Access to electricity is a crucial element defining human development as it is indispensable for basic activities which have become a part of modern life, such as lighting, refrigeration, hospital, transport infrastructure. An individuals’ access to electricity is one of the clearest indication of a country’s energy poverty status. Despite adding a commendable 200 GW of capacity since independence, with a record capacity addition of 54,964 MW in the 11th five year plan period and having integrated four regional grids into National grid, India’s per capita energy consumption is one of the lowest in the world.
As per the expert report submitted by a network of Parliamentarians to the Indian Prime Minister, India today has 75 million households without access to electricity. The per capita consumption of power in rural households is only 8 units per month as compared 24 units in urban households. The reason for such low level of consumption is not low demand, but poor access to energy.
Inspite of a number of programmes and schemes for rural electrification, India has one of the lowest levels of access to modern energy and the country continues to face formidable challenges in bridging the energy gap. According to a report by Federation of Indian Chambers of Commerce and Industry, association of business organisations in India, the country loses USD 68 billion, or about Rs. 4,14,800 crore of its Gross Domestic Product due to electricity shortage.
India suffered the largest power outage in the history of modern world, in two consecutive days (July 30th & 31st, 2012) depriving an estimated 600 million people of electricity and various other dependent facilities like water supply and transportation. The incident highlighted the inability of the Indian power sector to withstand the burgeoning electricity demand of the country.
In 2001-02, the Government of India pledged to provide ‘electricity for all by 2012’; a target that was later deferred to 2017 and might still remain a distant dream. The current situation raises various questions about the investment being made in infrastructure and development in India, the third largest Asian economy and 5th largest electricity market in the world. Continuous access to electricity, which is a basic human right in the developed world, unfortunately is continued to be considered a luxury in much of India.
Hence it is of prime importance to not only expand the generating capacity so that no demand-supply gap exists in the country but also address the existing bottlenecks in the transmission and distribution sector. Electricity generation capacity addition programme of the government has fallen short of target in every five-year plan. Looking at the challenges of limited availability of water, coal and natural gas resources and issues like equipment shortage, the Centre for Monitoring Indian Economy (CMIE) has lowered its forecast for power generation to 10.8 per cent from 13.2 per cent. Government needs to lay down a plan to tackle all these issues and help the country meet its demand, a target of 88,000 MW, as laid down by the 12th five-year plan.
THE PROMISE OF THE UMPP POLICY
In order to provide access to electricity to the remotest areas in the country, energy needs to be economically delivered from reliable suppliers. To address the issue of reliable supply of power and deliver the promise of ‘Power to all by 2012’, the Government of India took up the ambitious programme of UMPPs in 2005. Each UMPP project with an installed capacity of 4,000 MW was envisaged with the intent to make power available at minimum cost through economies of scale, superior energy efficiency and environment friendly technology.
In line with the UMPP policy, Coastal Gujarat Power Limited, a wholly-owned subsidiary of Tata Power established Mundra UMPP in Gujarat in 2007. The state-of-art technology and the choice of unit size used, along with the choice of fuel, has made the Mundra UMPP plant most efficient power plant in the country alongside cutting down greenhouse gases emissions compared to conventional coal-fired plants. Reliable power from the project has been helping improve the competitiveness of manufacturing and services industries, which often are dependent on expensive alternative of diesel generation to ensure continual production during load shedding and power cuts. The competitively priced power is also improving access to electricity in rural and urban areas while reducing subsidy burden on the states.
The levellised tariffs for the project, which meets 2 per cent of the country’s power needs, would be in the range of Rs. 2.90 to 3.10 per unit (even after adding the proposed compensatory component to partially defray the unforeseeable rise in coal prices as has been proposed). This is among the lowest per unit rates for power, being substantially lower than the Rs. 4.10- 4.50 per unit cost of average thermal plants, and less than half the Rs. 7 per unit cost of power in the country’s spot prices.
Not only is the power produced by the Mundra UMPP much cheaper than most other generation source, it is also environment friendly. The greenhouse gas emissions per kilowatt hour of energy generated at the UMPP are about 750 grams of carbon dioxide per kWh, which is around 60 per cent of India’s national average of 1,259 g CO2/ kWh for coal-based power plants. Mundra’s emissions are also lower than the world average of 919 g CO2/ kWh and the Organisation for Economic Co-operation and Development (OECD) average of 888 g CO2/ kWh. The UMPP’s supercritical technology helps it avoid burning 1.7 million tonnes of coal per year, thus averting carbon emissions of 3.6 million tonnes per year. In an era when clean development is a major concern across the world, the UMPP presents a laudable example of efficient and sustainable resource use.
The Mundra Project benefits close to 16 million domestic consumers and supplies cost competitive power to industry and agriculture in five states – Gujarat, Rajasthan, Maharashtra, Haryana and Punjab – areas that suffer from severe shortages of electricity. It has led to the creation of 5,000 construction jobs and 700 operations oriented jobs. Besides this, due to the advanced level of technology deployed at the plant, the UMPP serves as a training centre for upcoming power professionals.
For the country’s GDP to grow at 8-9 per cent, the power sector needs to grow at 12-13 per cent. But so far government has failed to grasp the nettle. When countries like China continue to grow at close to 8 per cent, we have to ask ourselves what is stopping India from doing the same. The answer possibly lies in the manner India deals with its infrastructure development. Too often projects are delayed, held up or tough decisions flunked because the political pressure is too high. Whilst public opinion must be taken into account, it is also critical that decisions of such national importance are taken with a greater degree of rational thought. The only way to ensure this is for decision makers to take the long view for rational debates on our country’s important needs. There is a heightened need to ensure that the Mundra UMPP and other similar projects are encouraged to help meet the energy needs of the country in a sustainable and responsible manner.