Betting on the power game

India’s nuclear deal with the United States has led to an almost violent clash of ideologies and political wills. The smoke generated from such debates has relegated the real issues to the background. Amidst the din of warring ideologies we seem to have forgotten that problems like those pertaining to energy security can only be settled by seeking refuge in the coldness and starkness of statistics rather than the heat of emotions.

The real issue is whether India can do without nuclear energy or not. What kind of allies it should seek in kindling nuclear energy and what treaties and agreements it should negotiate is a more secondary question. Being an emotional breed, as is evident from the steady diet of soap operas most of us thrive on, Indians have overlooked the practical question pertaining to the need for nuclear energy and attached primacy to the secondary question.

Here I endeavour to do exactly the opposite.

If there is one phenomenon, which can sabotage the Indian growth boom it is power shortage. A sampling of such shortages indicates outages that account for a total of 12 hours per day in towns like Bulandshahar in Uttar Pradesh and load shedding of epidemic proportions in Maharashtra often numbering 40 hours on the trot. Uttar Pradesh meets only 75% of its total power demand of 8,000 MW and industrial Maharashtra currently faces a power shortage of 5,000 MW.

With power demand known to motor along at the rate of economic growth, the race between demand for power and its supply seems to be as hopeless as that between the hare and the tortoise; in this case it will take more than a fable to put the latter ahead of the former.

There are two kinds of constraints to the expansion of power supply. One exists in the form of institutional constraints. These are short-run constraints — resources in the form of coal and water exist but the state electricity boards or unbundled state electricity corporations simply do not have the resources to undertake investment in new power plants; private sector expansion has been allowed, but has not been forthcoming till very recently because of lack of faith in the ability and willingness of the state to meet its infrastructure and finance commitments to the private sector as well as incomplete reform of the fuel markets supplying the power sector.

Certain encouraging changes have taken place — for example, the under-implemented Electricity Act of 2003 and the government finally allowing the private sector to play a larger role in electricity supply expansion by commissioning contracts for ultra mega power plants. The institutional problems might slowly be on the mend; however, when finally we do overcome our most crippling institutional barriers we might run headlong into long run constraints posed by the availability of fuel. Note that at an 8% rate of growth of GDP our national income as well as demand for power should increase 25 fold by 2050.

GDP growth and growth in power use share a synergistic relationship: GDP growth increases the demand for power and the increased use of power facilitates GDP surges. If the required increase in power supply is not forthcoming over a long time, all efforts at increasing efficiency of power use would have exhausted themselves, and GDP growth itself would be threatened. In other words, decoupling GDP increase from power supply augmentation is ruled out in the long run.

Even if power generation from coal maintains its share in total generation of 55%, coal resources would be exhausted by around 2045 at the mentioned rate of GDP growth. Supporters of hydro power expansion often point rather gleefully to existing estimates that indicate a utilization of only 33 giga-watts out of the total potential of 150 giga-watts of hydro-power. However even after full exploitation, hydro power will barely take care of 5% of the projected electricity demand in 2050.

Natural gas, even by Planning Commission scenarios, will never be able to meet more than 16% of our requirements. Similarly available scientific data indicates that wind power, even if developed to its full potential, will never satisfy more than 3% of the projected power demand in 2050. With existing technologies, large scale solar power production is ruled out because of high costs. Thus, a major power crisis would become unavoidable in 2050 or earlier unless nuclear power generation is developed on a large scale.

Couplets from Kabir, notwithstanding, we Indians are masters at procrastination. The writing though is clearly on the wall — India has to not only solve the institutional problems impeding the fuller utilisation of existing resources for power supply but at the same time think in advance of ways and means of pushing back resource constraints before we bump against them in the course of GDP growth. We can only freely utilise our bank balance of exhaustible resources such as coal if we have plans for augmenting our fuel supplies from other resources. Deal or no deal, nuclearisation of power supply is the only long-term option left for the Indian economy!

(The writer is Director, Research, Consumer Unity & Trust Society, and can be reached at sm2@cuts.org. These are his personal views).