Sunday, March 30, 2008

Switch gears!!

Conservation alone does not hold the key to power deficits

During my recent business visit to Finland, I happened to visit the office of the president of a leading venture fund (primarily investing in clean technology funds). While presenting his company he stated that the last power outage occurred in their city was almost two years back. I preferred to keep quiet; even to think of an uninterrupted power supply for over two days in the NCR region still remains an impossible dream, leave alone the thousands of villages, which have yet to see electric light. Equally, one should not discount that most European economies seamlessly succeed in energy demand management because their macro demand is much less than ours (consider this: entire Finland’s population stands at 0.5% of that of India’s). But then there is a huge and perpetual heating requirement which they have to address and we don’t need to.

Globally, energy for long has earned a strategic importance. With rising fuel prices and awareness of environmental issues, there has been a strategic shift in the energy policy of many economies. While the global demand for energy is increasing by leaps and bounds, the primary energy resources have been shrinking by the day. Not just that, there is a renewed thrust upon energy conservation, but at the same time huge amounts of investments are being pumped into superior energy-efficient, cleaner technologies and alternative fuels. Given this scenario, India's problem is relatively more complex. India has to not only secure sustainable energy supplies but also provision for burgeoning demand growth and consequent energy extravaganza. The challenge is even more uphill as the entire framework of production, transmission and distribution is riddled with myriad systemic inefficiencies, structural bottlenecks and institutional corruption. To make matters worse is India’s over dependence upon inefficient thermal power generation, wherein losses amount to about 70%. In addition, we have failed to capture the potential of hydro power, particularly in the northeast.

The focus of the Indian government has thus been more on energy conservation. There have been mass awareness campaigns, advocating citizens to save on energy. But the problem with such conservation is that it is typically based on human consumption behaviour. And there exists numerous studies suggesting that human consumption behaviour is indeed a very complex phenomenon; moving up on the consumption curve is a much easier process than moving down. Against this backdrop, the government must put all its effort towards investing more of its resources in energy efficient equipment. Sample this: at present, it costs nearly 10-12 times more to buy a CFL, given that an incandescent bulb is retailed at Rs 10 and CFL still costs Rs 120. India needs to envision and engineer an environment that generously rewards energy efficiency and penalises the converse patterns!

It would then be a more meaningful and workable solution to our overwhelming energy demands, wherein conservation ends up in a virtuous cycle.


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