If we talk about other sources of energy like coal, oil and gas are limited and will run out some day. Renewable energy has the capability to reduce our dependence on energy and fuels from foreign governments.
Fight against climate change It is clean and results in little to no greenhouse and net carbon emissions. It cannot deplete our natural resources and have minimal, if any, negative impacts on the environment, with no waste products of carbon-di-oxide and other more toxic takes with different sources of energy.
Reliable Energy Source Our dependence on fossil fuels has increased considerably in last few decades. The result is that our national security continues to be endangered by our dependence on fossil fuels which are prone to political instabilities, wars, a trade disputes, and high prices. This influences more than just our Country’s energy policy.
Economic Benefits Renewable energy sounds more economical and cheaper compared to the other sources of energy. It is estimated that as a result of renewable energy manufacturing, hundreds of thousands of stable jobs will be offered.
Keep energy price under control Switching over renewable energy sources also means steady pricing on energy. Since the cost of renewable energy depends on the invested money and not the increasing or decreasing or inflated cost of the natural resource. Governments would pay a certain price per unit rather than the ever changing commodity prices.
Less maintenance of facilities Once infrastructure for the harnessing of the renewable resource is laid down, there is low to zero maintenance required.
No adverse impact on public health If government took upon themselves to provide more renewable energy facilities, the population would enjoy the health benefits. A big chunk of budget goes to alleviate and cure diseases related to fossils fuel like heart diseases, cancer, and neurological disorders.
Greenhouse Gases Greenhouse, carbon and sulfur compounds emitted by fossils fuels are risky to our health if inhaled over time.
Empowering of public in village and distant area Renewable energy generation mainly takes place in remote settings, so this means that local towns would get a fair share of power generated. Electrification of those regions will open up untapped opportunities for development through the advancement of greenhouses using geothermal power, area heating of towns and communities using hot water generated by the energy manipulation of forestry and agricultural biomass.

Challenges of Renewable Energy Resources

In 2013, the six major sources of energy used in the world were:

Coal 28.9%
Nuclear Energy 4.8%
Hydro-Electric power 2.4%
Oil 31.1%
Natural Gas 21.4%
Biomasses 10%

key points :

“New” renewable energy sources 1.1%, obtained from solar energy and wind energy

What immediately catches one’s attention when looking at these data is that 80% of the world energy is obtained from fossil fuels which are valuable and useful sources that, however, are not renewable. Just because of this, it has now become necessary to increase, even develop the renewable energies, but to do so, some difficult issues must be overcome.
  • First of all it is important to successfully generate energy from the renewable sources so that they are economic and competitive than that of traditional energy sources.
  • Secondly, so that the source of energy is profitable, it must be in a concentrated form that can be stored and transported. Stocking and transporting energy would satisfy the demand of energy in areas that are far from the area of production.
  • Third renewable energy requires huge investment, finance and technology and western countries support to share finance and technology even in the backdrop of climate change.
  • Fourth there is need of new technology in order to innovate and increase the efficiency and capacity of battery.
  • Fifth, this will create another problem of plastic and waste generation, because of vast accumulation of used battery and their disposal remain a challenge

New Energy Licensing Policy

Government of India formulated a policy called New “Exploration Licensing Policy” in 1997.

The main objective was:

  • Attracting significant risk capital from Indian as well as Foreign companies,
  • state of art technologies and new geological concepts
  • proper management system to explore oil and gas resources in the country to meet increasing demands of oil and gas by individuals.

This policy, NELP had got approval from Government of India in 1997 and it became effective in February, 1999 since then licenses for exploration have been awarding only through a competitive bidding system. In addition to this, National Oil Companies (NOCs) are required to compete on an equal footing with Indian and foreign companies to protect Petroleum Exploration Licences (PELs).

The salient features of NELP are as follow:

  • 100% FDI is allowed under NELP
  • state participation through ONGC/OIL is not compulsory
  • Blocks to be awarded through open international competitive bidding.
  • OIL and ONGC to compete to get the petroleum exploration licenses on a competitive basis instead of the existing system of allowing them PELs on nomination basis.
  • OIL and ONGC to get the same contract and fiscal terms being a private companies.
  • Liberty to the contractors for marketing of crude oil and gas in the domestic market.
  • Royalty at the rate of 10% for offshore areas and12.5% for the onland areas.
  • Royalty to be charged at half the prevailing rate for deep water areas beyond 400 m bathymetry for the first 7 years after commencement of commercial production.
  • Cess will not be charged for production from blocks offered under NELP.
  • Companies to be let off from payments of import duty on goods imported for petroleum operations.
  • No discovery, production bonuses and signature.
  • A Model Production Sharing Contract (MPSC) which is reviewed for each NELP rounds.
  • Contracts to be governed as per the applicable Indian Laws.
  • Production Sharing Contracts – Since oil is national resource revenues is to be shared with government. It is a method to share revenue, where explorer is permitted to recover its investment before sharing revenue with government

OALP (Open Acreage Licensing Policy)

Feature of OALP

  • Open Acreage Licensing Policy (OALP) allows the company looking for hydrocarbons to select the exploration blocks on its own, without waiting for the formal bid round from the Government.
  • Under Open Acreage Licensing Policy (OALP), a bidder intending to explore hydrocarbons such as coal, gas, coal bed methane , gas hydrate, oil etc., may apply to the Government seeking exploration of new blocks (not already covered by exploration).
  • The Government will analyze the Expression of Interest and justification. If it is right for award, Government will call for competitive bids after acquiring environmental and other clearances.
  • OALP was introduced vide a Cabinet decision of the Government as part of the new fiscal regime in exploration sector called HELP or Hydrocarbon Exploration and Licensing Policy, so as to enable a faster coverage and survey of the available geographical region which has potential for gas and oil discovery.
  • What separates OALP from New Exploration and Licensing Policy (NELP) is that under OALP, oil and gas acreages are made available throughout the year instead of cyclic bidding rounds as in NELP. Potential investors will have to wait for the bidding rounds to claim acreages.
  • Establishing National Data Repository is one of the milestones achieved for Open Acreage Licensing Policy. To make India an auspicious destination worldwide for Exploration of Crude Oil and Natural Gas, the Government need to plan to move to the OALP regime soon.
  • It is acceptable that there is an urgent need for a faster vehicle of awarding blocks to bring more region under exploration.
  • As India has huge unexplored sedimentary basins, a strategy which provides a time bound full coverage has become a necessity. Further, the OALP pre-supposes offering of data to the interested companies for them to submit their bids. Hence, availability of data is not an alternative, but a pre-condition.

Issues under OALP

  • The policy gives an extra five points to bidders for a property if they have already invested in the exploration and development of that regions.
  • But, it is doubtful if this is a satisfactory incentive, since the investment required to simply explore is important.
  • Also, no such preference is given to mineral explorers while auctioning mining rights. Instead, a revenue-share from mining operations is their recompense for exploration efforts.
  • Another point to thing is whether India can attract enough investment to meet the government’s aim to reduce oil imports by 10% by 2022, although there are already proven reserves in other countries.

Energy and Global Warming

Fossil fuels: coal, petroleum, and natural gas are our major sources of energy, generating the vast amount of heat, fuel and electricity used by people across the country. In 2005 a whopping 86 percent of energy used globally came from fossil fuel combustion. In a current scenario, in India the number isn’t much lower at about 70 percent. Unluckily, fossil fuels are also the primary felon behind climate change. In the India, they’re to blame for more than 90 percent of CO2 emissions — and 80 percent of greenhouse gas emissions alone. While natural processes can absorb some of this CO2. That number will increase dramatically if we don’t check ourselves. A large part of energy will continue to be fossil based. Referred as dirty fuels, oil, gas and coal produce heavy CO2 that recently have become a concern to save the global temperature from reaching the ‘peak point’. Besides, with increasing vulnerability and decreasing reserves due to geo-politic challenges, this energy source has become untenable.


India is a nation in evolution. IESS 2047 highlights that the balance between the requirement of the country and other variable can be possible with leveraging of clean energy blend. There are some problems that still continues with renewables are access to cost and technology. Other limitations are accessibility of large area, variation in wind velocity, location etc. Other than this another important dimension of energy security is the adavncement of energy efficiency. This has to be done in terms of consumption and energy supply too. India suffers low plant load and technological obsolescence in terms of production that affects the already short supply of fuel. The government has now installed Ultra Super Critical and Super Critical Power Plant which have a positive response.
To implement consumption practices National Mission on Enhanced Energy Efficiency and the Bureau of Energy Efficiency aim at bolstering the practices like promotion of better electrical appliances and such others. Also decentralized energy forms will resolve the problem of large scale penetration. Government of India should pay attention on the technology and investment so that renewable energy reaches the common people. Subsidisation on commercial promotion and installation will put the cost of production down, taming its attractiveness and accessibility. Expansion of new relationships/partnerships i.e., Solar Alliance, installing the latest technology to add up the renewable like off-shore wind warms helps off-set possibilities of failure.