The Effect of Energy Sector Reforms on the Promotion of Renewable Electricity and Social Welfare in India

This chapter is based on research assessing the effect of policy and market-based reforms on the electricity sector in India. Per capita electricity consumption in India is still less than half of the world’s average, but it is likely to increase due to rapid economic growth and increased levels of personal income. The research analyses the data on electricity consumption in the household sector and its dependence on income, electricity prices, rural electrification, urbanisation, and share of renewables. It was found that an increase in income enhanced household electricity consumption; urbanisation and rural electrification did not significantly affect it. Unstable supply and high cost of electricity, particularly among rural households, are still responsible for low per capita consumption of electricity in rural India. The National Energy Policy of India proposes several reforms, including energy pricing reforms; provision of affordable and ‘round the clock’ electricity for all; and increased contribution of renewable energy in India’s energy basket. These reforms may open up the energy markets and accelerate the production and consumption of electricity from renewables, which, in turn, will translate into several social, economic, and environmental benefits, including reduction in greenhouse gas emissions and overall social welfare in India.