Navigant Research Blog

In the Dark, India Nears a Turning Point

Anissa Dehamna — August 13, 2012

As my colleague wrote Brittany Gibson wrote earlier, the Indian grid has had a hard time of it lately.

India is seen as a promising market for nearly everything, if only because of its impressive population and burgeoning middle class.  But one of the primary engines of economic growth in countries like India is energy – not just the amount of energy, but access to that energy.  Two days of extensive blackouts across northern and eastern India put the country’s economic ambitions in sharp contrast with reality: India’s power infrastructure simply isn’t there yet.   Some 600 million people were affected by the power failures, 200 trains had to stop operating when three grids failed, and “vital services” had to run on generators.

The Indian grid has a generation capacity of 163 gigawatts (GW), nearly all of which is regulated.  The grid system, including generation and transmission and distribution infrastructure, is mostly state-owned (at least 70%); however, pockets of privately-owned utilities and distribution companies exist.  Highly diversified, cradle-to-grave companies like Tata and Reliance participate in these markets.

In addition, the system operators in India are organized at a state, regional (i.e.,several states), and national level.  One characteristic of system operation that distinguishes India from more developed Asian economies is that these operators are referred to as state load dispatch centers, regional load dispatch centers, and the national load dispatch center, respectively.  This characterization of system operators originates from the fact that system operators can and often do shed load in order to balance the system; in the Indian electricity market, load is elastic.  Not surprisingly, this makes it difficult to do business.

Indian system operators are notorious for shedding load on a daily basis.  Indeed, this is the main tool operators have manage the system, and anecdotal evidence suggests that transmission losses (i.e., theft) are in the neighborhood of 40%.  According to data from the Energy Information Agency, transmission losses in the United States are closer to 7 percent.

As Brittany mentioned in her earlier post, cleantech, especially smart grid technology, distributed generation, and energy storage, would help India optimize the country’s existing assets.  It seems like a no-brainer, but truthfully, India today is simply too price sensitive to move toward cleantech adoption.  Although there were technical reasons for the blackouts, politically, this short-sighted approach is what led to two days of darkness for India.  Perhaps Indian leaders will be more savvy to cleantech now.

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