On July 30 and 31st, the power grid collapsed in Northern India, leaving 670 million people—approximately half of the country’s population, and 10 percent of the world’s population—without access to electricity. Farmers had no power for irrigation, train passengers were stranded mid-journey, coal miners were trapped, traffic signals went black. Though Indians are no strangers to power cuts, the scale of this particular breakdown spurred international scrutiny.
But the blackouts were just symptoms of a rotting foundation. In the words of the former power minister Suresh Prabhu, “This failure of the grids is evidence of failure in establishing the mechanism needed for generation, transmission, distribution, and consumption of power. The grid failure is not just one single accident.” (from a CNBC interview)
India’s energy problems have been around for decades, and the government hasn’t yet implemented efficient, effective reforms tailored for the country’s nuanced demand—from over-populated cities, to poor farmers in rural regions who can’t afford to pay for the resources, and everyone in between.
In the next 10 years, India’s demand for energy is predicted to double. But the country has failed to meet every one of its capacity and infrastructure targets since 1951. The developed world is looking at India, a paradox of high economic growth accompanied by high rates of poverty, malnutrition, unemployment, and general income disparity, with critical lenses and wondering why the fast-growing nation is struggling to provide resources to power its own growth.
The Current System
The current state of electricity in India poses multiple challenges. First of all, there is a severe shortage of coal, which accounts for 40 percent of India’s energy generation capacity. Second, electricity still needs to be transported around the country and the transmission infrastructure is weak. Third, the economics of supply and distribution are a mess because politicians insist on low tariffs and free power for large portions of the population (specifically for farmers) and distribution companies are functioning on losses. Finally, the “last mile” distribution channel is inefficient, and about half of India’s population lives without access to electricity
In 2003, the landmark Electricity Act attempted to restructure energy supply and distribution. However, according to former power minister Prabhu, the legislation focused policies on increasing power generation, and diverted attention from distribution (The Economic Times). Essentially, the focus was on increasing supply without paying due attention to distributing the supply to parties in need. That aside, the Ministry of Power set a goal in 2003 to provide “Power for All” by 2012, and India has only been able to meet 64 percent of its target. Coal and oil, the largest sources of energy in India, are clearly not meeting demand and the answer may lie in India’s potential for hydro- and solar power.
India ranks 5th in the world in terms of exploitable hydro-power potential. However, while large dam projects (called “mega dams”) can be successful in mitigating the energy deficit, there is considerable controversy surrounding the negative externalities associated with these projects. Large dams displace the (often underprivileged) people living on the land, and divert the flow of water from downstream villages. Small dam projects have less negative impact, but also yield less energy.
Solar energy seems to have fewer negative externalities. India receives almost 3000 hours of sunlight every year. Solar power alone would be able to meet the country’s demand for energy. According to Bloomberg, in 2011, India’s investment in solar energy increased to 4.2 billion dollars last year, from 600 million in 2010.
But it’s not easy—for either the suppliers or the customers. Though the cost has decreased significantly in the past two years, solar panels are still expensive. And many of the target customers are poor villagers. To reach these consumers, agents from private solar energy companies have to go door-to-door and help them through the process of obtaining bank accounts and negotiating loans.
However, there is hope for solar energy. The cost of solar panels decreased significantly in 2011. Solar parks are also easier to build than traditional power plants (The Economist likens them to “giant Lego kits”), and solar power is accessible to some regions where the grid is not yet available. Multiple companies are trying out various business models, and adapting the models to suit individual states.
Experts are skeptical that the costs of solar power will be able to compete with grid costs, but it remains inarguable that the grid is rickety; coal, oil and gas are not sustainable sources of energy; and the existing trajectory of power generation is not promising without investment in new technologies and exploration of alternate resources.
India faces many challenges to its progress. But perhaps if the country can responsibly leverage existing opportunities for renewable energy sources, there may be hope for meeting the rapidly increasing demand for power.