Eye On India: Lack of Electricity Hampers India's Growth

[From the NY Times:]

GURGAON, India — This suburb south of New Delhi is where the fruits of India’s economic advance are on full display: sprawling malls, skyscrapers housing India’s acclaimed software companies, condominiums with names as fanciful as Nirvana Country.

But this fashionable address of the new India is also a portrait of ambition bumping up against reality, namely an electricity crisis that represents one of the major hurdles to India’s ability to hoist itself into the front ranks of the global economy.

Look up at the tops of buildings, and on any given day, you are likely to find three, four or six smokestacks poking out of each, blowing gray-black plumes into the clouds. If the smokestacks are being used, it means the power is off and the building — whether bright new mall, condominium or office — is probably being powered by diesel-fed generators.

[Image: One of the malls in Gurgaon, a suburb of New Dehli, burns 1,600 gallons of diesel a day.]

This being India, a country of more than one billion people, the scale is staggering. In just one case, Tata Consultancy Services, a technology company, maintains five giant generators, along with a nearly 5,300-gallon tank of diesel fuel underground, as if it were a gasoline station.

The reserve fuel can power the lights, computers and air-conditioners for up to 15 days to keep Tata’s six-story building humming during these hot, dry summer months, when temperatures routinely soar above 100 degrees and power cuts can average eight hours a day.

The Gurgaon skyline is studded with hundreds of buildings like this. In Gurgaon alone, the state power authority estimates that the gap between demand and supply hovers around 20 percent, and that is probably a conservative estimate.

For all those who suffer from crippling power cuts in cities like this, there are others who have no connection to electricity at all. According to the Planning Commission of India, 600 million people — roughly half the population — are off the electric grid. For this reason, it is impossible to estimate accurately the total national shortfall.

But no matter how it is calculated, there is no doubt that India’s electricity crisis is becoming all the more acute for the roaring pace of the country’s economic growth and the new material aspirations it has generated.

Rachna Tandon, a prosperous housewife, is a good example. She moved here to a quiet street of row houses 14 years ago, settling in what was one of the first residential sites built by DLF Universal, Gurgaon’s and India’s largest builder.

Back then, electricity was in short supply, but she was fully confident things would improve. The advertisements at the time described Gurgaon as the best address south of Delhi. It was pitched as a millennium city.

Today Ms. Tandon says she prefers to think of it as a medieval city. The day before, the power went out for roughly 11 hours. Her power inverter, which is basically a series of rechargeable batteries — a household necessity here — failed after four hours.

For respite, some of her neighbors drove around in their air-conditioned cars. Her own children lingered outside and finally, when they nodded off to sleep, they lay on the living room floor, the coolest spot in the house.

Each appliance in her well-stocked home — an air-conditioner in each room, a flat-screen television, a microwave and an electric stove — speaks to the gap between India’s dreams and its realities.

The power cuts thawed the chicken sausage in her freezer and she had to throw it away, just in case it had spoiled. She did not dare use her electric oven, for fear that the power would go out in the middle of baking.

With no television, her 10-year-old son has been so bored that he took out his old cricket bat and ended up putting a ball through the kitchen window. Her daughter, 13, has had to study by flashlight. This summer, Ms. Tandon said, the family will have to choose between buying a generator and going on vacation. “We’re living in the Dark Ages,” she said.

For all her middle-class suffering, a reminder of the other India came earlier in the week, when her mother called from her hometown in rural north India and said she had had electricity for just one hour during the day.

In part because of these limitations, Indians are, for now, relatively conservative consumers of energy: about 600 units per capita per year, or one-fifth that of a typical American. But that will certainly increase as Indian desires reach those of the wealthy Western countries.

A recent report by McKinsey Global Institute frothily predicted a fourfold increase in consumer spending by 2025, vaulting India, as it said, “into the premier league among the world’s consumer markets.” McKinsey forecast that India would surpass Germany as the fifth-largest market in the world.

Driven by the increasing need for power, India has stepped up generation in recent years at the pace of about 6 percent a year. It is a pittance compared with what neighboring China adds on each year and in any case insufficient to keep up with India’s galloping demand.

The government has promised electric connections for all — which means access to the grid, not round-the-clock power — by 2009. That is a target that does not seem plausible at current rates of power generation.

The development of power plants, meanwhile, is constrained by a lack of access to land, fuel and water, all of which a power plant needs in large quantities. The power grid remains weak.

In Gurgaon, for instance, transformers routinely blow out because of heavy loads. Voltage fluctuations damage electrical appliances of all sorts.

What the state cannot provide efficiently, many take for themselves. The World Bank estimates that at least $4 billion in electricity is unaccounted for each year — that is to say, stolen. Transparency International estimated in 2005 that Indians paid $480 million in bribes to put in new connections or correct bills.

The country’s energy needs are one of the government’s main arguments for a nuclear deal with the United States, which would allow India to buy reactors and fuel from the world market.

But even if the deal goes through, it would lift nuclear power, which provides 3 percent of India’s energy, to no more than 9 percent, said Leena Srivastava, executive director of the Energy and Resources Institute, a private research group.

Similarly, in the coming years, alternative sources of energy, like wind, are expected to double, but to no more than about 8 percent of supply.

Coal will continue to dominate power generation, and already more than a third of India’s coal plants do not meet national emissions standards.

For Indian business, coping with chronic power shortages is a part of the cost of business.

At Tata, company managers took pains to say that power shortages did not hinder their ability to meet deadlines for their clients.

“The work as such does not suffer,” said Gurinder Virk, an assistant general manager. “We have sufficient stocks of diesel at all times.” Behind the building, three generators purred as a sweltering evening descended. A 2004 World Bank survey found that 60 percent of companies in India have such facilities.

Still, construction here surges ahead. With few exceptions, there is little effort to reduce power consumption, beyond the use of low-energy light bulbs. Gurgaon is dotted with buildings that are effectively curtains of glass, soaking up the searing summer heat.

“It’s good for New York, not Gurgaon,” was the verdict of Niranjan Khatri, a general manager with ITC, an Indian conglomerate whose office tower here is one of the few to comply with so-called green building codes.

Across the highway, the nearly completed Ambi Mall promises almost a mile of shopping on each floor. Next to it, a billboard for the Mall of India promises an even bigger shopping center, one that will put India on the “global retail map.”

Never mind that Gurgaon does not have a sewage treatment plant of its own, or that the city’s Metropolitan Mall burns an average of 1,600 gallons of diesel a day to run its generators during power cuts.

Farther south, in Nirvana Country, there are only generators. The 800-unit complex of row houses and apartment blocks, still under construction, is not even connected to the electric grid. It swallows 6,000 gallons of diesel each week to meet its needs — with only a fifth of its units occupied.

It was unclear how the power needs would be met once it reached full occupancy, said M. K. Pant, a retired army colonel who is now Nirvana’s estate manager. “There’s nothing in the files,” he said. “There’s nothing in the thinking also.”

No matter. Newspaper advertisements for Nirvana Country promise “air-conditioning in all rooms.”