Find the best tutors and institutes for UPSC Exams Coaching

Find Best UPSC Exams Coaching classes

Please select a Category.

Please select a Locality.

No matching category found.

No matching Locality found.

Outside India?

Power Sector in India

Rajesh Upadhyay
06/10/2020 0 0


  • Recently, the part of the package announced by the Finance Minister was 90,000 crores INR liquidity injection into power distribution companies (discoms).
  • This is the subject to the condition that Center will act as a guarantor of the loans given by State-owned power finance companies such as PFC and REC Ltd. To the discoms.


With a generation of 1561 terawatt-hours (TWh), India is the third-largest producer and consumer as well of electricity in the world.

  • India is ranked fourth in wind power, fifth in solar power and fifth on renewable power installed capacity as of 2018.
  • The Government of India has set a target to achieve 175 GW installed capacity of renewable energy by FY22.


  • Currently, India produces a majority of its energy from thermal sources.
  • However, with the commitment to the Paris Agreement (on climate change), there has been a push towards increasing the renewable generation capacity in the country.


  • Producer: Electricity is generated at thermal, hydro and renewable energy power plants, which are operated by either state-owned companies such as NTPC Ltd, NHPC Ltd, or private companies such as TATA Powers or Adani Powers.
  • State Government: The generated then moves through a transmission grid system that connects electricity producers and ends consumers who are mainly dominated by State-owned companies such as Powergrid Corp.
  • Distribution Companies (Discoms): Distribution includes maintenance of the distribution network and retail supply of electricity to the consumers mostly carried out by state-owned distribution companies. However, in cities like Delhi, Mumbai, Ahmedabad and Kolkata, private entities own the entire distribution business or parts of it. For example, BSES Rajdhani Power is a private discom Delhi.


  • ELECTRICITY ACT 2003: It was introduced to introduce competition, consumers’ interest and provide power for all. The act offers National Electricity Policy, Rural Electrification, Open access in transmission, phased open access in distribution, Etc.
  • POWER PURCHASE AGREEMENTS: As per Act 2003, distribution licensees enter into PPAs with generation companies for the retail sale of electricity. PPAs are bilateral contracts between the procurers and the generators.


  • Bureau of Energy Efficiency: It assists in developing policies and strategies with the primary objective of reducing energy intensity within the overall framework of the Energy Conservation Act 2001.
  • Power Finance Corporation: It functions to introduce reforms in the Indian power sector and enhancing value to its stakeholders; by promoting efficient investment in the power and allied industry in India and abroad.
  • Rural Electrification Corporation: The company is a Public Sector Undertaking that provides loans to Center/State Power Utilities in the country. State Electricity Board, Rural Electric Cooperatives, NGOs and Private Power Developers.
  • Power Grid Corporation: It is a State-owned Maharatna Company engaged mainly in Transmission of power and transmits about 50% of the power generated in India on its transmission network.
  • Central Electricity Regulatory Commission: CERC is a statutory body working under Electricity Act 2003. Its function includes levying various fees, tariffs, license issues to generation companies, etc. And also has an advisory role for Government of India.


  • Competitiveness: Electricity price for specific segments such as agriculture and the domestic category (what we use in our homes) is cross-subsidized by the industries and the commercial sector. This affects the competitiveness of the sector.
  • Discoms: The poor financial situations of state discoms and consequently, this impacts the quality of electricity that consumers receive.
  • Aggregate technical and distribution process from end consumers: It stands for the gap between the costs of the electricity that discoms gets from the generating company, the bills that it raises the final realisation from the collection process from end consumers. This leads to the mismatch in the electricity supplied and the value received.
  • NPAs in the sector: As per the RBI, public sector banks have the highest NPAs, most of which are in the power and the telecom sector. Absence of enough coal for efficient production delayed payment by discoms, and higher cost of power purchase agreements leads to an increase in NPAs in the sector.
  • The renewable market is still developing: An insufficient transmission network and non-synchronized generation cause issues with renewable energy. Poor states relatively are less willing to purchase renewable electricity due to their higher costs than conventional sources as renewable electricity has significantly less production and is not evenly spread about the country.
  • Environmental concerns: The majority of the energy in India is generated from thermal sources and increasing levels of emission, consumption and environmental sustainability have become some issues associated with it.



  • Smart metering and smart grid: Smart grid is an electricity network that uses information and communication technology to gather information and act to improve the efficiency, reliability, economic, and distribution of electricity that can get be supplemented and consumer- level smart metering.
  • Strengthening Electricity Regulators: This is to be done to bring in transparency, accountability and a professional approach to regulate the sector and also to balance the interests of investors as well as consumers impartially.
  • Checking theft: Making suitable measures to check theft and pilferage of power using smart meters and consumer awareness.
  • Rationalising generation cost: Generation cost can be reduced by improving the availability of lower indigenous price, rationalising coal supply sources, and adopting new technology as per indigenous price.
  • Removing cross-subsidies in the sector: This is within the distribution area need not exceed 20% and can be progressively reduced and eliminated within three years to enhance overall revenue realisation to meet the total cost of supply.
0 Dislike
Follow 2

Please Enter a comment


Other Lessons for You

Ancient Indian History- Class 1
First one needs to remember the timeline to solve questions of chronological order. The following topics are to be covered for UPSC CIVIL SERVICE exam and WBCS exam. A. Periods: Palaeolithic Mesolithic...

Priyanka G. | 18/09/2020

0 0

Bursting The Doubts Of An Aspirant- Shall I Go To Delhi, Take Online Classes Or Join A Coaching In Kolkata?
Preparing Online? Are you learning enough? Civil Service is thought to be as the most responsible and coveted career option in India due to the wide spectrum of opportunities it provides for connecting...

Sushmita Dhar | 01/11/2019

0 0

Transparency and Accountability
Transparency and accountability are the characteristics of Good Governance. A Good Government has to be transparent in its functioning. People have a right to know what is happening. The Right to information...

B.A. Nagesh | 19/05/2018

1 0

How to study Indian History?
Step 1 - Divide your syllabus into three major parts, that is ancient, medieval and modern history.Step 2 - Better to start with ancient Indian history, study chronologically, as it will provide you with...

Tarlok Singh | 14/04/2018

2 0

China Dismisses Indo: Pacific Concept
Subject: International Relations Paper: Gs Paper 2 China Dismisses Indo- Pacific Concept As Speculation The News: China dismissed as speculation reports about the US and Japan floating...

Looking for UPSC Exams Coaching Classes?

Find best tutors for UPSC Exams Coaching Classes by posting a requirement.

  • Post a learning requirement
  • Get customized responses
  • Compare and select the best

Looking for UPSC Exams Coaching Classes?

Find best UPSC Exams Coaching Classes in your locality on UrbanPro

Post your learning requirement is India's largest network of most trusted tutors and institutes. Over 25 lakh students rely on, to fulfill their learning requirements across 1,000+ categories. Using, parents, and students can compare multiple Tutors and Institutes and choose the one that best suits their requirements. More than 6.5 lakh verified Tutors and Institutes are helping millions of students every day and growing their tutoring business on Whether you are looking for a tutor to learn mathematics, a German language trainer to brush up your German language skills or an institute to upgrade your IT skills, we have got the best selection of Tutors and Training Institutes for you. Read more