Blackouts Challenge Indian Economy’s Clout – Analysis

By Devider Kumar

The massive failures of India’s power grid in July 2012 have not only forced more than 600 million people to plunge into darkness, but also underlined grave challenges ahead for the country’s ambitious emerging economy.

Even before the power outages, India’s outdated power supply was hurting its economy. India’s prestigious Planning Commission estimated that the country’s outdated power grid significantly decreases the international competitiveness of India’s companies and has reduced India’s growth rate by 1.2%.

Across a two-day period (July 30-31) India’s northern grid failed twice while parts of other large regional grids were also affected. Not only hundreds of millions of people were deprived of power, but communication of the incident was poor with little or no timely information from government departments or Power Grid Corporation of India Ltd (PGCI).

India has five electricity grids – Northern, Eastern, North-Eastern, Southern and Western. All of them are interconnected to some extent, except the Southern grid. All are run by the state-owned PGCI, which operates more than 95,000 circuit km of transmission lines. In July 2012 the Northern grid failed with 35,669 MWe load in the early morning, and the following day it plus parts of two other grids failed again so that over 600 million people in 22 states were without power for up to a day.

The first failure saw the almost total collapse of the country’s northern grid at 2.35am local time on July 30, affecting nine regions with a total population of over 390 million. PGCI said that it tackled the issue “immediately on a war-footing” but only managed to restore power supply to essential infrastructure such as airports, railways and underground rail after 5 hours. Full restoration of power supply came some 16 hours and 30 minutes after power first went down.

As if this were not enough, the country was hit again the next day. From 1.00pm local time on July 31 power supply was disrupted across an even wider region, with the northern grid this time joined by parts of the eastern and north-eastern grids. PGCI said that “small pockets” of Kolkata, Naora and the capital Delhi avoided blackout.

The company began issuing regular announcements: Essential supply was back after 2 hours and 30 minutes while supply to the 16.7 million people of Delhi was back after 8 hours and 30 minutes. The whole system was reported normal only on 1 August 1 at 9.30am local time – some 32 hours and 30 minutes after the outage began.

Director General of the Confederation of Indian Industry (CII) Chandrajit Banerjee said: “This is a telling commentary on the situation of the power sector in the country. Losses to businesses have been in thousands of crores [hundreds of millions of US dollars], which pales into insignificance when compared to the difficulty that the people of the country have had to face.”

“As one of the emerging economies of the world, which is home to almost a sixth of the world population, it is imperative that our basic infrastructure requirements are in keeping with India’s aspirations,” said Banerjee.

Reaction from the Government of India on August 1 was to install Veerappa Moily as minister of power in addition to his current role as minister for corporate affairs. On his first day in the job, Moily said the ministry had already appointed an expert committee to investigate the grid collapses.

Challenges

Moily said he wanted to restructure the distributors’ debt to enable them to make the investments needed to tackle stolen power and general losses across the system. In some regions, losses are an incredible 70%, while in others officials have brought the level down to “single digits” said Moily. He noted that maintaining the “grid discipline” of state governments was “of vital importance to us,” implying that part of the blame for blackouts could lie with the local governments.

A government scheme called ‘Energy for All’ has seen 105,000 villages connected to the grid in recent years and 19.7 million households below the poverty line given free power supply. Not counting nuclear power, government plans saw 22,500 MWe of new generation capacity added in the last year and foresee another 55,000 MWe added by 2017.

According to the World Nuclear Association (WNA), India has a flourishing and largely indigenous nuclear power program and expects to have 14,600 MWe nuclear capacity on line by 2020 and 27,500 MWe by 2024. It aims to supply 25% of electricity from nuclear power by 2050.

Because India is outside the Nuclear Non-Proliferation Treaty due to its weapons program, it was for 34 years largely excluded from trade in nuclear plant or materials, which has hampered its development of civil nuclear energy until 2009.

“Due to these trade bans and lack of indigenous uranium, India has uniquely been developing a nuclear fuel cycle to exploit its reserves of thorium. Now, foreign technology and fuel are expected to boost India’s nuclear power plants considerably. All plants will have high indigenous engineering content,” WNA says.

“In fact, India has a vision of becoming a world leader in nuclear technology due to its expertise in fast reactors and thorium fuel cycle,” WNA adds.

The highly strategic role of nuclear power plants in power supply us underscored by the fact that though the technology accounts for only 3.7% of power at present extensive new build plans aim to raise this to 25% by 2050.

India has stuck with small reactors that fit the size of grid connections and has so far deployed 20 units with total generation capacity of 4385 MWe. A break from this strategy is coming with the operation of two Russian-supplied VVER-1000 units at Kudankulam and preparation to import more of these as well as units from other vendors – Areva EPRs, Westinghouse AP1000s and GE-Hitachi ABWRs, avers WNA.

According to official sources, electricity demand in India is increasing rapidly, and the 900 billion kilowatt hours produced in 2009 was more than triple the 1990 output, though still represented only some 750 kWh per capita for the year.

With huge transmission losses, this resulted in only about 650 billion kWh consumption. Coal provides 68% of the electricity at present, but reserves are limited. Gas provides 12%, hydro 12%. The per capita electricity consumption figure is expected to double by 2020, with 6.3% annual growth, and reach 5000-6000 kWh by 2050, requiring about 8000 TWh/yr then.

In 2006 almost 9 billion USD was committed for power projects, including 9.35 GWe of new generating capacity, taking forward projects to 43.6 GWe and 51 billion USD. In late 2009 the government said that it was confident that 62 GWe of new capacity would be added in the 11th 5-year plan to March 2012, and best efforts were being made to add 12.5 GWe on top of this.

At the end of 2011, 180 GWe was on line. The government’s 12th 5-year plan for 2012-17 was targeting the addition of 100 GWe over the period. Three quarters of this would be coal- or lignite-fired, and only 3.4 GWe nuclear, including two imported 1000 MWe units at one site and two indigenous 700 MWe units at another. By 2032 total installed capacity of 700 GWe is planned to meet 7-9% GDP growth, and this was to include 63 GWe nuclear.

Clean technology

“With environmental concerns limiting new coal mines in already-polluted areas and energy policies driven by political expedience rather than practicality, India needs new sources of power to supply the electricity needed by the next generation of its entrepreneurs,” says Badal Shah, managing director and CEO of Flareum Technologies, a solar thermal energy company in the Indian state of Gujarat.

He points out that while international audiences may be hearing about India’s problems with its electricity grid for the first time, those who live in India know all too well about the country’s struggles to supply electricity to rapidly growing population and economy.

In fact, Indians long ago became accustomed to rolling blackouts, and many businesses and homes have installed backup generators to deal with them. In an attempt to increase the amount of electricity available, India recently brought several new coal-fired power plants on line. The efficacy of these plants, however, was limited by a combination of the inadequate electricity grid infrastructure and a shortage of available coal.

“The recent massive power outages show that the time for such stopgap measures has passed,” says Shah in an online contribution for RenewableEnergyWorld.com. “India’s economic growth and environmental future depend on how quickly the nation can move from an energy supply based on fossil fuels to one based on clean technology.”

“Fortunately, several India-based and foreign firms are well-placed to provide India with the clean technology and renewable power it so badly needs,” says Shah.

He adds: “India has the resources – wind, sunshine and, most of all, people – to be a powerhouse of tomorrow’s clean technology industries. Without forward-thinking decisions from its officials and government, though, other nations will surge forward while India lags behind. It is vital for India’s central, state and local governments to promote the development of clean technology solutions, create additional economic incentives for transitions away from fossil fuels and put India on the path toward a future powered by sustainable energy.”