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: Energy use and development are closely linked. It is estimated that India must invest in the power sector about four times the current level to graduate to an upper-middle income country, and by three times to reach China today. The need is not merely to cover the current shortages, but to provide the poor households access to power, improve reliability and support growth. In addition, urbanisation and growing income standards mean that a consumer on an average uses more electricity than before.
The challenge is not the scale of investments, but to ensure they offer security of supply and are affordably priced. Fossil fuels that support a bulk of our commercial energy consumption are increasingly imported and are subject to geo-political tensions and resource protectionism. They also cost more than ever before; in 2008-09 India spent 72% of its trade deficit on oil imports, up from 48% the year before. This places us in the risk of an energy-trap when higher costs will force us to spend more on energy imports, leaving a lesser part of our trade earnings for infrastructure and technology imports, harming our long-run growth prospects.
The strategy that France adopted in the 1970s in response to the oil embargo and the oil price shock is instructive–-for what it did right, and for what it missed. It embarked on a major nuclear new build programme, adding multiple reactors every year, thus, dramatically changing its power generation mix. Nuclear power accounts for 78% of France’s power generation today, compared with 14% for the world, and 3% for India. France also took advantage of the situation to reconsider its reactor technology, and moved on to adopt the PWR design that it has since pursued. It backed up its new build by developing local design competencies and a manufacturing base that has helped it maintain control and pursue improvements.
The result of the French policy shift is also evident in its reduced reliance on fossil fuels, from 92% in 1973 to about 56% of commercial energy today (see graph). In other countries, too, policies and actions have been aimed at reducing dependence on fossil fuels. Worryingly, India alone seems going against the trend, and last year, for the first time in four decades, India’s fossil fuel dependence has crossed that of China. To an extent this was spurred by the growth in personal transport, which accounts for 55% of all oil used...
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