Balancing climate policy and development

India has aggressive renewable energy targets and industry energy efficiency policies, but faces significant infrastructure challenges, which may derail otherwise good policy. India is growing rapidly and represented 8% of the increase in global energy-related CO₂ emissions between 2000 and 2010.


These graphs show the changes in emissions, emissions drivers, and policy in the Power sector in India


Emissions Greenhouse gas emissions and generation

Emissions largely tracked the growth in electricity generation.


    Emissions Drivers Fuel sources for power generation

    Most new generation came from conventional sources (particularly coal), although the past decade saw exponential growth in renewable energy generation.


      Policy IREDA loan distributions

      Renewable energy growth was supported by increased loan distributions by the central government, including the Indian Renewable Energy Development Agency (IREDA).

        • Prior to 1990, fundamental level policies aimed to improve the functioning of the electricity sector. However, high state control continued.

          • Policy Barriers

            • Indian Electricity Act, 1910
              Established rules on supply and use of electricity
              Established rights and obligations of licensees
            • Electricity Supply Act, 1948
              Uniform national power policy for rationalization of production and supply of electricity
              National grid infrastructure envisioned
              Established State Electricity Boards
          • Underlying changes

            • Government of India established PowerGrid Corporation in 1989 to build a national power grid (based on recommendations from Rajadhyaksha Committee report on power sector reforms)
            • Population increased by almost 25% by end of decade (IMF 2011)
            • GDP grew nearly 94% (from USD 150.86 billion in 1980 to USD 292.92 billion in 1990) (World Bank 2012)
        • Government policy focused on improvement in governance and regulation of the electricity sector. Policies also aimed to increase captive power generation.

          • Policy Barriers

            • The Electricity Regulatory Commissions Act established Central Electricity Regulatory Commission and State
            • Electricity Commissions, 1998
              Commissions determined tariffis for generation and transmission
              Aimed to improve State Electricity Board health
              Central Electricity Regulatory Commission was responsible for regulation of inter-state sale of power
            • Accelerated depreciation benefits for renewable energy and for energy efficiency was introduced
          • Underlying changes

            • By the 1990s, the majority of states had State Electricity
            • Regulatory Commissions to oversee tariff revisions
            • Wind energy took off, attracting substantial equity investments
            • Population grew from 843.25 million in 1990 to 1,024.25 million by 2000—approximately 20% increase (IMF2011)
            • Primary energy consumption increased by 64% over the decade (BP 2012)
        • The 2000s marked the beginning of major reforms in the electricity sector due to inefficiencies in existing systems and rising demand.

          • Policy Barriers

            • Energy Conservation Act of 2001 mandated a number of energy effciency provisions for certain energy-intensive industries (including the power industry)
            • The Electricity Act of 2003 transformed the electricity sector
              Increased private sector participation in generation by allowing independent power producers and captive generation
              Promoted competition among generating companies by allowing open access in transmission
              Reduced transmission and distribution losses
              Yearly revision of end-user tariffis linked to power purchase prices and inflation indices
            • Feed-in tariffs and premiums for renewable energy introduced, 2000
            • Various tax incentives for power sector projects introduced (Government Notification No. 21/2002)
            • Generation Based Incentive (GBI), 2008-2009
            • Gujarat solar power policy, 2009
              Only state solar power policy with fixed feed-in tariffs
              Did not use reverse bidding process for tariffs determination
            • Clean Development Mechanism project approvals in India commenced in 2005
            • Jawaharlal Nehru National Solar Mission (JNNSM) policy framework introduced in 2010 to achieve 20GW solar power installed capacity by 2022
          • Underlying changes

            • Private sector participation in power generation projects increased
            • Solar power industry started witnessing growth at end of decade
            • Primary energy consumption increased by 76% over the decade (BP 2012)