India needs to invest heavily for its energy demand

India will have to invest almost $1.6 trillion over the next 20 years, to meet the growing demands of its economy in energy. Almost $1 trillion will have to be invested in new power generating plants, while the rest will have to be spend on transmission and distribution networks. India’s current power situation is in a mess with utilities booking billions of dollars in losses, as they are forced to sell power at below cost prices to consumers.

Under a scenario created by IEA, India will need to invest $340 billion on renewable energy sector alone over the next 20 years to create capacity of around 13 GW a year from 2026 to 2035. I think that IEA is underestimating this. By 2026, the costs of solar energy will be low enough for not only it to account for a majority of the new supply, but also displacing old and dirty sources of energy. India faces huge problems such as huge losses of its utilities and irrational pricing by state governments. These problems will have to be solved structurally in order for India to meet its economic growth targets. India is deficient in fuels and needs very good policies in order to meet its growing energy requirements. Almost 300 million people in India do not have access to good electric grids.

India has done some good work in the past doubling up capacity of its power grid in the last decade and being the 4^th largest producer of wind power in the world. But compared to China, the country is far behind in generating and consuming energy. China is installing nearly 100 GW of power every year compared to less than 10 GW for India. Last couple of years were a disaster, as the economy went downhill and corruption took a huge toll of the power sector. Most of the private utilities are also loaded with debt and bleeding money due to insufficient coal and low prices.