Chapter 3. ENERGY

Energy is broadly classified into two categories:

  • Renewable: Solar energy, Wind energy, Tidal energy, Geothermal energy, Biomass energy.
  • Non-Renewable: Coal, Oil, Gas.


  • Electrical energy in the country is monitored by the Ministry of Power.
  • Technical matters assistance is given by the Central Electricity Authority (CEA), to the Ministry.
  • The Power Grid is responsible for:
  • The formation of the National Power Grid.
  • All the existing & future transmission projects in the Central Sector.
  • The Power Finance Corporation (PFC) provides term-finance to projects.

With commissioning of electricity supply in Darjeeling during 1897, the development of Power sector commenced in India, at end of the 19th century, followed by the commissioning of a hydropower station at Shivasamudram in Karnataka during 1902.

Power Sector Ministries

  • Ministry of Coal
  • Ministry of Power
  • Ministry of Petroleum & Natural Gas
  • Ministry of New & Renewable Energy

Ultra Mega Power Projects (UMPPs)


  • To ensure cheaper tariffs utilizing economies of scale, catering to the need of states.
  • To mitigate the risk relating to tie up of land fuel, water and other statutory clearances, etc.

The Govt. had launched an initiative for the development of coal-based Ultra Mega Power Projects (UMPPs), each with a capacity of 4,000 MW.

4 UMPPs:

  • Mundra in Gujarat
  • Tilaiya in Jharkhand
  • Sasan in Madhya Pradesh
  • Krishnapatnam in Andhra Pradesh

India’s Power Sector Schemes

  • Sahaj Bijli Har Ghar Yojna (Saubhagya 2017)

Objective:  To provide electricity connections to over 40 million families in rural and urban areas by December 2018.

Under the scheme the poor families will be provided electricity connections free of cost

  • It will provide power connections to an estimated 4 crore households, which currently do not have a power connection.
  • Other families will pay Rs.500 only, which shall be recovered by DICOMs in 10 installments through electricity bill.
  • The scheme funds the cost of last-mile connectivity to willing households to help achieve the goal of lighting every household by 31 December 2018.

Beneficiaries would be identified using Socio Economic and Caste Census (SECC) 2011 data.

Deendayal Upadhyay Gram Jyoti Yojana (DDUGJY) 2015.

It is one of the flagship programmes of the Ministry of Power and will facilitate 24x7 supply of power.

  • This scheme will enable to initiate much awaited reforms in the rural areas.
  • It focuses on strengthening of sub-transmission & distribution infrastructure including metering at all levels in rural areas.
  • This will help in providing round the clock power to rural households and adequate power to agricultural consumers.

The National LED Programme: (UJALA-2015)

Background: High cost of LEDs has been a barrier in adoption of such efficient lighting systems. This scheme proposes to overcome this cost barrier. The scheme is being named "UJALA" - an acronym for Unnat Jyoti by Affordable LEDs for All.

Overall targets:

  • Expected reduction of load - 5000 MW
  • Expected overall annual energy savings - 10.5 billion KWh
  • Expected annual cost reduction of consumer bills - Rs. 40,000 crore
  • Overall target of number of incandescent bulbs to be replaced - 200 million
  • Annual estimated greenhouse gas emission reductions- 79mn tonnes of CO2

Eligibility of acquiring LED bulbs

  • Every grid-connected consumer having a metered connection from their respective Electricity Distribution Company, can get the LED bulbs at about 40% of the market price under the UJALA Scheme.
  • Consumers also have the option of paying for the LEDs in monthly installments.
  • Energy Efficiency Services Limited (EESL) distributes LED bulbs to households at 40 % of market price.

Ujwal Discom Assurance Yojana (UDAY)

  • It empowers DISCOMs with the opportunity to break even in the next 2-3 Years.
  • It gives an assurance for the rise of vibrant and efficient DISCOMs through a permanent resolution of past as well as potential future issues of the sector.

Salient Features for Financial Turnaround

  • States will take over 75% of the DISCOM debt as on Sept 30, 2015 - 50% in FY 2015-16 and 25% in FY 2016-17.
  • States to issue non-SLR including SDL bonds, to take over debt and transfer the proceeds to DISCOMs in a mix of grant, loan, equity.
  • Borrowing not to be included for calculating fiscal deficit of the State.
  • Moratorium period – up to 5 years.
  • Maturity period of bonds - 10-15 years.
  • Rate - G-sec plus 0.5% spread plus 0.25% spread for non-SLR.

Achieving Financial Turnaround

Balance 25% of debt to remain with the DISCOMs in the following manner:

  • Issued as State-backed DISCOM bonds or Re-priced by Banks/FIs at interest rate not more than bank base rate + 0.10%
  • States to take over future losses of DISCOMs as per trajectory in a graded manner:
  • 2015-16: 0% of the loss of 2014-15
  • 2016-17: 0% of the loss of 2015-16
  • 2017-18: 5% of the loss of 2016-17
  • 2018-19: 10% of the loss of 2017-18
  • 2019-20: 25% of the loss of 2018-19
  • 2020-21: 50% of the previous year loss
  • Balance losses to be financed through State bonds or DISCOM bonds backed by State Govt guarantee, to the extent of loss trajectory finalised with MoP.
  • Jharkhand and J&K given special dispensation for take over of outstanding CPSU dues.

Its operating imperatives are:

  • Reduction of cost of power
    • Reduction in interest cost of DISCOMs
    • Improving operational efficiencies of DISCOMs
    • Enforcing financial discipline on DISCOMs through alignment with State finances

State Gross Fiscal Deficit GFD/GDP ratio increased by 0.7 percentage points to 3.6 % in 2015- 16 from 2.9% without UDAY. It has rationalized now.

India's energy security

It is primarily about:

  1. Supporting the economic growth.
  2. Ensuring continuous availability of commercial energy at competitive prices.
  3. Meeting the lifeline energy needs of households with safe, clean and affordable forms of energy.

Initiatives for energy security:

  1. New Domestic Gas Pricing Policy:
    1. Under this, a transparent new gas pricing formula, linked to global market, was made effective from 2014.
    1. Marketing and pricing freedom was provided for gas produced from geologically difficult, high cost areas with a price based on landed cost of alternate fuels.
  2. Hydrocarbon Exploration and Licensing Policy (HELP)-2016:
    1. It is governed by a single license for exploration and production of all forms of hydrocarbon.
    1. It aims to provide a simple and easy way to administer:
      1. Revenue sharing model
      1. Marketing and pricing freedom
      1. Open acreage policy
      1. Permitting exploration throughout the contract period.
    1. The policy is guided by the principles of minimum govt, maximum governance and ease of doing business.
  3. Give-It Up Campaign:
    1. Under it, well-off LPG consumers have been asked to voluntarily give up LPG subsidy.
    1. Against each 'Give-It-Up' consumer, one 1 security deposit-free connection is given to a BPL family (Give Back Scheme).
  4. Pradhan Mantri Ujjwala Yojana (PMUY):
    1. In a bid to ensure universal coverage of clean cooking gas in the country, the Government launched PMUY.
    1. Under PMUY, 5 crore LPG connections were to be provided to BPL families with a support of 1,600 per connection by 2018-19.
    1. It aims at empowering millions of poor women who are forced to inhale unhealthy emissions from burning coal, wood and other unclean fuels while cooking.
  5. Pratyaksha Hastaantarit Laabh (PAHAL) scheme:

Objective: to ensure that the subsidy on LPG reach the intended beneficiaries.

  1. It is a scheme for direct transfer of LPG subsidy to consumers all over the country from 2015.
    1. This is the largest direct cash transfer scheme in the world as recognized by Guinness Book of World Records.
    1. Under this scheme, LPG is being sold to consumers at the market rate while the subsidy is directly credited to their bank accounts as per entitlement.

Energy Efficiency Initiative

Govt’s 2 pronged approach to cope up with the energy demand while ensuring minimum growth in CO2 emissions:

  • On the generation side, the Govt. is promoting greater use of renewable in the energy mix mainly through solar and wind and a shift towards supercritical technologies for coal based power plants.
  • To efficiently use the energy in the demand side through various innovative policy measures under the overall ambit of Energy Conservation Act 2001.

EC Act & BEE

  • The Energy Conservation Act (EC Act) was enacted in 2001 with the goal of reducing energy intensity of Indian economy.
  • Bureau of Energy Efficiency (BEE), a statutory body under Ministry of Power is responsible for spearheading the improvement of energy efficiency in the economy.


  • This web portal monitors the progress of Inter State & Intra State Transmission Projects through Tariff Based Competitive Bidding (TBCB) & Regulated Tariff Mechanism.
  • It also shows upcoming Inter State as well as Intra State Projects being floated by different Transmission Utilities Pan India.
  • Ministry of power has nominated RECTPCL and PFCCL as Bid Process Coordinator (BPC) for Inter State Transmission Projects to be awarded under Tariff Based Competitive Bidding. Under Regulated Tariff Mechanism Power Grid Corporation of India Ltd (PGCIL) is executing Inter State Transmission Projects.

Non-Conventional Energy

  1. Ethanol Blended Petrol
    1. Ethanol Blended Petrol (EBP) Programme started in 2003.
    1. In 2006, it was extended to the entire country, except north-eastern states, Jammu and Kashmir, Andaman and Nicobar Islands and Lakshadweep.
    1. To give boost to EBP Programme, the Government decided that 5% mandatory ethanol blending with petrol is to be implemented across the country.
  2. Bio-diesel Purchase Policy
    1. Govt. launched biodiesel policy on January 1, 2006. Under this policy, OMCs would purchase biodiesel, meeting the prescribed BIS standard, at a uniform price, as may be decided by the OMCs from time to time, for blending with High Speed Diesel (HSD) to the extent of 5% at identified 20 purchase centers across the country.

Pricing of Petroleum Products

  • The Administered Pricing Mechanism (APM) or cost plus pricing for petroleum products of 1976 was abolished with effect from 1st April 2002, consequent to the de- regulation of the oil sector in India.
  • The Govt notified that pricing of all petroleum products except PDS kerosene and domestic LPG, would be market determined.
  • On the basis of Rangarajan Committee recommendations  in June 2006:
  • The Govt. changed the pricing mechanism for petrol and diesel from import parity to trade parity.
  • Trade parity being the weighted average of import parity and export parity prices in the ratio of 80:20
  • While the pricing of PDS kerosene and domestic LPG continues on import parity basis.


  • Responsibilities Ministry of Coal:
  • Development of coal & lignite reserves
  • Determining policies & strategies of exploration
  • Sanctioning important projects of high value and for deciding all related issues.
  • Coal Reserves in India have been found mainly in Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Telangana and Maharashtra.
  • The Lignite reserves are located in:
  • Tamil Nadu
  • Rajasthan
  • Gujarat
  • Kerala
  • West Bengal
  • Jammu and Kashmir
  • The Union Territory of Puducherry.

PSUs under Ministry of Coal:

  • Coal India Limited (CIL)- a Maharatna Company
  • Neyveli Lignite Corporation Limited (NLC)- a Navratna Company

New & Renewable Energy

Ministry of New and Renewable Energy (MNRE) is the Nodal Ministry at the federal level for all matters relating to new and renewable energy.


  • Energy Affordability: Cost-competitive, convenient, safe, and reliable new and renewable energy supply options.
  • Energy Equity: Per-capita energy consumption at par with the global average level by 2050, through a sustainable and diverse fuel- mix.
  • Energy Security: Lesser dependence on oil imports through development and deployment of alternate fuels (hydrogen, bio-fuels and synthetic fuels) and bridging the gap between domestic oil supply and demand.
  • Increase in the share of clean power: Renewable (bio, wind, hydro, solar, geothermal & tidal) electricity to supplement fossil fuel based electricity
  • Availability and Access of Energy: Supplement energy needs of cooking, heating, motivate power and captive generation in rural, urban, industrial and commercial sectors.

India has Renewable Energy Potential of about 900 GW from commercially exploitable sources, such as:

  • Small hydro – 20 GW
  • Bioenergy – 25 GW
  • Wind – 102 GW (at 80 meter mast height)
  • Solar Power – 750 GW assuming 3% wasteland is made available

National Offshore Wind Energy Policy, 2015

  • Under this Policy, the Ministry of New & Renewable Energy (MNRE) has been authorized as the Nodal Ministry for use of offshore areas within the Exclusive Economic Zone (EEZ).
  • The National Institute of Wind Energy (NIWE) has been authorized as the Nodal Agency for development of offshore wind energy and to carry out allocation of offshore wind energy blocks, coordination and allied functions with related ministries and agencies.
  • It is planned to set up first offshore wind power project off the Gujarat coast.

The National Institute of Wind Energy (NIWE):

  • Formerly known as Centre for Wind Energy Technology, has developed the Wind Atlas of India.
  • NIWE also collects data from Solar Radiation Resource Assessment stations and develop Solar Atlas of the country.
  • The Indian Institute of Science, Bengaluru has developed Biomass Atlas of India.
  • Alternate Hydro Energy Centre, IIT Roorkee has assessed small hydro potential in the country.

Jawaharlal Nehru National Solar Mission (JNNSM) was launched on the 11th January, 2010.


  • To deploy 20,000 MW of grid connected solar power by 2022 aimed at reducing the cost of solar power generation.
  • The target will also comprise of 40 GW Rooftop and 60 GW through Large and Medium Scale Grid Connected Solar Power Projects.

Renewable energy targets has been up-scaled to 175 GW by the year 2022 which includes:

  • 5 GW from small hydro-power
  • 10 GW from bio-power
  • 60 GW from wind
  • 100 GW from solar

Stepping up capacity target under JNNSM by 5 times, India is aiming to generate 1,00,000 MW solar power by 2022.

International Solar Alliance

  1. ISA is a coalition of solar resource rich countries lying fully or partially between the Tropics of Cancer and Capricorn and aims to specifically address energy needs by harnessing solar energy.
  2. The Paris Declaration establishing ISA states that the countries share the collective ambition to innovative for reducing the cost of finance and technology for solar generation assets. This will mobilize more than US $ 1 trillion dollars in investments that will be required by 2030.
  3. Economy and industry in turn can benefit from the business opportunities available across 121 ISA member countries.
    1. ISA is the first International intergovernmental treaty-based organization headquartered in India (Gurugram, Haryana).
    1. As on date, 46 countries have signed and out of these, 19 countries have ratified the ISA Framework Agreement.

Strategic Partners of ISA:

  • World Bank
  • Climate Parliament
  • European Investment Bank
  • European Bank for Reconstruction and Development
  • United Nations including its organs are ISA’s strategic partners

Govt has made a provision of R.100 crore as one-time fund for ISA Fund corpus.

Current Programmes under ISA:

  • Scaling Solar Mini-grids
  • Affordable Finance at Scale
  • Scaling Solar Applications for Agricultural Use

Two programmes underway:

1.      Scaling Solar Rooftops

2.      Scaling E-Mobility & Storage

Some Major Initiatives of ISA:

  • ISA has established Digital Infopedia which serves as a platform to interact and collaborate with one another.
  • ISA is also developing "Common Risk Mitigating Mechanism" (CRMM) for de-risking and reducing the financial cost of solar projects.
  • The State Government of Haryana has agreed to institute Kalpana Chawla Solar Award for the women Solar Scientists doing extraordinary works across the 121 ISA prospective member countries.

Renewable Energy For Rural Applications

  • Under the National Biomass Cookstoves Initiative, several pilot projects have been taken up for deployment of improved biomass cookstoves for   demonstration among domestic and large sized community cooking in Anganwadis, mid-day meal schemes in schools, tribal hostels etc.
  • Projects taken up under Unnat Chulha Abhiyan are eligible for carbon credits under the CDM mechanism with Sardar Swaran Singh National Institute of Renewable Energy (SSS-NIRE), an autonomous institute of MNRE, located at Jalandhar, have been designated as Coordinating and Managing Entity (CME).

National Biogas and Manure Management Programme (NBMMP)

  • Biogas is obtained from biodegradable organic waste through anaerobic digestion and enriched organic bio-manure is produced as byproduct from this process. The anaerobic digestion process is known as low carbon generating technology for efficient management of waste and sanitation. Biogas is, thus, a  clean gaseous fuel.
  • NBMMP provides for setting up of family type biogas plants mainly for rural and semi-urban  households.
  • Note: This Document is a part of Jatin Verma’s Polity & Governance Course on Unacademy Plus.  For More such UPSC related stuff, you can subscribe to:
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