Editorial: India's powering energy sector

The International Energy Agency has highlighted the stellar accomplishments of India’s energy sector, which is critical for the country’s ambitious economic development plans. The Paris-based intergovernmental organisation’s latest report revealed that India had recorded the third-largest growth in power generation capacity after China and the US over the past five years. While India is winning accolades for its green energy thrust and near 100% electrification, one cannot ignore the prevalent inequality permeating into energy consumption as well.

The IEA’s report titled World Energy Investment 2025 extolled India for the tremendous increase in investments in renewables, as a whopping 83% of investment in 2024 went to clean energy. In consumption, the good news is that almost every household has electricity and many households can afford electrical appliances and gadgets. The bad news is that the increased ownership and use of air conditioners indicate the rising heat due to the worsening of climate change. The ownership of air conditioners tripled in the last 15 years, reaching 24 units per 100 households. This data, however, hides the inequality as some households have multiple air conditioners while a distressingly large number of households do not even have an air cooler. Another indicator is that owning all three consumer appliances – a television, a refrigerator and a washing machine – is still limited to 16% of families. However, while two-thirds of households own a television, only 18% own a washing machine. Therein lies the story of urban-rural and high-, mid- and low-income divides.

The sector’s glowing success stories cannot hide the darker problems plaguing it. The central government boasted about meeting the 241 GW peak power demand in June this year with zero peak shortage. Yet, throughout the summer months of May and then in June, there were widespread media reports on power cuts as energy from all power plants with requisite installed capacity would not be available concurrently.

One way of resolving the issue is through the deployment of smart technology solutions to manage the supply and demand and optimally manage the electricity grid. India has developed a home-grown power planning tool called STELLAR, which helps power distribution companies, popularly known as discoms, to predict demand and accordingly plan the supply so that there are no power cuts. By correctly matching demand and supply, discoms can avert losses arising from wasteful idling of the plant and the consequent operational costs. If a regular and dependable power supply is assured, then commercial consumers can cut down expensive power backup costs involving diesel generators.

Lastly, the Indian government is likely to rope in tech billionaire Nandan Nilekani to wield the digital magic wand to solve some pesky problems. He is gung-ho about leveraging technology for power sector reforms that could result in reducing costs by 25% across the generation-transmission-distribution spectrum. Already in the works, among other things, is an expectation to replicate the success of UPI or Unified Payments Interface in financial transactions through its energy domain equivalent, the Unified Energy Interface.

The IEA report sheds light on the mammoth elephant in the room – that is, the discoms being mired in financial dire straits. They owe $9 billion in unpaid dues and have another $75 billion in accumulated losses. The government needs to do more to fix the problem.