CEE Jul-Sep-2012

WAVES OF ELECTRICITY Thermal , nuclear, and hydropower each have thei r Reduce demand or Increase supply? negative environmental impacts that cannot be The growing demand of electricity is mounting washed away. Even wind and solar may have immense pressure on the government authorities. negative impacts that will become clear as time An obvious mismatch between supply and demand progresses. is bout to fail unless the authorities devise an Ultimate objective of all economic activity is intelligent plan. Dr. Bharat Jhunjhunwala reports. human welfare. We have to then examine whether The avowed objective of the government as increased levels of consumption of electricity lead to stated in the Electricity Policy is to meet all demand improvement in human welfare. A study titled of electricity. Idea is that any person should be able Electricity Supply and Demand Side Management to by as much electricity as he/she wants as long as Options prepared for the World Commission on they have the paying capacity. The government is Dams states, "the Figure 1 shows the relationship making an all-out effort to increase generation to between per capita energy consumption meet this demand. Yet, the gap between supply (commercial and traditional energy) and the Human and demand continues to increase. The shortage of Development Index (HOI) for 100 developed and electricity has remained in the range of 8- 12 % for developing countries. The graph suggests that for last many years. There are two ways to manage countries with low levels of energy services, even this mismatch between supply and demand: small inputs of energy are associated with significant increase supply or reduce demand. The supply-side welfare improvements. At higher energy solution of increasing generation which has been consumption levels, further increases do not seem adopted by the government is doomed to failure to impact greatly on human development." because of the increasing demand. A more circumspect approach of simultaneously limiting This means that reduction of consumption of the demand is urgently required . rich would not lead to a significant reduction in their welfare. On the other hand, increased supply to the The demand-side approach is pooh-phooed on poor would greatly enhance their welfare. The trick, grounds that new technologies will enable a therefore, lies in reducing consumption of the rich increase in electricity generation. It is indeed true and supplying part of the saving to the poor. that nuclear, solar and shale gas inventions have Reduction in consumption of the rich would reduce enabled a greater increase in electricity generation the stress on the ecosystem while increased supply than previously thought. However, human history to the poor would lead to increase in human welfare. teaches that there have been limits set by nature In this way, both the objectives of environment that mankind has not been able to cross. Grand protection and human welfare can be attained. ancient civilizations r----------_;_------------------, such as that of the Indus Valley have collapsed as a result excessive exploitation of natural resources. It would be better, therefore, to err on the side of caution. We should focus on demand side approach till such technological solutions are not available . Let demand foll ow increase in supply; not the other way round. There may not be absolute limits to growth. But there certainly are current limits to growth - of electricity in particular. Value ofHDI 1 0.8 0.6 0.2 • • ... •••• • •• • • or calculated • Actual HDI 0~--~---r--~--~--~----.---.---.----.---. 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 Per capita energy consumption (KOE/ H) Figure 1.Relationship between per Capita Energy Consumption and HOI 22