India Power Outage Spotlights Energy Planning Failure

In one of the world's worst power blackouts ever, more than 600 million people across India lost electricity Tuesday, the second massive grid failure in as many days, raising questions whether the government's failure to modernize and bolster its energy delivery system had finally left the nation at the breaking point.

Rail service was halted, streets were clogged at intersections with darkened traffic lights, and people sweltered without air conditioning in temperatures above 90°F (32°C), as authorities worked to restore power and pinpoint the cause of the problem. The outage that began Monday lasted 15 hours, and only shortly after service was restored, at 1 p.m. Tuesday, a far largser system collapse swept across the nation's northern and eastern grids.gt

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The government quickly announced it would appoint a three-member panel to study the causes of the massive failure and submit a report within 15 days. But observers have long warned that India faces a major energy challenge, with its economy growing at a rate of about 9 percent annually, while 56 percent of households in rural India—some 400 million people—have no access to electricity at all.

Delhi's plunge into darkness was not unusual—even the largest, most developed of India's cities have power shortages and rely on massive diesel-fueled generators for power backup. But the duration of the outages and their geographic extent were unprecedented. And with per capita energy consumption expected to double by 2020, India needs urgently to generate more power and deliver it more efficiently. But the government has faced public opposition and spiraling costs for both of the sources on which it hoped to fuel its energy future: nuclear power and coal.

Nuclear Plans Delayed

Distribution of energy resources is a contentious issue in India. Critics often argue that the bulk of the new power in India goes to the upper middle class and growing wealthy class in the form of big shopping malls and air-conditioned houses and offices. India also has a high rate of electricity loss due to theft and inefficient transmission and distribution.

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India has long planned to build the world's largest nuclear power plant near the port of Jaitapur on its west coast. The government said nuclear energy—which can provide a large amount of energy without carbon emissions—is necessary for curbing growth of greenhouse gas emissions. But the $9.3 billion nuclear project at Jaitapur, (map) some 400 kilometers (250 miles) south of the commercial capital of Mumbai, became a target for protest after the Fukushima Daiichi disaster in Japan last year.

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The project is one of the first sites where Paris-based AREVA plans to introduce its new generation of pressurized reactors called Evolutionary Power Reactors (EPR). Its extra containment and independent backup cooling systems are seen as important safety advances, but local environmentalists raised concerns on the risk to the fishing and agricultural communities nearby. Amid the sometimes violent protests over the plant, negotiations on the project slowed. Areva has said it expects to reach a final deal with India by year's end.

Coal Cost Challenges

India is also facing unexpected challenges in its massive plan for coal power expansion. Coal provides roughly 70 percent of India's electricity, and the government's most recent plan called for coal to provide for 75 percent of newly installed capacity. Tata, India's giant conglomerate and largest private electric utility, has been building what it hopes will be one of the largest coal power plants in the world, the 4,000-megawatt Tata Mundra, in Gujarat State, 500 miles (805 kilometers) northwest of Mumbai.

But the Tata Mundra project has brought to light a harsh new reality: Coal power is no longer looking like cheap power.

Although India has seemingly abundant coal reserves, the low-quality, high-ash fuel causes problems when it's used in state-of-the-art power plants. Instead, companies like Tata are looking overseas for coal, and import prices have been rising steadily. Tata's chief executive officer says Tata Mundra won't be financially viable unless it gets a hefty rate increase to offset the soaring prices of imported Indonesian coal.

This month, Standard & Poor's lowered its outlook on Tata Power from stable to negative because of a loan-covenant breach on its Mundra project, which is only partly completed. Coal prices already have tripled from Tata's initial projections in 2006, according to a report by the Sierra Club. The Association of Power Producers, which represents more than 20 private power companies in India, recently estimated that more than 50 power projects accounting for 68,000 megawatts of capacity were at the risk of financial default.

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Indian Prime Minister Manmohan Singh earlier this year established a multiministerial committee to tackle the severe financial challenges facing the coal sector. And in the short term, the government's response to the industry's financial woes has been to direct state-owned Coal India to guarantee coal supplies to power producers at lower prices. But those supplies generally are of low quality with high ash content.

Meanwhile, India's coal mines have become a front line in the energy crisis now facing the nation, as the power outages stranded hundreds of miners underground, with electric-powered pulleys idled.

Renewable Possibilities

Some experts have urged India to focus more heavily on renewable energy. Solar power now is less expensive than burning diesel for the first time in India, according to a recent Bloomberg news report based on its New Energy Finance data. It noted that the potential of solar power had caused billionaire Sunil Mittal to invest heavily in that market.

Daniel Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley, and adviser to National Geographic's Great Energy Challenge initiative, says India's wind resource has now been reassessed to be a whopping 30 times larger than previously thought.

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Although the country has made strides in solar, small hydroelectric plants, and wind farms, renewable energy overall plays a minor role in India's energy portfolio.

For now, the focus will be restoring power and finding the root causes of the outages. But in the long term, experts say the world's fourth largest energy consumer will need to find a way to bolster its supply and modernize its delivery. Even on the best days, the nation has a chronic electricity-supply shortfall of about 15 percent during peak demand hours. And the United Nations estimates that India, now with 1.2 billion people, will overtake China as the most populous nation by 2025.

This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.