Modi’s plan to light up India households faces several hurdles

Alongside the lush green paddy fields and tea estates in the middle of the north-eastern Indian state of Assam, stands an imposing power project, dominated by enormous, futuristic-looking components.

From here, hydropower generated in remote areas of the Himalayas is being transmitted across a distance of more than 1,700 kilometres to another station in the city of Agra, best known for being home to the Taj Mahal.

This ultra-high voltage transmission link is currently in its trial phase. But the system, which has been developed by the Swiss power and automation technologies firm ABB, is set to be fully commissioned next year and will have the capacity to supply electricity to 90 million people in north India.

The project is worth more than US$1.1 billion and belongs to the Power Grid Corporation of India, a government-owned utilities company which transmits about half of all power generated in India on its network.

Such high-tech power solutions could be critical to the country, where more than 300 million Indians still live without electricity, according to the World Bank. Many parts of India suffer regular blackouts and electricity theft is widespread.

The pressure is mounting as India’s economy grows and the country’s appetite for energy is rising. Reliable electricity flows are vital in the country’s ambitions for development of “smart cities” and its manufacturing sector.

The Indian prime minister Narendra Modi has set himself the ambitious target of achieving round-the-clock electricity for all by 2022.

“We have an enormous challenge which is a fantastic business opportunity,” says Ulrich Spiesshofer, the chief executive of ABB. “The complexity increase on the supply side is mainly driven by renewables” which involve “longer distances, more volatility, less predictability, many more feeding points”, he says.

“The Indian government is investing significantly in making India a more sustainable country with a more sustainable environmentally-friendly power supply. It’s a Herculean task for the Indian economy.”

Coal-powered plants are India’s main source of energy. But the government has highlighted that renewable energy sources, including solar and hydro, are fundamental to meeting India’s energy demands. It is aiming to generate 175 gigawatts of renewable energy by 2022. Of this, the plan is that 100GW would be solar energy compared to 4GW now.

India’s government has said the country needs $250bn of investment in energy infrastructure over the next few years.

Power generation from renewable sources is growing in India, with the share of renewable energy in the country rising from 7.8 per cent in the financial year to March 2008 to 12.3 per cent in the financial year ending in March 2013, according to Ernst & Young.

Piyush Goyal, India’s minister for power, coal, and renewable energy, speaking in Mumbai last week, pointed out that overcoming India’s power issues is vital, as it tries to attract more foreign investment and companies.

“Nobody is going to come to India with the kind of outages we have,” he said.

India this month unveiled a rescue package for its loss-making utilities companies to help them to clear 4.3 trillion rupees (Dh328.8bn) of debt. Mr Goyal has said that this move will help to revive the power sector and achieve the goal of providing uninterrupted electricity.

This will also help to boost investment into the power sector, according to Mr Goyal.

“We are going about with clinical precision to keep costs affordable and ensure 24 by 7 energy access and a larger focus will be on renewables and transmission,” he says.

India has also come under pressure to cut its carbon emissions after the United States and China made formal commitments to start reducing their emissions.

India came in at 107th place in an “energy trilemma” index released by the World Energy Council last week, which ranked countries based on how they were managing to balance the challenges of energy security, defined as a country’s ability to meet its current and future energy demand, with accessibility and affordability of energy, and environmental sustainability.

“In 2014, almost half of global investment in renewable energy was made in Asia, with investment in China amounting to more than $83bn, an increase of $28bn compared to 2013, and an additional $56bn spend in other Asian countries including India,” according to the World Energy Council. “Increasing the share of renewable energy sources in the energy mix will not only help reduce countries’ environmental footprint, but also help enhance energy security and lower dependency on energy imports.”

Electricity consumption in India is expected to grow by 5.8 per cent annually between this year and 2020, according to a report on India by the Economist Intelligence Unit, published this month.

“Both the government and the private sector are taking positive steps to address … the key issues facing the energy sector,” it says.

“Nonetheless, given the myriad of constraints, a combination of new power sources and improved transmission mechanisms will be necessary to address the country’s severe and chronic power problems.”

The report states that it is also “imperative” for India “to develop a uniform, transparent and sustainable pricing policy that can support a nascent and buoyant” renewable energy sector.

“If India can overcome these issues, renewables may provide an opportunity to gradually reduce coal’s share in India’s energy mix over the coming 30 years, and to build a sustainable and efficient energy future.”

Abu Dhabi National Energy Company (Taqa) is among the companies that have zeroed in on the business opportunities in India’s power sector. Taqa at the end of October started selling power from its 100-megawatt Sorang hydropower project in Himachal Pradesh, north India. This project could supply electricity to 500,000 homes at full capacity.

“We are keen to participate in meeting India’s growing energy needs through the completion of this project which provides cost-efficient power and helps develop renewable energy sources,” Saeed Mubarak Al Hajeri, the chairman of Taqa, said in a statement.

The company’s Indian operations also include a 250MW lignite power station in the Neyveli region of south India.

As another potential solution to some of India’s energy challenges, ABB this month presented a multi-source micro-grid in India at its global customer fair, which was held in New Delhi.

Powered by solar and wind, it can generate up to 125 kilovolt ampere, which is enough clean energy for about 4,000 rural households, according to ABB. The micro-grid is equipped with a battery bank that allows power storage, so the company considers this a solution to meeting the demands of rural areas and solving some of the outage problems in the country.

“India has a big need for power and I think there are a number of solutions,” says Frank Duggan, ABB’s president of Asia, the Middle East and Africa, who believes that there are huge opportunities for his company in India going forward.

“One solution could be micro-grids and another solution has to be evacuating – that’s the word they use in power – bulk power from areas where you can produce it, like hydro in the Himalayas, down to Delhi, down to Mumbai.”

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Rebecca Bundhun

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