India’s energy demand projected to surge

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Simon Denyer and Rama Lakshmi
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NEW DELHI — Like China two decades ago and the United States in 1950, India stands on the cusp of transformational economic and social change, a jumping-off point at which the demand for electricity is about to explode.

Its economy and population are among the fastest growing in the world, and it has ambitious and energy-intensive plans to develop its infrastructure and industrial base. But business leaders are crying out for uninterrupted power supplies, and a third of India’s population is not even connected to the national grid.

 
 

“For a nation in its stage of development, demand for electricity has only one way to go — and that is very, very rapidly upwards,” said Laszlo Varro, the head of gas, coal and power at the International Energy Agency in Paris.

Every modern, industrial society in history has gone through a 20-year period “where there was extremely large investment in the power sector, and electricity made the transition from a privilege of an urban elite to something every family would have,” Varro said. “India is right now just at that jump point.”

Whether it succeeds in meeting that demand could be the single most important determinant of India’s economic prospects over the next two decades, one of the main factors that will decide whether the country can continue to pull hundreds of millions of people out of poverty and realize its ambitions to be a 21st-century economic powerhouse.

The thirst for energy has long shaped India’s foreign policy, helping it reach a historic deal with the United States in 2008 to develop its nuclear power industry but making it equally reluctant to sever ties with Iran, a major source of crude oil. It has become perhaps the most urgent challenge facing its economic policymakers.

But will India clear the bar?

Early this month, a blackout deprived half the country of electricity, affecting more people than any previous power cut in world history. But that blackout represented just the tip of a much larger problem.

With its energy policy in a mess, India is failing to meet its current demand for power and needs a fundamental change in the way its government operates if it is to meet the challenge of the next two decades, experts say.

Indeed, for entrepreneurs such as factory owner Tarun Gupta, the recent blackout was a day just like many others, a day shaped by his constant need for power.

Gupta runs a garment export business just outside Delhi that makes shirts and has supplied uniforms for companies such as Wendy’s, Pizza Hut and KFC. When his American clients e-mailed him after the blackout to ask whether the power was back on, Gupta said, he chuckled to himself.

“I wanted to tell them that I am doing my business with power cuts that last 18 hours every day here,” he said, speaking over the constant hum of the diesel-powered generators that supplement the grid’s meager supply. The cost of fuel makes his shirts 5 percent more expensive, “which plays a major role when you are competing in the international market with Sri Lanka and China.”

 

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