Energy for Growth Hub
Report Dec 13, 2023

Enhancing Transparency and Competitiveness in India’s Electricity Sector

A case study of India's electricity sector.
Making Markets Work
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Summary

India has made dramatic progress in expanding access to electricity across its population and in closing the power deficit. The Electricity Act, 2003, ushered in an era of competition in energy supply and improved disclosure in contracting and power procurement. In line with its climate mitigation aspirations, renewable energy capacity has increased to more than a quarter of total installed capacity and the government is committed to not accepting new coal proposals in the next 5 years. Although with so many coal plants in the pipeline and still being built, this pause will not have as much effect as coal remains the dominant energy source. India has set an ambitious renewable energy target of 450 GW by 2030. Meeting the target will require $600 billion in financing for new generation and grid infrastructure, including $200 billion for PV and wind capacity. Sector financing and contracting must scale rapidly to meet this target.

The country’s power sector faces challenges despite ambitious renewable energy plans. The sector’s competitiveness depends on addressing financial strain in distribution companies, caused by below-cost prices for residential and agricultural consumers and high technical and distribution losses. Reforms must also create a level playing field for all technologies by regulating central, state-government power generation companies, and IPPs uniformly aimed at reducing debt risk, systemic imbalances, and unfair practices.

This case study offers recommendations on how structural reforms that enhance transparency and promote competitiveness could put the country on a path toward delivering universal access to clean, reliable, and affordable electricity.

Read our full case study (12 pages) here.