With A Range Of Energy Market Reforms, India Now Vital For Global Energy Markets Future

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India is gradually becoming vital for the future of the global energy markets. In recent years, the government appears to be making impressive progress in increasing citizens’ access to electricity and clean cooking.

The government, according to informed sources, has also successfully implemented a range of energy market reforms and carried out a huge amount of renewable electricity deployment, notably in solar energy.

India has a population of 1.4 billion and is currently rated as one of the world’s fastest-growing major economies.

Apparently looking ahead, the government has laid out a seeming ambitious vision to bring secure, affordable and sustainable energy to all its citizens. This in-depth review aims to assist the government in meeting its energy policy objectives by setting out a range of recommendations in each area, with a focus on energy system transformation, energy security and energy affordability.

The review also highlights a number of important lessons from the rapid development of India’s energy sector that could help inform the plans of other countries around the world.

Already, in partnership with NITI Aayog, the International Energy Agency (IEA) has released the first in-depth review of India’s energy policies.

The National Institution for Transforming India (NITI Aayog), was however, formed via a resolution of the Union Cabinet on January 1, 2015. NITI Aayog is the premier policy ‘Think Tank’ of the government, providing both directional and policy inputs. While designing strategic and long term policies and programmes for the government, NITI Aayog also provides relevant technical advice to the centre and states.

In keeping with its reform agenda, the government constituted the NITI Aayog to replace the Planning Commission instituted in 1950. This was done in order to better serve the needs and aspirations of the people of India. An important evolutionary change from the past, NITI Aayog acts as the quintessential platform of the government to bring states to act together in national interest, and thereby fosters Cooperative Federalism.

At the core of NITI Aayog’s creation are two hubs – Team India Hub and the Knowledge and Innovation Hub. The Team India Hub leads the engagement of states with the central government, while the Knowledge and Innovation Hub builds NITI’s think-tank capabilities. These hubs reflect the two key tasks of the Aayog.

NITI Aayog is also developing itself as a State of the Art Resource Centre, with the necessary resources, knowledge and skills, that will enable it to act with speed, promote research and innovation, provide strategic policy vision for the government, and deal with contingent issues.

In the mean time, 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.

Executive Director of the IEA, Dr Fatih Birol, presented the key findings of the IEA in-depth review of India’s energy policies in New Delhi in the presence of the country’s Minister of Coal, Shri Pralhad Joshi, Minister of Petroleum and Natural Gas, and Minister of Steel, Shri Dharmendra Pradhan, for Power and Renewable Energy, Shri R K Singh, Vice Chairman, NITI Aayog, Dr Rajiv Kumar,  CEO of NITI Aayog Shri Amitabh Kant, key energy secretaries, ambassadors, think tanks and the media.

The IEA regularly conducts in-depth reviews of energy policies for its member and association countries. This is the first review carried out for India, which has been an IEA association country since March 2017.

While introducing the report, NITI Aayog Special Secretary, Shri. R.P. Gupta, who welcomed and commended the hard work of the IEA said, “as India builds on the remarkable growth and development of its energy sector, this in-depth review will help the Government in meeting its energy objectives by setting out a range of recommendations in each energy policy area.”

NITI Aayog CEO Kant, who brought up the idea with the IEA to conduct the review, said: “With clear goals in place, the country is making great strides towards affordable, secure and cleaner energy for all its citizens. India is working hard to move towards its aspirations of transforming the energy sector”

“The IEA has the privilege of enjoying a close relationship with India. This first in-depth review of the country’s energy policies illustrates the value of our growing collaboration”, said Dr Birol. “The energy choices that India makes will be critical for Indian citizens as well as the future of the planet. This was demonstrated at the IEA’s 2019 Ministerial Meeting, which mandated the Agency to start consultations with India for a strategic partnership that could serve as a path to eventual membership, a game-changer for international energy governance.”

The IEA report congratulates the Indian government on its outstanding achievements in extending citizens’ access to electricity, affordable efficient lighting and clean cooking in record time through historic schemes like SAUBHAGYA, UJALA and UJJWALA, while pursuing energy market reforms and the swift deployment of renewable technologies.

The report highlights the strong growth of renewables in India, which now account for almost 23% of the country’s total installed capacity. The review also found that energy efficiency improvements in India avoided 15% of additional energy demand, oil and gas imports, and air pollution as well as 300 million tonnes of CO2 emissions between 2000 and 2018.

India is becoming increasingly influential in global energy trends. The country’s demand for energy is set to double by 2040, and its electricity demand may triple, according to the IEA report. Indian oil consumption is expected to grow faster than that of any other major economy. This makes further improving energy security a key priority for India’s economy, the report says.

The IEA welcomes Indian government policies designed to conduct large-scale renewable energy auctions, open up coal mining to private companies, and promote access to oil and gas markets for foreign investors.

The report offers a wide range of recommendations for reforms in support of India’s goal of promoting open and well-functioning energy markets in sectors such as coal, gas and electricity. These include building strong regulators to ensure non-discriminatory access, moving from state allocation to market pricing, and further rationalising energy subsidies.

In India’s renewables-rich states, the share of variable renewables in electricity generation is already above 15%, a level that calls for dedicated policies to ensure they integrate smoothly into the power system. NITI Aayog can play a strong role in working with the states to implement power sector reforms, advance grid integration, improve flexibility and coordinate energy policy decisions.

The review also strongly encourages India to institutionalise energy policy coordination across government with a national energy policy framework.

NITI Aayog Vice Chairman Dr Kumar emphasised that India’s energy goals cannot be achieved without strong coordination of policies and targets between central and state governments, notably on electricity market design and renewable targets, and that a stronger cooperation is therefore needed on these fronts.

Coal Minister Joshi said: “With the support of Amitabh Kant and Dr. Rajiv Kumar, India recently launched commercial mining operations. IEA’s report will be very helpful for designing our future course of action in the energy sector.”

Petroleum and Natural Gas Minister Pradhan said: “NITI Aayog is already preparing a National Energy Strategy, and I would like to propose an annual event where NITI Aayog and the IEA bring together global energy stakeholders to have structured energy dialogue. We look forward to engaging with the IEA on oil security and on helping India move towards a natural gas-based economy.”

Power and Renewable Energy Minister Singh congratulated the IEA and NITI Aayog for the launch of the report: “India’s energy policy is a global story. India has the largest unified power grid that operates in single frequency. India has moved from scarcity to surplus electricity over the past few years while implementing the largest and the fastest energy access and energy efficiency programmes in the world.”

The report will help India to design implementation strategies to achieve secure and sustainable energy access for its citizens.
India 2020 – Energy policy review, Country report — January 2020 [PDF]

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