Many things demand a balance, energy being one of them. Electricity, in fact, must always be in balance as grid power cannot easily be stored. Unfortunately, in recent times the emphasis has shifted from reducing the demand of power in India through efficiency to increasing its supply. Except for limited examples such as India’s push for LED bulbs, which is a positive outlier, numerous studies have shown that people worldwide are under-investing in energy efficient products. While some of this may be due to lack of awareness, much of the problem stems from misaligned incentives — for utilities, selling more “product” (electricity) is their measure of success (and profits).
On the supply side, nuclear power was dreamt of as being the panacea for energy needs, offering what was targeted by US Atomic Energy Commission chairman Lewis Strauss (as part of a broader technology-enabled future) as electricity “too cheap to meter”. Solar power is a modern avatar of the supply-side solution. Solar is… sexy. This isn’t to diminish its value, or the remarkable reductions in cost in the last few years, but when I ask people getting solar panels whether they will be disconnecting from the grid, the answer is overwhelmingly “no”.
Leaving aside the economics (cost of power), a major challenge with solar and wind energy is that they are variable and uncertain, making such power opportunistic (take it when it’s available or it’s gone). Adding a battery roughly doubles the cost per kilowatt-hour, added to which is the cost for oversizing or redundancy required to truly cut the cord from the grid. This would explain why very few people leave the grid and instead just reduce their dependency on it. Worse, the first people to use solar power are the so-called “paying customers”, the commercial and industrial users (or larger residential users), who have the highest tariffs for power. In India, the grid has a peak demand mostly in the evening (around 7 or 8pm) — so, when these same users come back to the grid at peak time, the cost to supply such peak power is the highest. In addition, the physical infrastructure to supply power to them remains the same, sized to meet the peak load, but its utilisation has decreased, raising average costs of supply.
The so-called “Utility Death Spiral”
This has been termed the Utility Death Spiral, and while it hasn’t manifested itself yet in India, it has already been seen in Germany and parts of Europe. India has escaped thus far because it’s in a growth mode, unlike the West where power demand is flat or even slightly falling. However, part of India’s respite has come from covert and overt resistance to consumers trying to reduce their grid consumption (both from RE and under open access). With Indian utilities, the death spiral is exacerbated if “paying customers” leave since utilities depend on them for cross-subsidies. Ultimately, the question all utilities have to grapple with is: if consumers partly leave the grid, how should they be charged when they are, effectively, using the grid as their battery? Today’s regulated and averaged rupees per kilowatt-hour won’t be enough.
India can afford to place big bets on solar power, in part because it has great sunshine, and because it is in high growth mode, but what about the global push towards investments into renewable energy? To what extent are these an example of our wanting a technological fix for what is a socio-economic problem, i.e., lack of sustainability as part of economic planning?
Very often we get excited by marginal or incremental improvements, when it is the entire system–lock, stock and barrel–that needs to change. For example, when a typical car moves, some 80 per cent of its energy goes out the tailpipe (waste heat), about 19 per cent moves the vehicle and 1 per cent moves the person. So every time I hear about car companies raising fuel efficiency by 5 per cent, I think, what about getting rid of the car itself? Let’s make public transport better and also allow for better and safer walkability and cyclability, although air pollution and space are big concerns. It’s not just choosing to walk instead of taking a car… even owning the car that takes measurable resources.
The push towards cleaner fuels is again exemplified by how we get excited by relative vehicular savings. I’ll ignore loopholes in how fuel efficiency standards are calculated, especially in the United States, which, for example, excludes “light trucks” (aka SUVs!). When the US first gave incentives for hybrid electric vehicles, they based it on relative instead of absolute impact (avoided fuel). Thus, a person buying a small “regular” car which gives 42 miles per gallon (about 15 kmpl) got no incentives but someone buying a hybrid-electric monster-sized SUV that improves their fuel efficiency from 12 to 14 mpg gets a massive tax break!
What about these slow and steady shifts towards unsustainability? For example, average US home sizes have increased immensely, while household sizes have fallen to nearly 2.5 persons per home. Indian houses haven’t grown nearly as fast, and are nowhere near as large, but this is more a reflection of economics instead of our values.
|Year||Size of Avg. US Homes Sold (sq. ft.)|
Source: US Census Bureau
Prices matter when trying to figure out demand. Free electricity or cheap flat-rate pricing for farming is one reason a dry region like Telangana shifted its staple diet from coarse grains to water-guzzling rice in one generation. Shocker: It takes about 2 tonnes of water to grow 1kg of rice.
Just like people want calories written on their store-purchased food, maybe we need similar help to understand the energy implications of our choices, purchases and transactions. With food, it’s relatively easy — something that looks fried probably has a lot of fat. But with things we buy, we have very little idea of what the energy implications are, not only because of the materials-energy lifecycle implication, but also because the same product could be made in different ways in different locations.
Many of us agree it’s prudent to wear a sweater instead of turning up the heating, use fans before switching on the AC, take shorter showers, walk rather than drive, etc. These are things we all agree we should be doing, yet we don’t do enough. In any case, these are not supply-side solutions; they aren’t considered sexy, neither culturally nor business-wise. Just like medicines focus on acute care vis-à-vis preventative or chronic care, we are misplacing our attention on energy supply. In medicine, like energy, the incentives issue is the problem (creating a SickCare system instead of HealthCare system — practitioners make money when people are sick, not when they are healthy).
Even if there were truly cheap, clean energy, it would still have environmental and social implications, including land-use, and would not address many issues of access, something proponents of RE focus on (hint: most villages in India have power grids now but it is the last-mile household connection that is the challenge, plus, of course lack of supply on the wire, aka load-shedding). We hope ingenuity and innovation can lead us to cheap, clean power. We are still setting ourselves up for needing lots of it.
When prices are high, we remember energy (satirized above by Ben Sargent for the US), but otherwise, we either ignore energy or just expect supply to keep up with our rising needs.
RE may be a bit expensive, but for Indian consumers, “expensive” also relates to quality of power – many people are paying a lot for back-up power or lighting (think kerosene for the poor). This is before we consider the loss of productivity or opportunity costs.
Here’s a challenge to utilities: I am willing to pay for all the costs of green power, which include paying for the grid acting like a battery, but in return give me quality, uninterrupted power, so I never need diesel, inverters, UPSes, etc. Bargain?
This article first appeared in The Huffington Post, India on 3 September 2016. Like other products of the Brookings Institution India Center, this report is intended to contribute to discussion and stimulate debate on important issues.