Prime Minister Narendra Modi’s announcement of his dream of making 100 smart cities, building new or retrofitting the old ones, has stirred many a minds, including investors. Some are asking what is a smart city, is it feasible for India to do it, or is it just a pipe dream? Many others, including foreign investors, are getting ready to invest in this dream and looking forward to making it a reality.
The concept of smart cities revolves around internalising following features: smart energy (smart meters, demand response, co-generation and renewable energy generation), smart transport (intelligent transportation systems, real-time information sharing about traffic conditions and public transport availability), smart water and waste management (digitised distribution of water to minimise leakages by using geographic information systems, and recycling of waste), maximisation of e-governance services and smart buildings (building energy management systems, energy-efficient building designs and retrofitting of existing buildings). However, to keep these systems running, ensuring a sustainable power supply is of prime importance. So, how will India power these 100 smart cities?
India’s resource endowments for energy are not very encouraging: while India supports about 17% of world’s population, it has only 0.4%, 0.4% and 6% of the world’s oil, natural gas and coal reserves, respectively—a gross deficiency, considering that it is the fourth-largest consumer of energy in the world after USA, China and Russia. The fact that India is importing nearly 80% of its crude oil consumption, 15% of its coal consumption and 35% of its natural gas consumption makes it even more challenging to power the dream of 100 smart cities.
The potential answer to these challenges, therefore, lies in innovations, ranging from innovative ideas to processes and products, that are likely to make this dream come true.
One potential innovation would be to dovetail renewable energy into powering cities in a big way. Looking around the world for innovative methods, it may be interesting to note that the Eiffel Tower in Paris, which uses about 7.8 million kWh per year, has recently installed four solar panels that will provide about 50% of the hot water used for the tower. Vertical and hydraulically powered wind turbines are being installed on the first platform of the tower to generate 8,000 kWh/year of electricity. In addition, the tower’s first floor water supply network will have its own water-powered turbines producing 4,000 kW/year of electricity.
India has choices abound in conventional energy sources like coal, oil and gas, and in renewable and clean energy sources like solar, wind, hydro, biomass based electricity and nuclear energy. However, price and availability of these sources are two major constraints that would decide how these cities would be powered.
Coal-based thermal generation is the mainstay of the Indian power sector, contributing roughly 70% of the total electricity generation in 2012. Lately, it has suffered badly due to the fiasco over allocation of coal mines. But the key issue in the choice of alternative technologies is the cost and pricing of power. The price of domestic coal is currently about 40% cheaper than imported coal, despite the fact that India is a net importer of coal, and so is the story of gas pricing. This under-pricing of our energy resources not only makes us more dependent on costly imports but also thwarts the development and spread of non-conventional and renewable energy sources. While the costs and pricing of energy from coal hovers around R4/kwh, that from solar and wind would be almost double of this rate (without any subsidy), and that from diesel, almost 4 times the rates from coal. Although solar power is being motivated under the Jawaharlal Nehru National Solar Mission, which aims at creating capacity of 22,000 MW by 2022, but it looks very unlikely without correcting the pricing structure, especially for coal that reflects the negative externalities it produces.
Coal-based generation puts high demand on water, pollutes air, and has high health costs. A study by Harvard Medical School estimates that the life cycle effects of coal—extraction, transport, processing, and combustion and the waste streams thus generated cost the US public a third to over one-half of a trillion dollars annually. Accounting for these externalities conservatively would double or even triple the price of electricity from coal per kWh generated. For India, too. this would be no different. But this price correction in coal-based energy is not going to come soon and, therefore, the apparent gap between coal- and solar-based pricing of energy would remain wide for some more time to come.
What is therefore needed is a focussed research and development effort in solar energy, with a view to cut down its costs. In Israel, known as the land of innovations, a solar power company has developed a technology that can store heat from the sun, giving impetus to the solar thermal power industry by enabling plants to run at full capacity night and day. Although in nascent stages right now, the technology claims to produce electricity at a price comparable to that generated by conventional sources of energy. China has also been able to bring down the cost of its solar panels. It is only such technical gains, along with economies of scale, would help solar power become more competitive in the market and, thereby, provide a stable source for powering the new cities.
Within India, Gujarat envisioned the first state-specific solar policy in 2009. Rajasthan, Karnataka, Madhya Pradesh, Andhra Pradesh, Tamil Nadu, Chhattisgarh and Uttar Pradesh followed suit. Attracting foreign investments for developing solar power capacities in the country is also key. The Clinton Climate Initiative (CCI) had announced setting up of a 3000 MW solar power plant in Gujarat with an estimated investment of R50,000 crore likely to flow into the state. Similarly, Rajasthan has laid the foundation for another 3000 MW solar power plant at Bhadla of Jodhpur District in 2013. With some amount of convergence, these targets can be tied with the development of smart cities in these states so that the new cities being modelled can derive their power from the energy generated by renewable resources. That would be quite an innovation to synergise the development of sustainable and clean sources of energy along with development of 100 smart cities.
By Ashok Gulati & Astha Ummat
Gulati is Infosys Chair Professor for Agriculture at ICRIER and Ummat is a Consultant with the Planning Commission