India’s rise on the global energy scene

India’s achievements in its energy sector in recent years have been outstanding. Led by Prime Minister Shri Narendra Modi and his ministers, the Government of India is implementing reforms aimed at achieving a secure, affordable and sustainable energy system that can power robust economic growth.

The country has made huge strides to ensure full access to electricity, bringing power to more than 700 million people since 2000. It is pursuing a very ambitious deployment of renewable energy, notably solar, and has boosted energy efficiency through innovative programmes such as replacing incandescent light bulbs with LEDs (under the Ujala scheme). And it is addressing the serious health problems caused by air pollution for its major cities, providing 80 million households with liquefied petroleum gas connections (under the Pradhan Mantri Ujjwala Yojana scheme), thereby reducing the exposure from biomass cooking stoves, a major cause of respiratory diseases.

India is also introducing important energy pricing reforms in the coal, oil, gas and electricity sectors, which are fundamental to further opening the energy market and improving its financial health. It is taking significant steps to enhance its energy security by fostering greater domestic oil and gas production through the most significant upstream reform of the country's Hydrocarbon Exploration and Licensing Policy (HELP) and building up dedicated oil emergency stocks in the form of a strategic petroleum reserve.

For a country of 1.4 billion people, the scale of these measures is hard to overstate. They serve as an inspiration for countries around the world that want to achieve similar progress in providing access to electricity and clean cooking, deploying renewables on a major scale and significantly improving energy efficiency.

Building on two decades of cooperation, India joined the IEA family in March 2017 when it became an Association country, a major milestone. This relationship has flourished since then with cooperation across all energy-related ministries. The IEA benefits greatly from this partnership, given India’s importance in global energy markets and the remarkable insights its experiences provide for other countries.

The relationship now has the potential to progress to the next level. At the IEA’s 2019 Ministerial Meeting in December, member governments mandated the Agency to start consultations with India for a strategic partnership that could offer a pathway to eventual membership, a game-changer for international energy governance.

The IEA has been conducting in-depth peer reviews of its member countries’ energy policies since 1976. Since the Agency opened its doors more widely to major emerging economies in 2015, our policy review process has come to play a bigger role in our bilateral collaboration with Association countries.

In January 2019, a team of senior international energy experts visited India to discuss the challenges and opportunities of India’s energy sector with stakeholders from government, industry and academia. The resulting report is the product of those discussions and intensive exchanges between the IEA, the review team and the Indian government throughout the year. It provides a crosscutting overview of India’s energy policies and offers recommendations for all the key areas of country’s energy sector.

Last week, I was honoured to launch the IEA’s new in-depth review of India's energy policies in New Delhi together with India’s Minister of Coal Pralhad Joshi, Minister of Petroleum and Natural Gas Dharmendra Pradhan, and Minister of Power and New & Renewable Energy R K Singh.

I was very pleased that all three key Indian ministers welcomed the review and appreciated the continued support from the IEA. We discussed the need for an annual dialogue, and look forward to moving towards a strategic partnership.

Here are some of the report’s main findings and recommendations:

India’s demand for energy is set to double by 2040, and its electricity demand may triple, according to the report. The country’s oil consumption is expected to grow faster than that of any other major economy.

India’s goals include increasing its power generation capacity from renewables from 80 gigawatts today to 175 gigawatts by 2022 – and eventually to 450 gigawatts in the long term. This will require a major increase in investment as well as the right approach to accommodating the growing shares of wind and solar, whose electricity output can vary depending on the weather, the time of day and the season. Progress can be achieved by improving the design of renewables auctions to reflect quality, location and system value, along with measures to foster grid expansion and demand-side response.

Promoting renewables and domestic oil and natural gas production will help temper India’s growing reliance on imports of oil, gas and coal. But ensuring a secure oil supply will remain a pressing need, based on the expected growth in the country’s oil consumption and imports. The IEA supports India’s plan to expand its strategic oil stockholding and its efforts to develop international collaboration with countries with experience and expertise in this area.

India’s electricity reliability has improved markedly through the creation of a single national power system and major investments in thermal and renewable capacity. 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.

The IEA report highlights that making India’s energy system resilient to extreme climate conditions has to be a high political priority, as the country is witnessing intensifying water stress, storms, floods and other extreme weather events. The government should ensure that energy planning takes into account the vital relationship between water and energy, as well as future space cooling needs.

If India’s admirable passion for innovation and technology is supported by a smart policy framework, it can unleash investments in clean energy technology. By adopting a country-wide research and development strategy for energy, the government can bring together funding activities across India and engage with key players in the private and public sectors.

India would also benefit from taking steps to institutionalise energy policy coordination within the government – and to further improve the quality and availability of its energy data.

I would like to thank the Government of India, notably NITI Aayog CEO Mr Amitabh Kant and his team, for the excellent collaboration on the in-depth review. My gratitude also goes to Ambassador Noé van Hulst of the Netherlands for leading this review, and to the team members from Canada, Sweden, Switzerland, the United Kingdom, the United States and the European Commission who worked on it.

This first major IEA review of India’s energy policies is a landmark moment. As the country takes on an increasingly central role in the global energy landscape, we look forward to further strengthening and deepening our partnership in the coming years.