India is the third-largest producer and consumer of electricity globally after China and the United States. In FY 2024-25, the country generated 1824 TWh of power, of which 25% came from non-fossil sources.[8] India has achieved near-universal household electrification, though the quality and reliability of supply remain uneven across regions[9].
Electricity in India is generated by both public and private sector utilities, transmitted through a unified national grid, and distributed primarily by state-owned distribution companies. The sector has undergone significant reforms since the Electricity Act of 2003, which introduced competition, open access, and independent regulation. Despite rapid growth in generation and transmission capacity, the distribution segment continues to face financial stress due to high technical and commercial losses, tariff constraints, and subsidy burdens.
India has also emerged as a global leader in renewable energy deployment, with renewables accounting for 89% of capacity additions in FY 2024-25.[10] The country has set ambitious targets to achieve 500 GW of non-fossil fuel capacity by 2030[11] as part of its transition toward a low-carbon energy system.
History
Electricity was first introduced in India in 1879 with the demonstration of electric light in Kolkata[12], followed by the country’s first hydroelectric power station at Darjeeling in 1897[13]. During the colonial period, electricity supply was largely developed by private companies serving urban centers and industries.
After independence in 1947, electricity development became a state-led activity. The Electricity (Supply) Act, 1948 established State Electricity Boards (SEBs), which took responsibility for generation, transmission, and distribution within each state. The sector expanded rapidly through successive Five-Year Plans, with coal and large hydroelectric projects forming the backbone of India’s power system.
By the early 1990s, financial stress in SEBs and rising demand led to policy reforms. The 1991 economic liberalization permitted independent power producers (IPPs), and the Electricity Regulatory Commissions Act,1998 created independent regulators. These steps culminated in the Electricity Act, 2003, which consolidated prior legislation, mandated the unbundling of state utilities, introduced open access to transmission, and promoted competition in generation and distribution.
Since the 2010s, India’s power sector has seen major structural changes. The regional grids were fully synchronized in December 2013 to form a single national grid[14]. Large-scale electrification programmes such as the DDUGJY and Saubhagya scheme extended electricity access to nearly all households[15]. In parallel, India has pursued rapid renewable energy deployment, positioning itself among the world’s largest markets for solar and wind power.
India is the third-largest producer of electricity in the world. The nation's utilities produced 1824.2 TWh of power in FY 2024-25 with about 25% generated from non-fossil sources[16]. Generation was de-licensed in the Electricity Act of 2003, since then private participation has increased from 10% in FY 2003 to 37% in FY 2023.[17]
Generation and capacity installed in India by source (utilities)
India has huge coal reserves and as such it has been the backbone of India’s electricity generation, providing base-load power. The government has indicated that coal will remain significant in the near future, and will likely peak between 2030-35[30].
Utilization of gas plants has been limited by constrained domestic supply and high prices of imported LNG[31]. Oil-fired generation plays a negligible role, used mainly for peaking or emergency power.
Renewable energy generation has doubled from 181.7 TWh in FY 2011-12[21] to 365.7 TWh in FY 2022-23[27]. However its overall share in total generation has been around 20% for the time span. This share is likely to reach 40% by 2030[33], due to the government’s target of installing 500 GW of non-fossil capacity by then[34].
Large Hydro has historically contributed to the bulk of the renewable generation in the country, though solar – with its aggressive growth – has almost caught up with it as of FY 2024-25[29]. Wind energy has seen a relatively calm but steady growth.
Bio Energy has maintained a somewhat static generation of about 16 TWh in the past decade. However, it might increase as the government has mandated 5% biomass co-firing in Thermal Power Plants from FY 2024-25. This obligation shall increase to 7% from FY 2025-26[35].
The national grid - which was synchronized in 2013 - consists of Inter-State (ISTS) and Intra-state Transmission System (Intra-STS) of 220 kV and above. ISTS is largely managed by Central Transmission Utility (wholly owned by PowerGrid), whereas Intra-STS is managed by State Transmission Utility of each state.
Transmission planning has been aligned with renewable energy targets and is planned to evacuate around 613 GW of renewable capacity by 2032, including large zones in Rajasthan, Gujarat, and Andhra Pradesh.[36]
Transformation capacity of substations (GVA) incl HVDC
1104.5
1881.8
2345.1
Electricity distribution remains the most financially stressed part of the sector. Most distribution companies (DISCOMs) are state-owned, with private licensees operating in few areas such as Delhi and Odisha.[37] The distribution segment is characterized by
high aggregate technical and commercial (AT&C) losses (excess of 30% in early 2000s;[38] 22.6% in FY 2013-14[39])
a gap between average cost of supply (ACS) and average revenue realized (ARR).
Technical losses stem from transformation losses, line losses, poor Power Factor due to insufficient reactive compensation. Commercial losses are caused by theft, inaccurate / faulty meters, billing inefficiencies (error in billing process), and collection inefficiencies.
Govt has launched several initiatives (IPDS, UDAY, RDSS, etc) to improve the financial health and operational efficiency of DISCOMs. While there have been improvements, chronic issues like high losses, unsustainable tariffs, subsidy dependence, and regional disparities continue to affect the overall performance of the sector.
A major disadvantage of solar power is that it produces electricity only in daylight, and not during nighttime or cloudy daytime. This disadvantage can be overcome by adding energy storage capacity such as pumped-storage hydroelectricity.[41] A proposed gigantic-scale multipurpose project to interlink Indian rivers envisages coastal reservoirs for harnessing river waters that would also create adequte pumped-storage hydropower capacity for energy storage on a daily/weekly basis by consuming the surplus solar power available during the day time.[42][43] Existing and future hydropower stations can also be expanded with additional pumped-storage hydroelectricity units to cater for nighttime electricity consumption. Most of the groundwater pumping power required can be met directly by solar power during the daytime.[44]
Concentrated solar power plants with thermal storage are also emerging as cheaper (US 5¢/kWh) and cleaner Load following power plants than fossil fuel power plants.[45] They can respond to demand round the clock, and work as base load power plants when there is excess solar energy. A mix of solar thermal and solar photovoltaic plants offers the potential to match load fluctuations without requiring costly battery storage.
In 2020, the power tariff from Solar PV clubbed with pumped storage hydro have fallen below the coal-based power plant tariffs in offering base load and peak load power supply.[46][47]
Pumped storage schemes offer the potential for centralized peak power stations for load management in the electricity grid.[48][49] They also produce secondary /seasonal power at no additional cost when rivers are flooding with excess water. Storing electricity by alternative systems such as batteries, compressed air storage systems, etc. is more costly than electricity production by standby generator. India has already established nearly 4,785 MW pumped storage capacity as part of its installed hydro power plants.[50][51]
Peak demand for FY 2024-25 reached 250 GW on 30th May[52]. While it reached 241 GW on June 9 for FY 2025-26[53].
Demand trend
The draft national electricity plan 2022 prepared by CEA says that the peak demand and energy demand would be 272 GW and 1,852 billion kWh (excluding rooftop solar generation) respectively in the fiscal year 2026–27.[54] The peak demand and energy demand would be 363 GW and 2,459 billion kWh (excluding rooftop solar generation) respectively in the fiscal year 2031–32. From the calendar year 2015 onwards, power generation in India has been less of a problem than power distribution.[55][56][57][58][59]
Nearly 0.07% of Indian households (0.2 million) have no access to electricity.[1] The International Energy Agency estimates India will add between 600 GW to 1,200 GW of additional new power generation capacity before 2050.[60] This added new capacity is similar in scale to the 740 GW total power generation capacity of the European Union (EU-27) in 2005. The technologies and fuel sources India adopts as it adds this electricity generation capacity may have a significant impact on global resource usage and environmental issues.[61] The demand for electricity for cooling (HVAC) is projected to grow rapidly.[62]
According to the analysis presented in the India Cooling Action Plan (ICAP) released by the Ministry of Environment, Forests and Climate Change, only 8 percent of Indian households own air-conditioning units. The cooling demand across India is projected to rise at a rate of 15-20 percent annually and aggregated cooling demand will grow to around eight times by 2037–38, as compared to the 2017-18 baseline. In India, 45 percent of the country's peak electricity demand in 2050 is expected to come from space cooling alone.[63]
The per capita annual domestic electricity consumption in India during the year 2009 was 96 kWh in rural areas and 288 kWh in urban areas for those with access to electricity. Globally the per capita annual average is 2,600 kWh and in the European Union it is 6,200 kWh.[64]
Adding to it, the recent coal crisis has raised an alarm as over 60 per cent of the electricity produced in the country is derived from thermal power plants, and thus, depend on coal.[65]
In 2021, electricity consumption in India was dominated by the industrial sector at 43.9%. The residential sector used 25.3%, agriculture and forestry 19.0%, and commercial and public services 6.6%. Transport had the lowest share at 1.6%.[66]
* Data from the fiscal year ending on 31 March of each year. ** Refers to the fiscal year ending on 31 December.
Note: Gross per-capita generation=(gross electricity generation by all sources plus net import) / mid-year population. 'Consumption' is 'gross electricity generation by all sources plus net import' after subtracting transmission losses and auxiliary consumption in electricity generation.
India's Ministry of Power launched Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) as one of its flagship programs in July 2015 with the objective of providing round-the-clock power to rural areas. The program focused on reforms in the rural power sector by separating feeder lines for rural households from those for agricultural applications and strengthening transmission and distribution infrastructure. A previous scheme for rural electrification, Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) was subsumed into the new scheme.[70] As of 28 April 2018, 12 days ahead of the target date, all Indian villages (a total of 597,464 census villages) were electrified.[71]
India has also achieved close to 100% electrification of all rural and urban households. As of 4 January 2019, 211.88 million rural households were provided with electricity, close to 100% of the 212.65 million total rural households.[1] As of 4 January 2019, 42.937 million urban households are provided with electricity, close to 100% of the 42.941 million total urban households.
Electricity as a substitute for imported LPG and PNG
India's net import of liquefied petroleum gas (LPG) is 16.607 million tons and the domestic consumption is 25.502 million tons which is 90% of total consumption in 2021–22.[72] The LPG import content is nearly 57% of total consumption in 2021–22.[73] The affordable electricity retail tariff (860 Kcal/kWh at 74% heating efficiency) to replace LPG (net calorific value 11,000 Kcal/Kg at 40% heating efficiency) in domestic cooking is up to 10.2 ₹/kWh when the retail price of LPG cylinder is ₹1000 (without subsidy) with 14.2kg LPG content.[74] Replacing LPG consumption with electricity would reduce imports substantially.[75]
India's piped natural gas (PNG) for domestic cooking needs was 12,175 million standard cubic meters (mmscm) which is nearly 19% of total natural gas consumption in 2021–22.[72] Natural gas/ LNG import content is nearly 56% of total consumption in 2021–22.[72] The affordable electricity retail tariff (860 Kcal/kWh at 74% heating efficiency) to replace PNG (net calorific value 8,500 Kcal/scm at 40% heating efficiency) in domestic cooking is up to 9 ₹/kWh when the retail price of PNG is ₹47.59 per scm.[76][77] Replacing PNG consumption with electricity would reduce costly LNG imports substantially.
The domestic consumption of kerosene is 1.291 million tons out of 1.493 million tons total consumption in 2021–22. The subsidized retail price of kerosene is 15 ₹/liter whereas the export/import price is 79 ₹/liter. The affordable electricity retail tariff (860 Kcal/kWh at 74% heating efficiency) to replace kerosene (net calorific value 8240 Kcal/liter at 40% heating efficiency) in domestic cooking is up to 15.22 ₹/kWh when the kerosene retail price is 79 ₹/liter.
In 2024–25, the plant load factor (PLF) of coal-fired thermal power stations (nearly 222 GW) was only 68.45%.[18] These stations can run above 85% PLF if there is adequate electricity demand. The possible additional net electricity generation at 85% PLF is nearly 320 billion kWh which is enough to replace all the LPG, PNG, and kerosene consumption in the domestic sector.[78] The incremental cost of generating additional electricity is only the coal fuel cost, less than 3 ₹/kWh. Enhancing the PLF of coal-fired stations and encouraging domestic electricity consumers to substitute electricity in place of LPG, PNG, and kerosene in household cooking would reduce government subsidies. It has been proposed that domestic consumers who are willing to surrender subsidized LPG/kerosene permits should be given a free electricity connection and a subsidized electricity tariff.[79][80] To avoid the possibility of fatal electric shocks and improve the safety standard more than that of LPG cooking, power is supplied to the electric cook stove through a residual-current circuit breaker.
The power demand in India, peaks during the morning and evening hours mainly due to electricity consumption for water heating. To moderate the peak power demand, heat pump water heaters are available which consume 2 to 3 times less electricity for the same heat load.[81]
Substantial scope is also present in micro, small, and medium enterprises (MSME) to switch over to electricity from fossil fuels to reduce the cost of production provided uninterrupted power supply is ensured.[82] Since 2017, IPPs have been offering to sell solar and wind power below 3.00 ₹/kWh to feed into the high voltage grid. After considering distribution costs and losses, solar power appears to be a viable economic option for replacing the LPG, PNG, kerosene, etc. used in the domestic and MSME sectors. In August 2024, renewable power producers are offering firm and dispatchable renewable electricity at 4.98 ₹/kWh (0.06 $/kWh) which is economical to replace fossil fuels in above applications.[83][84]
The retail prices of petrol, diesel, LPG and CNG are high enough in India to make electric vehicles relatively economical.[85] The retail price of diesel was 101.00 ₹/liter in 2021–22, and the retail price of petrol was 110.00 ₹/liter. The affordable retail electricity price to replace diesel would be up to 19 ₹/kWh (860 Kcal/kWh at 75% input electricity to shaft power efficiency versus diesel's net calorific value of 8572 Kcal/liter at 40% fuel energy to crankshaft power efficiency), and the comparable number to replace petrol would be up to 28 ₹/kWh (860 Kcal/kWh at 75% input electricity to shaft power efficiency versus petrol's net calorific value at 7693 Kcal/liter at 33% fuel energy to crankshaft power efficiency). In 2021–22, India consumed 30.849 million tons of petrol and 76.687 million tons of diesel, both mainly produced from imported crude oil.[72] To spread the use of electric vehicles rapidly and reduce the consumption of imported fossil fuels, electricity sale prices at rapid (DC) charging centers could be subsidized to below 5 ₹/kWh. Thus owners of commercial passenger and goods vehicles can be attracted to switch to costly electric vehicles which do not contribute to surface air pollution.[86]
Electricity-driven vehicles are expected to become popular in India when energy storage/battery technology offers improved range, longer life, and lower maintenance.[87][88]Conversion of old petrol and diesel vehicles to battery electric vehicles is also feasible as the battery pack prices become affordable. Vehicle to grid options are also attractive, potentially allowing electric vehicles in helping to mitigate peak loads in the electricity grid.[89] Discarded batteries of electric vehicles are also used as energy storage systems economically.[90] Battery pack prices have fallen to US$ 100 per kWh in early 2025 to compete with conventional ICE vehicles.[91] The potential for continuous charging of electric vehicles through wireless electricity transmission technology is being explored by Indian companies and others.[92][93][94]
Foreign electricity trade
India's National Grid is synchronously interconnected to Bhutan, and asynchronously linked with Bangladesh, Myanmar and Nepal.[95] An undersea interconnector to Sri Lanka (India–Sri Lanka HVDC Interconnection) have been proposed.[96] Singapore and UAE are interested to import electricity from India by establishing undersea cable link to reduce carbon emissions as imported electricity would not contribute to carbon emissions upon its use whether it is generated from renewable resources or not in the exporting country.[97]
India has been exporting electricity to Bangladesh, Myanmar and Nepal and importing excess electricity from Bhutan.[98][99] Since 2016–17, India has been a net exporter of electricity with 9,232 Gwh exports and 7,597 Gwh imports, mainly from Bhutan, in 2021–22.[5][100][101] In 2018, Bangladesh proposed importing 10,000 MW power from India.[102]
Net exports (-) and Net imports (+). The above exports to Bangladesh are excluding the exports from the 1600 MW Godda Thermal Power Station which is located in India but not connected to Indian electric grid.
To encourage the carbon neutral solar power generation, plans are made to transform the Indian national grid into a transnational grid expanding up to Vietnam towards east and Saudi Arabia towards west spanning nearly 7,000km wide.[105][106] Being at the central location of the widened grid, India will be able to import the excess solar power available outside its territory at cheaper prices to meet the morning and evening peak load power demands without much costly energy storage.[107]
Regulation and administration
The Ministry of Power is India's top union government body regulating the electrical energy sector in India. The ministry was created on 2 July 1992. It is responsible for planning, policy formulation, processing of projects for investment decisions, monitoring project implementation, training and manpower development, and the administration and enactment of legislation in regard to power generation, transmission and distribution.[108] It is also responsible for the administration of India's Electricity Act (2003), the Energy Conservation Act (2001) and has the responsibility of undertaking amendments to these Acts when necessary to meet the union government's policy objectives.
Electricity is a concurrent list subject at Entry 38 in List III of the Seventh Schedule of the Constitution of India. In India's federal governance structure, this means that both the union government and India's state governments are involved in establishing policies and laws for the electricity sector. This requires the union government and individual state governments to enter into memoranda of understanding to help expedite projects in the individual states.[109] To disseminate information to the public on power purchases by the distribution companies (discoms), the government of India recently started posting data on its website on a daily basis.[110]
Trading
Bulk power purchasers can buy electricity on a daily basis for short, medium, and long-term durations from a reverse e-auction facility.[111] The electricity prices transacted by the reverse e-auction facility are far less than the prices agreed under bilateral agreements.[112] The commodity derivative exchange Multi Commodity Exchange has sought permission to offer electricity futures markets in India.[113] The union government of India is also planning reverse procurement process in which generators and discoms with surplus power can seek e-bids for power supply for up to a one-year period, to put an end to bilateral contracts and determine the market-based price for electricity.[114]
Energy saving certificates (PAT), various renewable purchase obligations (RPO), and renewable energy certificates (REC) are also traded on the power exchanges regularly.[115][116]
Borrowings by state owned discoms & commercial losses of discoms
India's Ministry of Power administers the Rural Electrification Corporation Limited and the Power Finance Corporation Limited. These central-government-owned public sector enterprises provide loans and guarantees for public and private electricity sector infrastructure projects in India. Excessive plant construction loans at 75% of overestimated costs on overrated plant capacities have led to stranded assets of US$40 to 60 billion.[117][118] The central and state-owned power generators escaped this crisis as they had entered PPAs with state-owned monopolistic discoms on a cost-plus basis at higher than prevailing market power tariffs, without undergoing competitive bidding process. Many direct and indirect subsidies are given to various sectors.[119]
Budgetary support
After the enactment of Electricity Act 2003 budgetary support to the power sector is negligible.[120] Many State Electricity Boards were separated into their component parts after the act came into force, creating separate entities for generating, transmitting and distributing power.[121]
The rapid growth of the electricity sector in India has generated high demand for trained personnel. India is making efforts to expand energy education and to enable existing educational institutions to introduce courses related to energy capacity addition, production, operations and maintenance. This initiative includes conventional and renewable energy.
The Ministry of New and Renewable Energy announced that State Renewable Energy Agencies are being supported to organize short-term training programs for installation, operation and maintenance, and repair of renewable energy systems in locations where intensive renewable energy programs are being implemented. Renewable Energy Chairs have been established at the Indian Institute of Technology Roorkee and the Indian Institute of Technology Kharagpur.[122] The Central Training Institute Jabalpur is a training institute for power distribution engineering and management.[citation needed] The NTPC School of Business Noida has initiated an energy-centered two-year post-graduate diploma in the management program and a one-year post-graduate diploma in management (executive) program, to cater to the growing need for management professionals in this area.[citation needed] Education and availability of skilled workers are expected to be a key challenge in India's effort to expand its electricity sector.
Challenges
India's electricity sector faces many issues, including:
Inadequate last mile connectivity. The country already has adequate generation and transmission capacity to meet the full consumer demand, both temporally and spatially.[7] However, due to the lack of last-mile link-up between all electricity consumers and a reliable power supply (to exceed 99%), many consumers depend on diesel generators.[123] Nearly 80 billion kWh of electricity is generated annually in India by diesel generator sets that consume nearly 15 million tons of diesel oil. Over 10 million households use battery storage UPS as back-ups in case of load shedding.[124] India imports nearly US$2 billion worth of battery storage UPS every year.[125] As overhead lines cause distribution problems during rain and wind storms, there is a plan to lay buried cables from low voltage substations to supply cheaper emergency power in cities and towns and thus reduce diesel oil consumption by diesel generator sets and the installation of UPS systems.[citation needed]
Demand build up measures. Electricity-intensive industries consume the cheaper electricity (average price Rs 2.5 per kWhr) available from the grid instead of running their own coal/gas/oil fired captive power plants.[126][127] The captive power generation capacity by such plants is nearly 53,000 MW, and they are mainly established in steel, fertilizer, aluminium, cement, etc. industries.[128][7] These plants can draw cheaper electricity from the grid on short term open access (STOA) basis, avoiding their own higher cost of electricity generation and diverting power from other consumers.[129][130] Some of these idling captive power plants can be used for ancillary services or grid reserve service and earn extra revenue.[131][132]
Unequal electricity distribution. Almost all households have access to electricity.[1] However, most households find the electricity supply intermittent and unreliable.[133] At the same time, many power stations are idling for lack of electricity demand and the idling generation capacity is sufficient to supply the needs of households lacking electricity three times over.
Erratic power pricing. In general, industrial and commercial consumers subsidize domestic and agricultural consumers.[134][135] Government giveaways such as free electricity for farmers, created partly to curry political favor, have depleted the cash reserves of state-run electricity-distribution system and led to debts of ₹2.5 trillion (US$30billion).[136] This has financially crippled the distribution network, and its ability to pay to purchase power in the absence of subsidies from state governments.[137] This situation has been worsened by state government departments that do not pay their electricity bills.
Over-rated capacity. Many coal-fired plants are overrated above the actual maximum continuous rating (MCR) capacity.[138] to allow the plant cost to be inflated.[139] These plants operate 15 to 10% below their declared capacity on a daily basis and rarely operate at declared capacity, undermining grid stability.
Lack of timely information on load and demand. Intraday graphs at 15-minute or more frequent intervals are required to understand the shortcomings of the power grid with respect to grid frequency, including comprehensive data collected from SCADA for all grid-connected generating stations (≥ 100 KW) and load data from all substations.[140]
Lack of adequate coal supply: Despite abundant reserves of coal, power plants are frequently under-supplied. India's monopoly coal producer, state-controlled Coal India, is constrained by primitive mining techniques and is rife with theft and corruption.[citation needed] Poor coal transport infrastructure has worsened these problems. Most of India's coal lies under protected forests or designated tribal lands and efforts to mine additional deposits have been resisted.
Poor gas pipeline connectivity and infrastructure. India has abundant coal bed methane and natural gas potential. However a giant new offshore natural gas field has delivered far less gas than claimed, causing a shortage of natural gas.
Transmission, distribution and consumer-level losses. Losses exceed 30%, including the auxiliary power consumption of thermal power stations and fictitious electricity generation by wind generators, solar power plants & independent power producers (IPPs), etc.
Resistance to energy efficiency in the residential building sector. Continuous urbanization and the growth of population result in increased power consumption in buildings. The belief still predominates among stakeholders that energy-efficient buildings are more expensive than conventional buildings, adversely affecting the "greening" of the building sector.[141]
Resistance to hydroelectric power projects. Hydroelectric power projects in India's mountainous north and northeast regions have been slowed down by ecological, environmental and rehabilitation controversies, coupled with public interest litigation.
Resistance to nuclear power generation. Political activism since the Fukushima disaster has reduced progress in this sector. The track record of executing nuclear power plants is also very poor in India.[142][143]
Key implementation challenges for India's electricity sector include efficient performance of new project management and execution, ensuring availability and appropriate quality of fuel, developing the large coal and natural gas resources available in India, land acquisition, obtaining environmental clearances at state and central government level, and training skilled manpower.[144]
↑ "Year End Review – 2011". Press Information Bureau, Government of India. December 2011. Archived from the original on 10 January 2016. Retrieved 1 January 2012.
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