India is a major force in the global energy economy. Energy consumption has more than doubled since 2000, propelled upwards by a growing population and rapid economic growth. Continued endeavours towards industrialization and urbanization will further increase the energy demand. According to the India Energy Outlook 2021, India will be the main driver of rising demand for energy over the next two decades, accounting for 25% of global growth. India’s energy consumption is expected to nearly double as the nation’s gross domestic product expands to an estimated $8.6 trillion by 2040. In this context, diversification of energy resources becomes a necessity for India:

• Predominance of coal: As per the 19th Electric Power Survey, out of the all-India power generation installed capacity by 2026-27, environmentally polluting coal-based projects would have a high 40 per cent share. Despite low per capita CO2 emissions, India is the third-largest global emitter of CO2. The carbon intensity of its power sector in particular is well above the global average.
• Menace of air pollution: Fossil fuel-based industry is a major source of particulate matter pollution in India. It causes heavy smog and air pollution in Northern India. In 2019, there were well over one million premature deaths related to ambient and household air pollution.
• Growing price competitiveness: Price volatility poses a major challenge for the fossil fuel and gas power plant operators as well as end users in India. On the other hand, the renewable energy sector has witnessed tremendous advancement in the whole value chain, especially due to technological advancement. Also, the market for renewable energy resources is maturing which will help drive down the price.
• Future proof: Generally, a wind or solar farm is built for up to 25 to 30 years of operation. The average time running period for a hydro power project is even higher. The equipment can be refurbished once its shelf life is over and newly upgraded solar modules or wind turbines will be relatively more cost effective and efficient.
• Ensuring energy security: In a fragile contemporary geo-politics, securing energy supplies and sources is essential for any nation to assert its sovereignty. While oil and gas sources are limited to certain regions of the world, renewable energy is available everywhere and is domestic. Not only does it offer security of energy supply but also reduces dependence on imported sources.
• International obligations: In the COP26 in Paris, India made a commitment to meet 50 percent of its energy requirements from renewable energy by 2030 and by 2030, it will reduce the carbon intensity of its economy by less than 45 percent.

Thus, the need for energy diversification for India cannot be overstated. Due to favourable policies by the government, India is on track to meet its Paris Climate Change commitments. In 2021, with an increase in renewable energy capacity to 102 GW, the total energy generation from renewable sources is about 12 per cent. This points towards a positive trajectory towards energy diversification.