India - Commercial Guide
Energy

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-08-25

Overview

The Central Electricity Authority reported only 1.1 percent growth in India’s energy demand for 2019, and during the 40-day national lockdown period from March 25 to May 3, 2020, India’s energy demand saw an additional 30 percent reduction according to the International Energy Agency.  Looking to 2040 there are projections, however, that India could witness the world’s fastest energy demand growth in the coming two decades. 

The global pandemic of COVID-19 has impacted the Indian power sector, for which reduced revenues continue into the post-lockdown period due to the government’s ongoing moratorium on bill payments and reduced economic activities.  The timelines for capacity additions and developmental plans will likely be delayed in the short term, but as an “essential service” the energy sector has the full support and is expected to recover relatively quickly.  For example, India’s Ministry of Power recently introduced a draft  Electricity  (Amendment) Bill, 2020 for comment including a proposal to create the “Electricity Contract Enforcement Authority” for settling commercial disputes between the state distribution companies and suppliers of electricity (generators and transmission entities) and to help ensure contract sanctity. 

India's Total Installed Capacity by Power Source (GW)

Source

As of March, 2018

As of March, 2019

As of April, 2020

Percentage of Energy Mix

Coal

196.95

200.70

205.13

55.52%

Gas

24.89

24.93

24.95

6.76%

Diesel

0.83

0.63

0.53

0.17%

Hydro

45.4

45.39

45.69

12.31%

Nuclear

6.78

6.78

6.78

1.83%

Renewables

69.02

77.64

87.26

23.41%

Total

343.85

356.07

370.34

100%

Source: Ministry of Power & Central Electricity Authority

Renewable Energy Mix

(by Source, GW)

As of March, 2018

As of March, 2019

As of April, 2020

Target for 2022

Wind Power

34.046

35.625

37.746

60 GW

Solar Power

21.651

28.180

34.812

100 GW

Biomass Power

8.700

9.104

9.880

10 GW

Small Hydro

4.485

4.593

4.683

5 GW

Waste-to-Energy

0.138

0.138

0.147

None

Total

69.022

77.640

87.268

175 GW

Source:  Central Electricity Authority

Indian Import Data by Subsector - 2019

($ millions)

Total Imports

Imports from the

United States

U.S. Market Share of Indian Imports

 
 

Renewable Energy Equipment

$2,925

$316

11%

 

Transmission & Distribution Equipment

$449

$29

7%

 

Oil & Gas Equipment

$6,773

$285

4%

 

Oil & Gas Commodities

$126,473

$5,820

5%

 

Coal Commodities

$23,676

$1,528

6%

 

Source:  Global Trade Atlas

 

Transmission & Distribution Equipment

($ millions)

2017

2018

2019

 
 

Total Local Production

$26,900 

$27,300 

*$27,500 

 

Total Exports

$1,098

$1,045

$1,034

 

Total Imports

$436

$589

$449

 

Imports from the United States

$18

$26

$29

 

Total Market Size

$26,238 

$26,844 

$26,915 

 

Sources:  Global Trade Atlas

*Estimates

Leading Sub-Sectors

Natural Gas Infrastructure

India intends to increase the share of natural gas in its energy mix from 6 percent in 2016 to 15 percent by 2030.  Currently, approximately half of India’s supply of natural gas comes from domestic production while the other half comes from imported liquefied natural gas (LNG), but industry experts expect rising demand will require a 30 percent domestic and 70 percent imported LNG supplier mix by 2025.  Anticipating future demand, Indian companies broadened their international supplier base and negotiated long-term contracts with suppliers.  However, longstanding infrastructure challenges at LNG receiving terminals and the lack of gas distribution pipelines create bottlenecks impacting efficient distribution and thus importation, resulting in large quantities of contracted LNG to be sold on the spot market while in transit.  The Indian Gas Exchange (IGX), a new nationwide trading platform, was launched in June 2020, establishing a transparent online marketplace for buyers and sellers to trade natural gas in the spot market. 

Currently, India has five operating LNG terminals and several more expected to come on-line.  Over 16,500 km of pipeline are in operation, with an additional 11,900 km under construction. The City Gas Distribution network in India is expected to provide connections for piped natural gas (PNG) to over 50 million homes, establish 10,000 compressed natural gas (CNG) stations for vehicles, and construct up to 30,000 km of steel pipelines over the next few years, requiring investment of up to $25 billion.

The International Trade Administration’s online report Energy Resource Guide – India – Oil & Gas contains additional information about the oil and gas regulatory environment in India, as well as links to tender announcements.

Transmission, Distribution, and Smart Grids

In India, electric power transmission and distribution (T&D) is dominated by public utilities with the overall private sector role limited to one percent in transmission and five percent in distribution.  One of the biggest challenges faced by the sector is the overall T&D loss (primarily due to theft or grid inefficiencies).  In its Executive Summary on the Power Sector – 2020, the  Central Electricity Authority estimated T&D losses at 21.04 percent in 2017-18, down from 34 percent in 2004.  Although India strives to achieve a reduction in T&D losses to 15 percent under the UDAY program, the world average for T&D loss stood at only 8 percent in 2019, which suggest ongoing market opportunities in the sector.

In terms of  funding availability for projects and procurements, India’s 2019-20 budget allocated $3.1 billion for the power sector, of which $73 million has been assigned for the Green Energy Corridor, $590 million for the rural electrification program named Deen Dayal Upadhyay Gram Jyoti Yojana, and $150 million for the Power System Development Fund which focuses on renovation and modernization of transmission and distribution systems for relieving grid congestion.

Energy Storage

Although India declared itself a power surplus country in 2017, many parts of the country continue to face severe power shortages or interruptions on a regular basis.  To ensure reliability of access to power, most industries maintain diesel-powered generators while urban households typically utilize inverters with lead-acid batteries.  As India’s installed capacity of renewable energy increases by up to 10 GW per year, utility scale battery energy storage systems are expected to play a critical role in grid integration and management.  

Several policies and incentives promoting the energy storage sector in India have been announced.  For example, the Jawaharlal Nehru National Solar Mission (JNNSM) offers a higher capital subsidy for photovoltaic systems with energy storage, than those without storage.  In January 2020, the Ministry of New and Renewable Energy (MNRE), issued a draft policy for supply of round-the-clock (RTC) power from renewable energy projects complemented with thermal power projects, designed to address some of the issues related to intermittency, limited hours of supply, and low capacity utilization of transmission infrastructure.  The policy encourages generators to incorporate energy storage systems to ensure a minimum requirement of annual availability of power at 80 percent

Opportunities

Overall, the U.S. market share of India’s energy-related equipment and commodities imports is rather low.  While China continues to lead as the top foreign competitor for low-cost equipment, India imports more equipment from Europe and Japan than the United States, which suggests that there is room to grow U.S. market share in high-value manufactured goods. 

U.S. exports of crude oil, natural gas, and coal to India continue expanding at a steady rate, with buyers open to exploring new partnerships with U.S. suppliers.  India’s imports of U.S. oil and gas commodities grew from $3.9 billion in 2018 to $5.8 billion in 2019.  As domestic production of ethanol will not be sufficient to meet mandated goals of 10 percent ethanol fuel blending for vehicles by 2022, industry is carefully watching to see if India will lift import restrictions for ethanol which would create substantial opportunities for U.S. ethanol exporters.

Several new refinery and petrochemical projects have been planned for the next five years, as well as expansion projects for existing refineries, as India plans to double its refining capacity from the current 5 million barrels per day to 10 million barrels per day by 2030. 

Natural gas infrastructure will be an area of opportunity for the next several years, particularly as India constructs new LNG terminals, expands pipelines across the nation, and builds out city gas distribution to include piped city gas for buildings and compressed natural gas dispensers for transportation.   Liquefied natural gas dispensing units and virtual pipelines in the form of cryogenic containers are other opportunities for U.S. companies.  The requirement for new entrants in fuel retailing business to have to invest in at least one new-fuel dispensation from the fuel station will be an opportunity for LNG, Biofuels, and possibly Hydrogen technology.

As India continues to modernize the national power grid, demand remains steady for traditional transmission and distribution equipment as well as “smart grid” innovations that improve reliability and stability.  Transformers, fixed capacitors, fuses for electrical apparatus, lightening arrestors, voltage limiters, electric conductors, microprocessors, amplifiers, electricity meters, and smart communication technology are frequently imported into India from foreign suppliers.

India plans to replace all traditional electricity and gas meters with smart meters, as a measure to improve the operational efficiency and revenue generation capacity of distribution utilities.  Energy Efficiency Services Limited (EESL) is the nodal agency for implementing the roll-out of smart meters for electricity and is the leading smart metering service provider in the country.   EESL plans replace 250 million conventional meters with smart meters over the next three years and has signed agreements with various state distribution utilities to undertake smart metering projects. 

The Indian Energy Storage Alliance (IESA) predicts that grid-connected energy storage demand could reach up to 65 GW by 2026, to meet India’s demand for renewable energy integration, frequency regulation, peak management, transmission and distribution deferral, and electric vehicle charging.  Currently U.S. energy storage technology enjoys a global competitive advantage, but suppliers will need to establish strong relationships with local business partners to enter this fast -developing market.

In 2020, the Ministry of Coal opened the market to commercial coal mining from the private sector and introduced a new coal mining auction process.  Under the new scheme, 41 coal blocks will be auctioned in the first phase which is expected to generate over $4 billion dollars in capital investment over the next five to seven years.  In 2019, the public sector entity Coal India Limited received a sizeable budget to modernize its coal mining operations, and several procurement tenders are being announced in 2020.  As coal mining operations expand in India, U.S. exporters of mining equipment should watch for new opportunities.

U.S. companies interested in tapping India’s energy sector opportunities should contact: Ms. Renie Subin, Senior Commercial Specialist.

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