India needs US$2.3 trillion investments in energy sector

Coal the dominant energy source until 2035.

In its “Energy Outlook for Asia and the Pacific” report, the Asian Development Bank also said India's energy needs will account for 95.6% of energy investment requirements in South Asia.

South Asia's investment needs are Asia and the Pacific’s second largest at US$ 2.4 trillion, or 20.6% of total investment requirements, This region includes Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka.

In the business-as-usual scenario, the final energy demand of India is estimated to increase at an annual rate of 2.7% from 2010 to 2035, a slower rate compared to the projected GDP growth rate of 5.7% during same period.

ADB said coal will remain dominant through 2035, driven by the power sector. India will continue to account for the bulk of the energy share in South Asia at 92.5% in 2035.

ADB noted the economic impacts of importing fossil fuel, oil, gas and coal are rising, and energy security have become a policy priority for India.

It also believes a core problem in India is energy pricing. Oil prices are government-controlled and do not fully reflect the procurement prices. Kerosene and diesel, in particular, and even liquefied petroleum gas are priced far lower.

Electricity price controls have also hindered the motivation to invest in new power plants, further dampening electricity supply.

ADB said low energy prices are disincentives for energy efficiency efforts. Building a more reasonable energy price system, enhancing the efficiency of existing energy-using equipment, and diversifying the energy source will be important.