When India went black, the lights may have actually come on. No,
nearly 640 million people were still without power for several
hours. But the powers-that-be there defined for their own people and
the rest of the world what the central problems are that led to such
a massive power outage.
India is growing at an 8-10 percent economic clip a year. But the
lifeblood that feeds such potential -- electricity and the
infrastructure carrying it -- is inadequate. The wires are old and
decrepit while the fuel levels to meet peak demand in summer are 8
percent less than where they need to be. Beyond those critical
issues, it’s hard for the government there to fix those things
because its people are largely poor and really do require the
subsidized power flows so that they have a shot at financial
freedom.
“Everyone overdraws from the grid,” says Power Minister Sushil Kumar
Shinde, who made his comments to reporters that circulated
throughout the international press. He said that extreme summer
temperatures in excess of 100 degrees Fahrenheit caused the Indian
states to overdraw their allotments. The immediate goal is to get
local grid managers to live within their rations.
Long-run, though, an efficient system will require huge investments
from outside financial interests. But the paradox is that is that no
one wants to take such risks unless they can get returns. And while
India is a developing nation with much promise that will require
more and more energy to reach its dreams, the government there is
remiss to allow free markets to take root. Doing so would cause
rates to skyrocket, leading to social upheaval.
According to a Bloomberg
BusinessWeek story, the nation needs $1 trillion in investment
for the next five years. All told, about 300 million there -- one in
four people -- are not tied to the transmission grid, adds the
International Energy Agency in Paris.
“The proximate cause of a power outage on this scale almost always
seems trivial,” say Michael Parker, an analyst in Hong Kong with
Sanford C. Bernstein & Co., in Bloomberg. “The blackout highlights
the big underlying issue India faces in terms of infrastructure
quality. To keep the lights on, India needs to add power capacity,
build robust transmission and distribution systems, ensure fuel
supply and transport and reform power pricing. Most of that is
expensive.”
Economic Costs
One issue that does not get the same level of attention but which
also bears responsibility for the blackout in India is the stealing
of electricity. An estimated one-third of all power there is
hijacked, according to a 2010 report by Deloitte partners that was
discussed in the Bloomberg story. By comparison, China’s theft rate
is pegged at 8 percent.
Basically, some its citizens there run wires from the distribution
lines into their homes, which is a tremendous hazard as the cables
are strung through populated alley ways and corridors. The epidemic
cost India’s government-owned utilities around $5 billion a year.
Circling back to the recent blackout, economic officials in India
say that hundreds of millions in lost economic opportunity occurred
during those several hours without any electricity. But the
additional perils are related to safety and the need for emergency
personnel to reach those sick and injured as a result of the
situation.
Here, the theft figures heavily into the equation as the impromptu
distribution systems are jerry-rigged in such a way that puts those
first responders in serious jeopardy. In situations where they have
to shut off power within a home, they are placed at risk of
electrocution or burning because meters that have been tampered with
may remain "live."
India’s citizens are accustomed to blackouts, although not
necessarily those of the magnitude just experienced. In such cases,
their people often remain calm while the vital businesses --
hospitals and rail systems, for example -- crank up emergency
generators. That ‘bandaid,’ though, is an immediate remedy that does
nothing to cure the overall ailment.
What’s needed is large outside investment so that the infrastructure
can get an upgrade. While that would help lift the economic
aspirations of the Indian people, the process of getting there is
expected to be long and painful -- and one that won’t erase the
brownouts that will undoubtedly continue there for a while.
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