Optimizing energy intensity through energy efficiency is an effective way of achieving low-carbon, inclusive and sustainable growth objectives, without impacting the sustained growth trajectory of a resource-constrained country. The decoupling of economic growth from enhanced energy demand is yet to be achieved. It is often attributed to the underlying challenges of energy overuse on the economy and natural environment, on one hand, and the establishment of a regulatory framework for institutionalizing energy efficiency on the other. 

India has gained significant ground as far as improving the effectiveness of energy use is concerned and this is clear from the observed decreases in energy intensity of GDP. As per World Energy and Climate Statistics, from 0.126 koe/$15p in 2010 to 0.109 koe/$15p in 2020 and currently standing at 0.105 koe/$15p (2023), India has significant energy efficiency achievements. In India, several energy efficiency policies and measures have been created in recent years including the Energy Conservation Act (2022). These measures incorporate schemes like Standards and Labelling by the Bureau of Energy Efficiency (BEE); Energy Conservation Building Codes (ECBC) by the Ministry of Power; and the UJALA Scheme, among others. However, the demand for the energy sector in the country has been growing at a rapid rate and is expected to grow further in the years to come. As per 20th Electric Power Survey (EPS) Demand projections, India’s electricity demand will be doubled by 2030 and is expected to surpass 400 GW mark. The Indian energy sector is one of the most diversified in the world, compared to many developing countries where crude oil and natural gas and renewables play a major role. Sources for energy generation in India range from conventional sources like coal, lignite, natural gas, oil, hydro, and nuclear power to other viable non-conventional sources like wind, solar, agricultural, and domestic waste. Because of insufficient fuel supply and low-generation capacity, the country has problems of energy shortfalls. As the growth of the economy in general and in the manufacturing sector is largely dependent on the creation of suitable energy infrastructure, the policy focus in India has been on infrastructure and energy investment. Such investment has increased manifold over time with increased private-sector participation in the country.

Challenges

The interaction between domestic energy policy and India’s stance on global energy futures is by far underexplored. A more robust approach to domestic energy governance that addresses the persistent domestic problems that revolve around energy security and uncertainties in regulatory framework of the country, might ease the pressure of energy supply constraints and provide new directions for Indian foreign policy on energy and climate change. To follow this approach will require institutional depth, both within government and out of it, besides a more robust debate on the links between domestic and foreign energy policy, and the complex connections between energy governance, supply security, and climate change.  India will need to remove barriers to scale-up new and additional cleaner sources of energy along with energy-efficiency measures. While lower tariffs have favoured the scaling up of large grid-scale projects, renewables do have hidden costs and other technical issues such as storage, efficiency of infrastructure, etc., that need to be addressed. There is a need for reforms to power market design to better integrate renewables alongside conventional sources of energy used by the country. Scaling-up and bringing down storage costs of energy generated by renewable sources can be addressed by the government with a special focus on need-based demands. With the development of a broader range of renewable energy options (e.g., offshore wind, geothermal) to raise load factors and overcome land-use constraints, India can further boost the efficiency of both renewable sources and non-renewable resources. Just by raising the technical efficiency of installations and contract enforcement, the sector could receive a push.

Another drawback of the Indian economy is the lack of a domestic manufacturing sector which will again not only help the renewable sources to attain feasible targets but will have the infrastructure built out for the next three decades. Decisions of the people and governments are influenced by the world’s energy economy.

Way Ahead

With rising demand, an increase in energy prices is inevitable. Coupled with depleting natural sources, the sustainability of life is under constant threat. A careful selection of generation methods by demands and regions is a must. Well-co-ordinated policymaking is essential to ensure that different institutions with responsibilities for various aspects of energy policy avoid operating at cross-purposes and synchronize the delivery of different parts of the system (e.g., new power plants with appropriate grid connections, coal supply with rail and port infrastructure, urban planning with provision for public transport). India has an untapped potential of energy savings which will not compromise its economic growth trajectory. By building capacities in technical and financial sectors of energy along with enhanced consumer awareness, India can scale-up its energy efficiency technologies. #

Kriti Sharma is Associate Fellow, Social Transformation and CSR, Centre for Social Research and CSR at TERI.