Atanu Dey On India's Development

India’s Energy Challenge

I have a piece in today’s livemint.com on India’s Energy Challenge. The money quote is this:

The advanced industrialized economies were lucky to have had their development fuelled by cheap fossil energy. Today’s developing economies have a much tougher challenge. It was a very short window of opportunity which opened just about 150 years ago and is likely to close in the next 40 years, by when the known reserves will be depleted at current levels of consumption.

All told, 200 years is a very brief interlude considering thousands of years of human civilization and hopefully hundreds of thousands of years yet to come. At some time in the distant future, they will look back and remark that the age of fossil fuel was a short inflection point, a point at which humanity passed through the bottleneck of dependency on oil from the ground. Before that point, humanity’s primary source of energy was the sun, and so it will be after that point.

The full article is below the fold.

The price of crude oil rose above $140 a barrel this month. The world at large is getting used to high prices at the pump, and even the Indian government finally decided to let the Indian consumer have a taste of what is to come by marginally increasing the prices of petroleum products.

Various theories are being advanced for this unprecedented rise in the price of petroleum — from the machinations of speculators to the derived demand for energy due to the growth of economies such as China and India. The rise in global oil prices even provides a handy excuse to the Indian government for the recent double-digit inflation.

India urgently needs to develop. Energy and economic vitality are conjoined twins. Energy is the binding constraint that faces all of humanity, not just the developing economies. Of course, given the projected increase in demand and the decline in the supply of fossil fuel energy, the price of energy will continue to move up — with predictable adverse effects on the growth prospects of the emerging economies.

The advanced industrialized economies were lucky to have had their development fuelled by cheap fossil energy. Today’s developing economies have a much tougher challenge. It was a very short window of opportunity which opened just about 150 years ago and is likely to close in the next 40 years, by when the known reserves will be depleted at current levels of consumption.

All told, 200 years is a very brief interlude considering thousands of years of human civilization and hopefully hundreds of thousands of years yet to come. At some time in the distant future, they will look back and remark that the age of fossil fuel was a short inflection point, a point at which humanity passed through the bottleneck of dependency on oil from the ground. Before that point, humanity’s primary source of energy was the sun, and so it will be after that point.

All sources of energy — fire, coal, oil, nuclear — for human use have been the result of discovery and invention. Some entity somewhere invests what it takes for research and development, usually some corporation in search of profit, and invents the technology to exploit some new source of energy. All indications are that solar energy will be the major player in the next stage.

Solar energy is non-polluting, abundant, widespread and inexhaustible. India’s development, if it has to happen, will depend critically on whether it has the technology for converting the abundant incident sunlight — insolation — into usable energy. The question is whether India will develop that technology for domestic use as well as for export or, as it has done for all the previous technologies, wait for others to do so and then import it.

It is important to remember that governments do not develop technologies. They do not have a comparative advantage in the type of skills needed for invention and discovery. Which is not to say that governments have no role to play in the process. On the contrary, private players succeed or fail in developing technologies to a large degree on the conditions created by the government. Governments help by outlining the broad goal, assisting with funding, and encouraging competition among private players. Public policy creates the necessary conditions for private enterprise to deliver.

High oil prices can be reasonably expected to continue till the end of the age of oil. For prices to fall, either the supply has to increase or demand has to fall, or both. There are really no reasons for oil producers to increase the supply. Oil is an exhaustible resource whose optimal rate of extraction is dictated partly by revenue requirements of the producers. At current high prices, they meet that goal at low levels of production. If prices climb higher, paradoxically the supply may contract even further.

The road ahead is steep for India, made steeper by rising energy prices. But this is a blessing in disguise because it is a wake-up call. There is time to prepare for a post-peak oil future. Independence from foreign energy — whether oil or nuclear fuel — is not an option but an absolute must. That will only happen if India develops the technology for solar energy use in all its forms, such as concentrated solar thermal and solar photovoltaics.

Solar technology is at its infancy. Costs are constantly declining but it will be several years before it achieves “grid parity” — costs comparable with conventionally generated electricity. Costs have fallen by 20% for every doubling of installed capacity. Projections indicate that by 2020, installed solar capacity will be 20-40 multiples of current levels. Even then, solar electricity would account for only 3-6% of total electricity generation. Solar energy has a long and promising future. How quickly that potential is realized depends on national will.

India has a lot of advantages in this regard. It is a large country and can afford the human and financial capital required for the challenge. As John F. Kennedy had observed regarding the manned mission to the moon, we must do this not because it is easy but because it is hard. Challenges don’t come any harder. India needs the vision to face it and win.

  • http://www.bhopale.blogspot.com bhopale

    Great post as usual. Look forward to your take on the current developments on Nuclear deal, is it worth all the trouble?

  • http://the-redpill.blogspot.com vakibs

    Hi Atanu

    Please try to diversify your sources of information. It is sad to see an intelligent guy like you get stuck in a political propaganda spun by the likes of Amory Lovins.

    For a primer on sustainable energy, this book by Prof David Mackay is very good. For a reasonable lifestyle of an industrialized economy, each person needs about 135 KWH of energy per day.

    Multiplied by India’s population, we need 135 TWH per day, that is a capacity of 3240 TW.

    The energy density of solar is very low. Solar energy advocates should remember this simple fact : to produce any reasonable quotient of energy, their plans have to be country sized . For example, to produce India’s energy needs, an area equivalent of Madhya Pradesh will have to be covered up with solar panels and wind turbines.

    Direct sunlight hitting at mid-day has about 1000 W/m^2. Accounting for daylight factor (1/4 of day = midday sun) and sunniness (1/3 of time is sunny), we get a figure of 80 W/m^2. The best technology for converting this to electricity (solar photovoltaic) is about 30% efficient. Current Solar PV has an energy density of 24 W/m^2. New advances of color dyes can make this about 50% efficient, that is an energy density of 40 W/m^2.

    In practice, we will diversify our solar production to use sources like concentrated solar thermal, wind, tide and hydro-electric, which have even lesser energy densities than Solar PV.

    Solar energy can indeed provide our required 3240 TW, but its demands on land and water will be very exacting. It will do massive environmental wreckage and murder our forests and biodiversity.

    Frankly, India cannot go solar with its 1billion+ population. If we reduce our population to about 200 million, solar energy might be intelligently deployed to cater to all our needs. But until then, its costs will be environmentally (not to mention economically) too prohibitive.

    This is why I think we should diversify our energy sources. Let’s say we get 40% of our energy needs from solar, hydel and wind. The rest of the 60% would come from breeder reactors using Thorium.

    India has sufficient Thorium reserves to last for several thousands of years. We are already in an advanced state of deploying fast breeder reactors. Once the 3rd stage of our indigenous nuclear program commences, we will have no need for foreign fuel – either oil or nuclear.

    Relying on Thorium for mid-term future thus saves a lot of environmental damage and preserves our biodiversity. At the same time, this industrializes our country and removes poverty.

  • http://the-redpill.blogspot.com vakibs

    The road to sustainable energy future begins by replacing oil (which is the costliest and most rapidly running out resource).

    The quickest way to do this is to investing heavily in trains and light rail transport. We already have a good rail network in India, but this is in a great need of modernization.

    Urban transit should be completely replaced by metro and light rail. Freight transit should be done almost completely by rail network.

    For suburban and rural transit, oil vehicles should be rapidly replaced by electric and hybrid vehicles.

    Converting to an electrified transport is a non-partisan issue. This electricity can be provided by either solar or nuclear. We have no disputes about this, so this should be done on a war footing.

    A very good post on the economics of converting to rail transit.

    We don’t need nuclear to replace oil. Simpler things such as natural gas, wind farms and even biofuels can do this job.

    But to replace coal – the dirtiest fossil fuel (hopefully as early as within 25 years, even though India has 100 years worth of coal), we will need massive nuclear and solar electricity production.

  • http://jihadwatch.org/ Notsure

    vakibs I agree with you on solar.
    solar propobullshitters say solar has no environmental impact.
    The answer is theres no such thing,
    you have to mine for resources.
    you also need to process materials
    now theres no Cho%ing way solar wouldnt have an environmental impact.
    With that said it may make sense in some areas in india….
    Nuclear with an eye towards thorium makes the most sense long term.
    Coal makes sense short term(<20 yrs).

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  • http://www.sundarmail.com Sundar

    Dear Vikabs,

    A middle class family needs 25 KWH of energy per person per month (excl. AC and cooking). Even if you multily with a factor of four for industrial, transort and public usage, it will work out to 100 KWH per person per month or 3.3 KWH per person per day.

    Current installed capacity itself is about 100,oooMW which works out to 72 KWH per person per month. Actual consumtion may be about 65% of this due to losses and inefficiencies.

    AC, Water Heater and Fridge are the top three appliances that consume 70% evergy at modern homes.

    While investing heavily on new renewable energy research, we must also spend equally on conservation.

    Also we must tune our lifestyle for energy conservation and efficiency.

  • pankaj

    very good article vakibs , people think that solar power can be used like cable tv dish, and as u rightly pointed out land is a very scare resource in india so from where will we get the land for so many solar panels and wind turbines.wind turbines requires unobstructed space which again we have very less.

  • http://the-redpill.blogspot.com vakibs

    Hi Sundar

    Currently we do not use electricity directly for a lot of our energy needs. Instead, we depend on chemical fuels such as petrol.

    Also, India is not an industrialized economy yet, and the current energy usage is no indication of the future.

    Please check this page for a comparative assessment of energy needs in an energy efficient future economy. I highly recommend the entire book of Prof Mackay.

  • Amit

    vakibs, you do have a good sense of humor when you refer to Amory Lovins’s argument as “political propaganda.” :-)

    What part of Amory’s argument is, according to you, “political propaganda”? To me, his arguments make good sense and he is even pro-market, in what’s termed as natural capitalism (http://www.natcap.org/) – an idea whose time has come. Though why it was ignored by so many so-called famous economists is beyond me. Why show profits by excluding negative externalities and socializing risks, which seems to be the nuclear industry sop?

  • Amit

    correction: “nuclear industry’s sop (standard operating procedure)?”

  • http://the-redpill.blogspot.com vakibs

    Hi Amit

    You haven’t replied to the main issue I have raised, which is that solar energy hogs precarious resources such as water and land.

    By your own argument, these negative externalities and socializing risks should be included in computing solar costs. Also, the opportunity costs of not using nuclear, which are continued dependence on fossil fuels or immense human misery – should be given their place in the antinuke arguments.

    This is pure economics, and the same as natural capitalism or whatever.

    I say Amory Lovins is a political activist, because he is indeed one, and a very good one at that. The art of politics is in spreading incomplete information, in which Mr. Lovins excels.

  • Amit

    You haven’t replied to the main issue I have raised, which is that solar energy hogs precarious resources such as water and land.

    Oh, I wasn’t aware that I was supposed to.

  • Amit

    You haven’t replied to the main issue I have raised, which is that solar energy hogs precarious resources such as water and land.

    And nuclear reactors don’t hog water? Wonder why so many of them are located near a river then. Plus accidents like these carry their own risks to humans: http://www.spiegel.de/international/europe/0,1518,566412,00.html

    As for land, at least in the US, solar panels are approved after an environmental and land-impact review. But there’s plenty of land (e.g. along the highways) where solar panels can easily harvest energy without hogging land.

  • Amit

    I say Amory Lovins is a political activist, because he is indeed one, and a very good one at that.

    Yes, A is A because it is self-evident. ;)

    I wish it were true. Given that his ideas are mostly on the fringe so far and haven’t become mainstream, maybe he’s not as good as you make him out to be. :-)

  • http://jihadwatch.org/ Notsure

    Lovins does engage in some deceptive tactics (but isnt a bad guy in my book Yet).
    He is selling the idea about carbon fiber composites (some what smugly) as something new.
    composites have been around for a while, Airplanes use it, so do expensive race cars….
    And that stuff is 20-30x more expensive to produce.
    So there was a duh factor when I read Rocky Mountains experimental results on car efficiency b/c of carbon fiber(like no one else ever thought of that before)
    And so far fiberforge(the commercial venture)
    doesnt have much to show on how to bring the cost down….
    So there you have it natural capitalism leading to a natural choice.
    @Amit What is the efficiency of those panels along the highway particularly when its finaly delivered.
    If some one could have made money on it they would be doing so, rather than pushing for subsidies.

  • Amit

    What is the efficiency of those panels along the highway particularly when its finaly delivered.

    Notsure, why don’t you do some research and report back here?

    If some one could have made money on it they would be doing so, rather than pushing for subsidies.

    If you ponder over your above statement, the fallacy of it will become evident.

  • http://jihadwatch.org/ Notsure

    Amit, I have and plenty others have regarding Solar being a clever corporate welfare program.
    Heres part 1 of a 3 part article (rest are all easy to find on his cite)
    http://www.circuitcellar.com/archives/viewable/209-Ciarcia/5.html
    After running throught the numbers steve concluded its worth the panels b/c government subsidizes it.
    also you may want to start with
    http://www.tinaja.com/glib/energfun.pdf

    Regarding “If you ponder over your above statement, the fallacy of it will become evident.”
    your lie about my fallacy is the only thing thats evident here.

  • http://the-redpill.blogspot.com vakibs

    Amit..

    I wanted to have a reasonable debate with you and other solar proponents, because I trust you are intelligent guys and deeply concerned about eradicating India’s poverty. So I expected you to answer the questions I have raised – that is on the land requirements of solar energy.

    Please don’t panic, let’s reason together.

    The art of politics is to use incomplete arguments to advance their motives, and Lovins does a very good job of it. So I said Mr. Amory Lovins is a political activist, and being a political activist is not bad.

    As Britrihari says, a wise man is like a swan.. he separates the milk from water. This is how one should read political arguments.

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