India 2020: Energy Policy Review (IEA Report 2020)

“India 2020: Energy Policy Review”, a report published by International Energy Agency (IEA). The report highlights the achievements of India’s energy policies and provides recommendations to support the government’s goals of promoting well-functioning energy markets and boosting deployment of renewables.

Major Highlights of the Report

A. India will be Vital for the Future of the Global Energy Markets

• The Government of India has made impressive progress in recent years in increasing citizens’ access to electricity and clean cooking. It has also successfully implemented a range of energy market reforms and carried out a huge amount of renewable electricity deployment, notably in solar energy.
• Looking ahead, the government has laid out an ambitious vision to bring secure, affordable and sustainable energy to all its citizens.

B. India is Making Great Strides Towards Affordable, Secure and Cleaner Energy

• Ensuring Indian citizens have access to electricity and clean cooking has been at the top of the country’s political agenda. Around 700 million people in India gained access to electricity between 2000 and 2018, reflecting strong and effective policy implementation.
• The IEA highly commends the Government of India for this outstanding result and supports its efforts to shift the focus towards reaching isolated areas and ensuring round-the-clock reliability of electricity supply. The government of India has also made significant progress in reducing the use of traditional biomass in cooking, the chief cause of indoor air pollution that particularly affects women and children. The government has encouraged clean cooking with liquefied petroleum gas.

C. Major Energy Reforms Lead to Greater Efficiency

• The IEA commends India for its continuous pursuit of market opening and greater use of market-based solutions through ambitious energy sector reforms. Increased access to affordable energy has raised the living standards of all segments of the population. India now has the institutional framework it needs to attract more investment for its growing energy needs.
• Reform of India’s electricity sector will need to be comprehensive to achieve these goals. The IEA welcomes the reforms proposed by the Central Energy Regulatory Commission (CERC) and progress made towards improved real-time markets.

D. India is Making Energy Security a Priority

• India’s electricity security has improved markedly through the creation of a single national power system and major investments in thermal and renewable capacity. India’s power system is currently experiencing a major shift to higher shares of variable renewable energy, which is making system integration and flexibility priority issues.
• The Government of India has supported greater interconnections across the country and now requires the existing coal fleet to operate more flexibly. It is also promoting affordable battery storage.

E. Significant Progress in Sustainable Development

• India has made important progress towards meeting the United Nations Sustainable Development Goals, notably Goal 7 on delivering energy access. Both the energy and emission intensities of India’s gross domestic product (GDP) have decreased by more than 20% over the past decade. This represents commendable progress even as total energy-related carbon dioxide (CO₂) emissions continue to rise. India’s per capita emissions today are 1.6 tonnes of CO₂, well below the global average of 4.4 tonnes, while its share of global total CO₂ emissions is some 6.4%.
• The government’s LED programme has radically pushed down the price of the products in the global market and helped create local manufacturing jobs to meet the demand for energy-efficient lighting.
• Based on current policies, India’s energy demand could double by 2040, with electricity demand potentially tripling as a result of increased appliance ownership and cooling needs.
• Recent IEA analysis shows that in 2018, India’s investment in solar PV was greater than in all fossil fuel sources of electricity generation together.
• By December 2019, India had deployed a total of 84 GW of grid-connected renewable electricity capacity. By comparison, India’s total generating capacity reached 366 GW in 2019.

F. Energy Technology and Innovation Enables “Make in India”

• As part of its climate policy agenda, the government has pursued a mission-based approach in many policy areas, including solar, water and energy. India has also been a leader in Mission Innovation and other multilateral collaborations, including the IEA Technology Collaboration Programmes.
• Recent years have shown a marked increase in clean energy RD&D funding, especially as India works to double its spending over five years under Mission Innovation. However, funding efforts are spread both thinly and widely across the government and its public sector companies.

G. Towards more Robust Energy Data and Policy Governance

• As energy policies become more intertwined, it is becoming increasingly desirable to strengthen coordination and develop a framework for the government’s long-term energy agenda. This is particularly needed to create visibility for all stakeholders in the energy sector.
• The draft National Energy Policy by NITI Aayog, currently under consultation, is an excellent framework and should be adopted swiftly to guide policy making, implementation and enforcement across central and state governments.