It is often said that China could become the first country in the world to age before it gets rich. India faces no such spectre. However, India has already become the first important economy in the world to take on onerous climate-related obligations before it has provided electricity to all its citizens.
This reality has greatly accentuated India’s energy challenge, which is unique in some respects. Consider the scale of its challenge: Before its population stabilises, India will add at least as many people as the US currently has. Even if India provided electricity to its projected 1.6 billion population in 2050 at today’s abysmally low per capita energy consumption level, it will have to increase its electricity production by about 40% of the total global output at present.
India’s domestic energy resources are exceptionally modest in comparison to population size and the demands of a fast-growing economy, with energy demand projected to rise 90% just over the next 13 years. And, unlike China, India does not share common borders with any energy-exporting country and thus must rely on imports from beyond its neighbourhood, making it vulnerable to unforeseen supply disruptions.
Still, under the Paris Agreement, India has committed to reduce the carbon intensity of its economy by about a third by 2030, including by generating 40% of its electricity from non-fossil fuels. The single-minded focus on carbon threatens to exacerbate India’s water crisis, given the water-guzzling nature of the energy sector — the largest user of water by far in the West.
What may be “clean” from a carbon angle could be “dirty” from a water-resource perspective. For example, “clean” coal, with carbon capture and sequestration, ranks along with nuclear power at the top of the water intensity chart. Also, some renewables, such as solar thermal power and geothermal energy, are notoriously water-intensive. By contrast, two renewable technologies increasingly being employed in India — solar photovoltaic and wind plants — need little water for their normal operations.
In choosing its energy options, India must strike a prudent balance between carbon intensity and water intensity, or else it will get caught in a vicious circle, with attempts to address the energy crisis worsening the water crisis, and vice versa. The nexus between energy, water and even food demands a holistic, integrated policy approach.
The share of renewables in India’s energy mix is set to increase considerably, given the tax and other incentives on offer. In contrast to the intermittent nature of renewables like solar and wind, hydro and nuclear power can be used both to cover the electrical base load and for peak load operations. Yet hydro and nuclear power face increasingly strong headwinds. Activist NGOs — many foreign funded — have made it difficult for India to build large dams, blighting the promise of hydropower. It is virtually certain that India (which generates more power from wind alone than from nuclear) will slip badly on its 2030 target to produce 12% of electricity from atomic sources.
Nuclear power growth is falling victim to larger factors. The first factor is the increasingly poor economics of nuclear power across the world. Skyrocketing construction costs, made worse by the post-Fukushima safety upgrades, and reliance on massive government subsidies are making nuclear power uncompetitive.
A second factor is the dire financial state of the foreign companies that were planning to build nuclear power plants in India — Toshiba-Westinghouse and Areva. Their very survival is at stake today. France’s state-owned Areva needs a government-led €5 billion bailout to stay afloat. It is also set to be split, with its reactor unit being sold to EDF, also state-owned.