Energy Infrastructure: Power, Coal, Oil, Gas and Renewables

Why energy matters

Energy is the input to every economic activity. India is the world's third-largest energy consumer and third-largest electricity producer, but its per capita electricity consumption is only about 1,400 kWh a year, roughly a third of the world average. Rising incomes, urbanisation, air conditioning and electric vehicles will drive demand sharply higher.

India's energy trilemma:

• access and affordability;
• security, since India imports most of its oil and much of its gas;
• sustainability, through its climate commitments.

Energy mix

Primary energy: coal supplies over 55% of India's primary energy and about 70–75% of electricity generation.

Installed capacity: India's total installed power capacity passed about 500 GW in 2025. Non-fossil sources (renewables, large hydro and nuclear) crossed 50% of installed capacity by mid-2025, meeting India's NDC target five years early (it was set for 2030). Generation is still dominated by coal, because solar and wind run at lower capacity factors.

Targets:

• 500 GW of non-fossil capacity by 2030;
• net zero by 2070 (announced at COP26, Glasgow, 2021).

Coal

Reserves and production: India has the world's fifth-largest coal reserves and is the second-largest producer and consumer, after China. Production passed 1 billion tonnes in 2023–24.

Where the coal is: most reserves are in Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh and Telangana. Most Indian coal is Gondwana, with high ash content and low calorific value. Tertiary coal is found in the North-East.

Coal India Limited (1975) is the largest producer.

Reforms:

• commercial coal mining by auction (2020), which ended CIL's effective monopoly;
• coal gasification targets (100 million tonnes by 2030);
• Mines and Minerals (Development and Regulation) Act amendments (2015, 2021, 2023).

Issues: pollution, land acquisition, displacement of tribal communities, and the need for a just transition for coal-dependent districts.

Oil and gas

Import dependence: India is the third-largest oil consumer and imports about 85–88% of its crude and about half of its natural gas.

Diversification: after 2022, India sharply increased its purchases of discounted Russian crude. Russia became its top supplier, ahead of Iraq and Saudi Arabia. In 2025 this drew US penalty tariffs; the situation continues to evolve.

Policy:

• Hydrocarbon Exploration and Licensing Policy (HELP, 2016), with Open Acreage Licensing, a revenue-sharing model and a single licence for all hydrocarbons;
• Strategic Petroleum Reserves of 5.33 million tonnes at Visakhapatnam, Mangaluru and Padur, with new sites planned at Chandikhol and Padur;
• a target to raise gas in the energy mix from about 6% to 15% by 2030: the One Nation One Gas Grid, city gas distribution and LNG terminals;
• ethanol blending: the 20% target (E20) was reached in 2025, ahead of the original 2030 date;
• SATAT (compressed biogas, 2018).

Renewable energy

Solar:

• installed capacity passed about 120 GW in 2025;
• Rajasthan, Gujarat, Karnataka and Tamil Nadu lead;
• the Bhadla Solar Park (Rajasthan) is among the world's largest;
• schemes:
• PM-KUSUM (2019): solar pumps and farm solar;
• PM Surya Ghar Muft Bijli Yojana (February 2024): rooftop solar for 1 crore households, with up to 300 units of free power a month;
• solar parks;
• PLI for high-efficiency modules;
• ALMM (Approved List of Models and Manufacturers) to boost domestic manufacturing.

Wind:

• about 50 GW, mostly in Tamil Nadu, Gujarat, Karnataka and Maharashtra;
• the offshore wind potential off Gujarat and Tamil Nadu is being tendered, with viability gap funding (2024).

Hydro:

• about 47 GW of large hydro, which was classified as renewable in 2019;
• pumped storage is growing as a balancing resource.

Nuclear:

• about 8.8 GW;
• the Nuclear Energy Mission (2025) targets 100 GW by 2047, with Small Modular Reactors;
• private participation needs amendments to the Atomic Energy Act 1962 and the Civil Liability for Nuclear Damage Act 2010.

Green hydrogen:

• the National Green Hydrogen Mission (January 2023), with an outlay of ₹19,744 crore;
• target: 5 million tonnes a year by 2030;
• the SIGHT programme for electrolyser manufacturing.

International: the International Solar Alliance (2015, India and France), headquartered at Gurugram, and "One Sun One World One Grid".

The power sector chain and its problems

Generation → transmission → distribution: the distribution companies (discoms), mostly state-owned, are the weakest link.

Their problems:

• high aggregate technical and commercial (AT&C) losses: about 22% in 2021, falling to about 16% by 2024;
• below-cost tariffs for farmers and households;
• delayed state subsidy payments;
• accumulated losses of over ₹6 lakh crore.

Bailouts: UDAY (2015) shifted discom debt to states, but losses came back.

Reforms:

• the Revamped Distribution Sector Scheme (RDSS, 2021, ₹3 lakh crore), with smart prepaid meters;
• the Late Payment Surcharge Rules 2022, which cut discom dues to generators sharply;
• green energy corridors for renewable transmission;
• One Nation One Grid, achieved in 2013 with the synchronous national grid;
• the Electricity (Amendment) Bill (pending), which proposes to delicense distribution.

Analysis: India's energy transition

The challenge: India must grow its energy supply while decarbonising.

What makes it hard:

• intermittency of solar and wind, which needs battery storage (the viability gap funding scheme for BESS, 2023–24), pumped hydro and grid flexibility;
• critical minerals: lithium, cobalt and rare earths. The National Critical Mineral Mission (2025) and KABIL address them, with lithium blocks in J&K and overseas assets in Argentina.
• Coal will remain the baseload source for years. The government plans new coal capacity even as it expands renewables, which climate critics question.

Common prelims traps

• Large hydro has counted as renewable since 2019.
• SPR sites: Visakhapatnam, Mangaluru and Padur.
• Gondwana coal is the main type; Tertiary coal is in the North-East.
• The ISA headquarters is in Gurugram, India.

Practice: Mains question

*"India's energy transition must balance growth, security and sustainability." Discuss the challenges and the policies adopted. (250 words)*

Energy security: what it means for India

India's energy security has four dimensions:

1. Availability: enough supply.
2. Accessibility: affordable prices.
3. Acceptability: environmental sustainability.
4. Adaptability: resilience to shocks.

Diversifying suppliers:

• crude from Russia, the US, Guyana and Brazil;
• LNG from Qatar, the US and the UAE.

Diversifying fuels: gas, renewables and nuclear.

Overseas assets: ONGC Videsh holds stakes in Russia's Sakhalin-1, Mozambique LNG and others.

Strategic reserves: a second phase of the SPR is planned.

Energy diplomacy:

• membership of the International Energy Agency (India is an association country and has applied for full membership);
• the Global Biofuels Alliance, launched at the G20 New Delhi summit (2023);
• partnerships for green hydrogen exports with the EU and Japan.

Electric mobility

Policy:

• FAME I (2015) and FAME II (2019–2024) subsidised EVs;
• they were followed by the PM E-DRIVE scheme (2024) for two- and three-wheelers, e-buses and charging stations;
• PLI for advanced chemistry cells and auto components;
• a scheme to promote electric passenger car manufacturing (2024), which allows reduced import duty for firms committing to local production.

Adoption: EVs passed about 7% of new vehicle sales in 2024–25, led by two- and three-wheelers.

Challenges:

• charging infrastructure;
• battery costs;
• critical mineral supply: China dominates processing of lithium and rare earth magnets, and its export curbs on magnets in 2025 hit Indian EV makers;
• grid readiness.