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Overshooting the mark

Predicting power demand is a tricky business. However, we must guard against inflated projections, writes Prabir Purkayastha.

india Updated: Sep 12, 2006 01:53 IST

In criticising Sitaram Yechury’s estimates of future energy costs, D.V. Kapur, a former NTPC chairperson and currently a Reliance Industries board member, has argued that we should take a 30-year view while choosing from among our technology options today (Don’t lump it, August 31).

The problem with predicting the future is that it is an uncertain business. This venture has caused many an august person to go down the annals of history with egg on their face. Lewis Strauss, chairperson of the US Atomic Energy Commission, predicted in 1954 that energy would become so cheap in 50 years that it would not be metered any more. In 1943, Thomas Watson, chairperson of IBM, argued that there was a market for at most five computers in the world. Kapur bids fair to join this select group on his prediction that we will need 400,000 MW of nuclear power by the year 2031. This is a vastly inflated figure.
The problem starts with Kapur’s demand projection for 2031 and the assertion that this will reach “962,210 MW projected by the Ministry of Power or the 778,000 MW projected by the Planning Commission”. The question arises: how accurate have the past estimates been, taking a 30-year prediction cycle?

The power estimates used by the government and the Ministry of Power come from the Electric Power Surveys (EPS), for which the latest is the 16th. The long-term plans are the National Power Plans (NPP) made by the Central Electricity Authority. If we take the 13th EPS and the 1983 NPP to see how demand predictions have panned out, we will see that the over-estimation of demand over 15 years was to the extent of 50 to 100 per cent. Against an actual demand of about 80,000 MW in 2001-02, the 13th EPS had predicted 146,000 MW and the NPP 115,000 MW.

There are good reasons why the EPS figures have turned out to be much higher than actual demand. In the days when the Planning Commission cut down all estimates by half while allocating resources, all departments routinely over-estimated demand. The methodology of the EPS has not changed since then. The second reason pertains to all long-term projections. Suppose we take a growth rate of 6  or 8 per cent on today’s base of about 125,000 MW to compute future demand over a 30-year cycle. What starts as a small difference of 16,500 MW over five years, grows to a huge 400,000 MW difference over 30 years: long-term projection magnifies any difference in the initial growth rates.

The other problem in predicting electricity demand is that its per capita consumption saturates at some point. This is why electricity demand in advanced countries has not been growing for the last 20 years. And as society becomes more and more energy efficient, the saturation takes place at ever lower per capita levels. Predicting in advance when this saturation will take place would require not only good statistical techniques but also a crystal ball! Neither do we know whether there will be new breakthroughs in solar power or fusion energy to make all our supply-side equations utter nonsense. In this context, only the foolhardy will choose immediate technology options based on current supply costs and demand predictions for 2031.

In pushing for the nuclear route, Kapur has argued that our 250 years of coal reserves based on current consumption are too little, as the rate of consumption will rise steeply. He also believes that no new coalfields will be discovered, nor will coal that is too costly to mine today become economically viable tomorrow. This, according to Kapur, means we are in danger of running out of coal, possibly in 50 years, and should start looking at other options right now.

There is an obvious fallacy in such an approach. Projecting demand based on current consumption and rate of growth, and assuming no increase in efficiency and no new breakthroughs of any kind, it can and has been shown time and again how we will rapidly run out of all our resources. This is the favourite pastime of all Doomsday predictors, starting with Malthus, who in 1798 predicted that humans would soon run out of food.

It is because predicting the future is such a hazardous business that immediate technology choices are always based not on what we think will happen 30 years down the line, but in the next 10. Based on current prices, Yechury’s cost estimates for coal, gas, hydel and nuclear power in the immediate future are consistent with the current trends. True, Iranian gas at $7 a million BTU will be more expensive than indigenous gas. But it will be significantly cheaper than nuclear power generated using French or American reactors. It is this techno-economics of nuclear and other sources of power that we need to address. And it certainly cannot be addressed by talking about a spurious requirement of 400,000 MW of nuclear power by the year 2031.

The writer has worked as a power engineer for the last 35 years and is currently with the Delhi Science Forum.