Power Sector - Demand, Generation, and Supply (Part I)

India's power sector is a key component of the nation's infrastructure and economy. Power is the ability to generate, transmit, and distribute electrical energy for various uses, such as lighting, heating, and powering machinery. The power sector includes all the entities involved in the production, marketing, and sale of electricity and heat.

India’s Power Landscape

Recent years have seen significant improvements in the country's power generation capacity. India's power demand is set to increase with massive industrialization and urbanization over the next three decades. Currently, India is the third-largest producer and consumer of electricity worldwide, with a total installed power capacity of 448.37 GW as of July 2024. (Ministry of Power)

Graph 1: Per Capita Power Consumption in India (2016-23)

Source: Our World in Data

During the steady rise in power consumption, India and the other countries, witnessed a decrease in Year 2020 due to the global impact of the COVID-19 pandemic. However, the proceeding year got a sharp rise of 7% in per capita power consumption.

Demographic Insights of India's Power Sector

The power sector in India exhibits significant demographic data:

Installed Power Capacity : India's total installed power capacity stood at 448.37 GW in July 2024.
Electricity Generation : The electricity generation target (Including RE) for the year 2024-25 will have a growth of around 7.2% over the actual generation of 1750 BU for the previous year (2023-24).

Graph 2: Energy Generation Trend in the previous 5 years

*electricity generation target

Source: Ministry of Power

Power Consumption : Power consumption in India during FY24 saw an 8% growth to 152.38 billion units in June 2024.
Renewable Energy Targets : India aims to achieve a non-fossil energy capacity of 500 GW by 2030 and fulfill 50% of its energy requirements through renewable energy by the same year.

Figure 1: Renewable Energy Progress FY 2024-25

Source: Niti Aayog

India's power sector is undergoing significant growth and transformation, with a focus on renewable energy and policy initiatives to enhance electrification and meet increasing power demands.

The power sector's scope extends from generation to transmission, distribution, and consumption, including the regulatory frameworks guiding each one of these stages. The diverse scope of power generation includes thermal, hydropower, nuclear, geothermal, and renewable energy sources, combining conventional fuels like coal, oil, and gas with eco-friendly options such as solar, wind, and small hydro plants. Understanding this domain and the influential players within it is the key to unlocking its potential and shaping a sustainable future.

Stages of the Power sector

The power sector, a keystone of modern civilization, plays an important role in sustaining economic activities and improving quality of life. It comprises a multifaceted domain and covers various aspects, from power generation to distribution and consumption.

The different stages of the power sector include:

i. Generation:

Power generation in India involves utilizing various energy sources such as coal, natural gas, hydro, nuclear, and renewables (solar, wind, small hydro, and biomass) in generating stations or power plants.
According to the Ministry of Power, India's total electricity generation in 2023–2024 is about 1,750 BU, which is a 7.2% increase from the previous year. The country has also seen an 80% increase in power generation capacity since 2014, reaching 446.2 GW in June 2024.

Losses:

Fuel Conversion Losses : Energy losses occur during the conversion of fuel into electricity within power plants, primarily due to inefficiencies in the combustion process.
Generator and Turbine Losses : Some energy is lost as heat and friction during the generation process, particularly in the operation of generators and turbines.
Transmission Losses : 1.7% of energy is lost as heat during the transmission of electricity from the power plant to the transmission grid.

ii. Transmission:

Transmission involves the movement of electricity from power generation sources to distribution networks and end-users. Transmission is carried out primarily by central and state companies and largely remains a government-controlled activity.
According to the Ministry of Power, India's transmission network has increased by 224% since 2014, with inter-regional capacity now at 116.5 GW.

Losses:

Resistance Losses : Energy losses occur as electricity flows through transmission lines, primarily due to the resistance of the conductors.
Transformer Losses : Energy losses occur in transformers during the process of stepping up or stepping down voltage levels for transmission, mainly due to magnetic core losses and copper losses.
Corona Discharge Losses : At high voltages, some energy is lost due to corona discharge, which causes ionization of air molecules and subsequent energy dissipation.

Corona Discharge: high-voltage transmission lines ionize the surrounding air, creating a bluish glow and a hissing noise.

iii. Distribution:

Distribution utilities supply electricity from the substations to individual consumers through a distribution network. Distribution is the retail stage and operates at lower voltages.

Losses:

Line Losses : 6-7% of energy losses occur in distribution lines due to resistance, resulting in I²R losses.
Transformer and Substation Losses : Additional losses occur in distribution transformers and substations, including magnetic core losses, copper losses, and losses in switching and control equipment.

iv. Consumption:

The energy sector in India faces significant losses in the process of energy generation, transmission, distribution, and consumption. These losses not only have financial implications but also contribute to environmental degradation, social inequality, and governance challenges. By adopting renewable energy sources, energy storage technologies, and demand response programs, businesses can significantly reduce their carbon footprint and greenhouse gas emissions, thereby contributing to global efforts to mitigate climate change.

India's power consumption in June 2024 was 152.38 billion units (BU), which is a 9% increase from the previous year.

Who is responsible for what?

The above diagram represents the flow of roles and responsibilities across different levels (Central, State, Private Players) in the power sector, broken down into the stages of Generation, Transmission, Distribution, and Consumption. It illustrates the interconnectedness and collaborative efforts among various entities at different levels to ensure the effective functioning of the power sector in India.

This interconnected framework highlights the significance of each player's role in addressing challenges, improving infrastructure, and driving the energy transition towards sustainable and low-carbon sources.

By working together, these entities can enhance energy security, promote economic growth, and contribute to a cleaner and more resilient energy future for India.