The strong economic growth expected in the near future calls for substantial addition to India's energy generating capacity. Fossil fuels and hydro-electricity will continue to play a dominant role in the energy sector of the country in the next few decades. Being limited and non-renewable, fossil fuel resources therefore need to be used prudently. Use of fossil fuels also leads to environmental problems such as global warming and climate change. At the same time the existing technologies of production, transmission and distribution of electricity as well as end-use have inherent inefficiencies. It is, therefore, imperative to diversify the country's energy supply.

5.2 India's energy scenario calls for the effective management of all available resources in order to attain national objectives. A well-balanced fuel mix, in which all energy resources are appropriately utilized, is essential for sustainable development. Renewable energy resources, which the country has in abundance, such as solar, wind, biomass, small hydro, etc. are non-depletable, and can effectively meet energy demand and are environmentally benign. They can create a significant impact in the generation of grid electricity, as progress in wind power, small hydro, biomass power and bagasse cogeneration has demonstrated in the last few years. About 3700 MW of power generating capacity based on renewable energy sources has been installed in the country so far. This constitutes about 3.5% of the total installed capacity. Resource assessments and technology development are being intensified, and new application areas are being identified. A fairly broad-based local manufacturing base has been set up and commercial development is being promoted. The power generation capacity established so far has largely come about through private investments.

5.3 Considerable progress has been made in the area of wind power generation. India has the fifth largest wind power installed capacity in the world, which has now reached 1702 MW. Most of this capacity, or 1639 MW, has come about through commercial projects from private investment. Supporting this effort is the world's largest wind resource assessment programme. Over eleven billion units of electricity have been fed to various State grids from these projects. New initiatives have been taken in re-assessment and expansion of the wind resource data base; establishment of a Centre for Wind Energy Technology; and, motivating large private sector corporations, public sector units and power utilities to set up wind power projects. Local manufacturing capacity has been established and wind turbines and wind turbine components are being exported to USA, Europe and several developing countries.

5.4 Optimum bagasse cogeneration in the sugar mills and biomass power generation from surplus agricultural residues, are being actively promoted. A capacity of 468 MW has so far been commissioned and 530 MW is under installation. Notable initiatives include a biomass resource assessment programme to bring out a Biomass Resource Atlas for India; facilitating fast track projects; new modes of implementation of projects in co-operative / public sector sugar mills; and, technology development and demonstration of producer gas engines and advanced biomass gasification. Biomass gasifiers capable of producing power from a few KW up to 500 KW have been developed indigenously. They have successfully undergone stringent testing abroad, and are being exported to countries in Asia, Latin America, Europe and USA. A large number of installations for providing power to small scale industries and for electrification of a village or group of villages have been undertaken. A total capacity of 53 MW has so far been installed, mainly for stand-alone applications.

5.5 Small hydro power generation of station capacity up to 25 MW, which is particularly suitable for remote, hilly regions, and in Ladakh and North-Eastern States, is being expanded. A capacity of 1463 MW has so far been installed and an additional 538 MW is under installation. The programme is reaching a stage of near commercialisation with over 2300 MW of capacity being offered / allotted by different States to the private sector.

5.6 Grid quality power generation programmes based on solar thermal and solar photovoltaic technologies are also being supported. A 140 MW Integrated Solar Combined Cycle (ISCC) Power Project is planned to be set up at Mathania near Jodhpur in Rajasthan by Rajasthan Renewable Energy Corporation Ltd. as a centrally assisted project. The project will comprise a 35 MW solar thermal power plant and 105 MW combined cycle power plant. This will be the first of its kind, and the largest such project in the world. The Ministry is also providing support to grid interactive solar photovoltaic projects for voltage support at the tailends of rural grids and for peak shaving / demand side management in urban centres. Projects on diesel grids in islands and other remote areas, and for captive power generation, are also being promoted. Grid interactive solar photovoltaic power projects aggregating to 2.5 MW have so far been installed and another 550 KW capacity is under installation.

5.7 Attractive financial and fiscal incentives are being provided under the National Programme on Energy Recovery from Urban, Municipal and Industrial Wastes for promotion and development of projects based on appropriate conversion technologies such as biomethanation, gasification, pelletisation, etc. While projects with an aggregate capacity of about 25 MW have been completed, projects with a capacity of about 16 MW are under execution.