24 September 2012: A report by the International Energy Agency (IEA), titled “Understanding Energy Challenges in India: Policies, Players and Issues,” analyzes India’s energy sector and recommends a focus on research and development instead of import substitution in the renewable energy sector.

The report analyzes India’s current energy situation against the background of the as-yet unfinished liberalization of the energy sector, the uncertainty of its energy supply, the growing energy demand and fuel imports, the limited financial capacity for investments, fluctuating world market prices, and the intensifying international competition. It discusses India’s energy policy framework and energy demand and supply dynamics, as well as different sectors, including the power, coal, oil and gas, renewable and nuclear sectors.

The report finds that the various energy sectors have shown different degrees of development and maturity over the past two decades. While the renewable sector is characterized by large private investments, the report notes that certain policies, including the domestic-content requirement for the solar industry, hinder the expansion of the sector. It recommends a focus on open market policies and research and development rather than on import substitution.

The report further identifies six challenges that will need to be addressed to ensure a reliable energy sector: increased capacity for energy companies, including financial resources for investments; liberalization of the pricing mechanism to ensure commercial viability of energy players; investments to meet energy demands, with a particular focus on investments in green growth energy technologies; effective implementation of energy policies by improving bureaucratic and administrative processes; integrated and consistent energy policies to overcome fragmentation; and strong political will to invest in the energy sector. [IEA Press Release] [Publication: Understanding Energy Challenges in India: Policies, Players and Issues]