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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Indian Business Press Trashes China's Electrical Grid Ambitions

Indian Business Press Trashes China's Electrical Grid Ambitions

Rising BRIC economic superpowers India and China, while having vastly differing economic and political systems nevertheless have one thing in common.

A surging need for increased electrical output to fuel their booming economies.

India achieved an unenviable world record, when during a torrid summer earlier this year, an electric grid failure on 30-31 July resulted in the world's largest blackout, affecting more than 600 million people.

It was easy to see it coming, as India’s surging economy has resulted in increased electrical demand that the country’s ramshackle power grid has been unable to meet. Ensuring such events will occur again in the future, 300 million people, a quarter of India’s population, still have no access to electrical power, and as they are connected to the national grid, demand will only further increase.

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According to a recent report by the International Energy Agency, “India suffers from a severe shortage of electricity generation capacity. According to the World Bank, roughly 40 percent of residences in India are without electricity. In addition, blackouts are a common occurrence throughout the country's main cities. Further compounding the situation is that total demand for electricity in the country continues to rise, and is outpacing any increases in capacity. Additional capacity has failed to materialize in India in light of market regulations, insufficient investment in the sector, and difficulty in obtaining environmental approval and funding for hydropower projects. In addition, coal shortages are further straining power generation capabilities.”

So it comes as no little surprise that the Indian business press is gleefully citing critics of China’s State Grid Corp., which is pressing the government to approve a $250 billion upgrade plan that it contends would make China's grid an international trailblazer, but which critics contend is both too costly and which could expose the system to blackouts.

During a meeting two weeks ago in Beijing where China's leadership met to decide the nation’s transition of power, China’s State Grid Corp. head Liu Zhenya, presented his case to the Chinese leadership to approve a massive plan to upgrade the country’s electrical transmission system, whose bottom line would be more than four times the cost of the Three Gorges Dam. China’s State Grid Corp. intends to weave across the Chinese landscape as many as 20 ultra-high voltage (UHV) power lines, labeled “power corridors,” over the next seven years.

“The Economic Times” quotes Joseph Jacobelli, a Hong-Kong based independent energy analyst, who was formerly head of global clean technology research at HSBC Holdings PLC as observing, "The UHV projects are massively expensive and, together with many observers, I am not convinced of the projects economics and not convinced the projects make sense from an energy supply security perspective."

Want more? Two months ago the European Union Chamber of Commerce in China issued a report noting, "Connecting regional power grids by UHV transmission line has high risk of leading to national blackouts."

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Not surprisingly, the project is viewed somewhat differently in China. At a news conference of the 18th National Congress of the Communist Party of China chairman of the Tebian Electric Apparatus Stock Co Ltd (TBEA) in the Xinjiang Uygur autonomous region Zhang Xin told reporters, "The government is going to approve many UHV transmission projects in the coming years, to satisfy the energy demand during the economic expansion. Unprecedented opportunities for China's UHV transmission and new-energy industries are coming, along with the government's plan to accelerate economic restructuring."

What is beyond dispute is China’s increasing need for reliable electricity, as government analysts project that the nation’s capacity needs to grow to 1,500 gigawatts by 2020 from 1,060 GW at the end of 2011.

If the massive UHV project is approved, it will place China’s State Grid Corp., which already transmits and distributes electricity to 1.1 billion Chinese, nearly 90 percent of China’s population, in an even more commanding position, a near monopoly situation that Western (and Indian) power companies can only dream of. In contrast, the state-owned Power Grid Corp. of India Ltd. supplies about 50 percent of the total power generated in India on its transmission network.


So, who’s correct, the critics or the optimists? India has no comparable scheme even in the planning stages.

One thing is certain – if the Chinese mange over the seven years successfully to construct their UHV grid additions, then it will give a massive boost not only to the country’s economy but the population’s standard of living.

All of which no closely will be watched by 600 million sweltering Indians and 300 million of their fellow citizens waiting to turn on their lights.

By. John C.K. Daily

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