Energy scenario calls for urgent attention

Narendra Modi, India’s new prime minister, swept into office in May on a message of aspiration, and a reputation for action.

During the nearly 13 years that Modi served as chief minister of Gujarat, before becoming the prime minister, his successes included drastically curtailing the number of hours that manufacturers in India’s premier industrial state went without electricity. The state’s transmission grid was strengthened and Modi promoted the development of 900 megawatts of solar generating capacity. That’s equivalent to the power generated by a large nuclear plant.

These steps and many others fit Modi’s mantra of “less government and more governance,” as well as the prime minister’s deep understanding of the influence of adequate energy production in reviving a flagging economy.

Doing something similar at the national level is inordinately more difficult. In three long reporting trips to India since 2012 Circle of Blue and the Wilson Center, our research partner, have documented a cycle of risk involving water, energy, and food that is harming India’s environment, slowing its economy, and impeding the nation’s development.

At the center of the cycle is India’s insistence on managing its natural resources as a social welfare program that produces startling outcomes:

— In Haryana and Punjab, India’s prime grain producing states, the policy of providing farmers free water, free electricity, and subsidized diesel fuel is producing endemic grain surpluses that are piled in stout walls of burlap sacks in government-financed depots. But the free and subsidized energy and water policy, which affects 700 million people who live on farms, also is depleting the country’s aquifers, causing a steady rise in the fossil fuel-related trade deficit, and producing dire electricity shortages that cause constant brownouts and blackouts.

India has sought to diversify its power generating capacity by installing big hydroelectric dams and powerhouses high in the Himalayan range in five northern states. But the hydroelectric projects are expensive to build and difficult to operate in the world’s most hazardous mountains, which are prone to earthquakes, floods, and landslides. In June 2013, a flood in Uttarakhand killed thousands of people, swept villages away, and seriously damaged the state’s hydroelectric dams and powerhouses.

The brightest outlook in India’s deeply troubled energy sector is clean energy, particularly the wind and solar industries.

On January 1, 2014, renewable generating capacity reached 30,178 megawatts, according to figures from the Ministry of New and Renewable Energy. That represented almost 13 percent of India’s total electrical generating capacity. In the 11 years since 2003, renewable energy technologies have added an average of 2,600 megawatts of electrical generating capacity annually, according to the Central Electric Authority.

That represents 22 percent of the 11,805 megawatts of generating capacity that India added annually in the same time period. Still, even that level of development is not sufficient to dramatically change India’s national energy
outlook, which is that electricity shortages are forecast to persist for decades.

A decade after India regularly exceeded eight percent annual economic growth, and the nation was seen globally as the next industrial and high-tech juggernaut, India is slipping badly. It’s not just endemic corruption, impenetrable bureaucracy, deteriorating air and water, and rapid population growth that make doing business in India a test of courage. Lack of electricity in almost every state make doing business efficiently a test of patience.

In plain words, India is not producing enough energy to supply its citizens, businesses, and communities. By March 2014, India’s utilities had built 237 gigawatts of electrical generating capacity. Over the last 5 years, the average annual increase in generating capacity has been 14 gigawatts. That is sufficient to provide the average Indian household 684 kilowatt-hours of electricity annually.

The figures provide clear evidence that India is not likely to match energy production and consumption levels consistent with those in the western democracies or in China. Prime Minister Modi’s most important tasks over the next several years is raising electrical generating capacity and helping his nation reach a new definition of “the good times.”

By: Keith Schneider