Huge Power Blackout Highlights India’s Energy Crisis, Poor Infrastructure

The blackout -- which impacted Delhi, Uttar Pradesh, Haryana, Punjab, Himachal Pradesh, Jammu and Kashmir and Uttarakhand and Chandigarh – was the worst such disturbance in India in a decade and underscores the crisis India’s of overburdened and aging power grid system.

The Hindu newspaper reported that power ministry officials believe the failure was caused by a malfunction in the grid near the city of Agra. However, other reports suggest that power outage was caused by excessive demand of electricity due to the extreme heat of the mid-summer.

Sushial Kumar Shinde, the power minister, said he will form a committee to investigate the energy breach.

As of Monday morning (local time), power was partially restored in the affected areas. Power officials were able to obtain emergency supplies from India’s eastern and western regions in order to ensure essential services to the some hospitals in and around Delhi.

While electrical power will likely be completely restored within a day or two, India faces much larger problems given that its energy infrastructure has failed to keep up with rising demand and economic growth.

“The country is facing a huge supply shortfall this summer,” wrote Soutik Biswas, BBC’s India correspondent.

“A shortage of coal [most of India's energy is thermal], loss-making state electricity boards, the theft of power, a lack of transparency in fixing electricity charges and underperforming private distribution agencies mean that vast swathes of India live without electricity for several hours a day.”

Biswas noted that Indian Prime Minister Manmohan Singh entered into a civilian nuclear project with the U.S. to help meet soaring energy needs, but such plans have been scuttled by safety fears (especially in light of the Fukushima disaster in Japan last year). According to reports, only 3 percent of India’s power supply is provided by nuclear energy – Singh is committed to increasing that proportion.

As in neighboring Pakistan, frequent blackouts by an aging grid system has often led to public protests and clashes with police.

Siddharth Bhargava, a research analyst at Matthews International Capital Management in Sam Francisco, warned in April of this year that India is on the brink of a major power crisis.

“More than 400 million people have no reliable access to electricity in India, which has more citizens living without power than any other nation,” he said.

“As is the norm in the world’s largest democracy, the root of the problem spans several sectors, and highlights structural issues and political considerations. It is an issue that ultimately requires clarity on policy and capable leadership at the helm of state-run enterprises.”

Bhargava indicated that coal comprises half of India’s energy sources and that supply is largely controlled by just one government-owned company (Coal India Ltd.).

“India’s over-reliance on a single firm for its fuel is a problem, especially considering this company has missed production targets by about 10 percent each year for the past three years,” he noted. “Furthermore, environmental restrictions have tightened over the last few years, leading to the closure of several coal mines. Concurrently, the private sector has boosted investment in the country’s power generation, increasing the demand for coal while supply remains low.”

Power is also lost through theft and inefficiencies due to obsolete or damaged equipment.

“Power facilities in every country experience some level of power loss during distribution, but in India this loss is nearly three times higher than the International Energy Agency's acceptable standards,” Bhargava indicated.

“For the foreseeable future, India will have to keep relying on a single supplier of coal and take steps to institutionalize coal imports.”