South Asia’s Energy Crisis: Water Scarcity and its Implications for Hydroelectricity

1 November 2016 James Maxwell, Research Assistant, Global Food and Water Crises Research Programme Download PDF

Key Points

  • Demand for electricity in South Asia will continue to increase. While coal is likely to continue to be the main energy source, diversification efforts could decrease its share.
  • The role of hydroelectric production has been to stabilise the grid, it is not likely to be the region’s primary energy source in the future.
  • The Russian shift away from the Central Asian energy market has provided an opportunity for South Asia to capitalize on the region’s hydropower potential.
  • Attempts to connect the Central Asian hydropower electricity network to South Asia are unlikely to be completed by 2030 due to traditional and non-traditional security challenges.
  • Stabilising the region, through bodies such as SAARC, are the initial steps to opening up the energy options for South Asia.

Summary

The question of whether hydropower can fill the demands and eliminate the dependence on external energy imports must be weighed against the diminishing water security of the region. In April 2015, the World Bank declared South Asia the fastest-growing region in the world. A secure energy supply is essential to ensure continued development of the region.

Rapid and sustained growth has increased energy requirements as more productive industry and wealthier citizens demand more electricity. As it is dependent on oil imports, South Asia has benefited from the reduction in oil prices. The desire to transition away from a dependence on external energy sources, however, remains strong, particularly as oil prices could begin to rise again.

Hydropower could serve as a stabiliser, providing domestic energy production and alleviating the dependence on energy imports. Many of the options for hydropower in South Asia are largely untapped. The insecurity of regional water sources, due to depletion and volatility of climate patterns, political instability and regional tensions present challenges to the development of regional energy networks.

Analysis

Electricity in South Asia

Demand for electricity to fuel economic growth will continue to rise for the foreseeable future. A shortage of electricity is likely to be the largest barrier to further economic development in the region. In some South Asian countries, such as Nepal where oil accounts for 20 per cent of total imports, energy is a costly drag on the economy. The development of domestic energy sources could reduce the region’s dependence on costly energy imports.

The power sector in South Asia faces multiple challenges. In Pakistan, Sri Lanka, Bangladesh, India and Nepal demand is increasing, but power companies struggle to collect revenue and provide a reliable product. The region faces the highest transmission and distribution loss rates in the world, the result of poorly maintained electricity networks. For electrification programmes to be successful, governments will need to look beyond the development of hydropower. Transmission infrastructure will also need to improve.

Coal will continue to provide the majority of South Asia’s energy until at least 2030. The Indian Government, for instance, aims to double domestic coal production by 2020, such production increases suggest that the government plans to continue to use the resource for a considerable amount of time, possibly even beyond 2030. Regardless of the form of energy production, increased demand for electricity will likely place further strain on South Asian water resources.

The Water-Energy Nexus: Water a Vital Component of Energy Production

The water-energy nexus illustrates the close relationship between water and energy production. All forms of energy production require water to some extent, either directly for the generation of electricity or indirectly for cooling power-generating equipment.

Existing plans suggest that hydropower will play a major role in meeting increased energy demand but, given the region’s history of poor water management, this could prove troublesome. Other forms of electricity generation also consume considerable amounts of water.

Water scarcity in some parts of the region has led to electricity shortages. South Asia’s per capita water availability is down to one-fifth of what it was 60 years ago. Output from some Indian coal-fired power plants has declined due to a shortage of cooling water. The 1,720 megawatt Raichur Thermal Power Station, for instance, has had one of its eight generating units shut down due to low water levels in the Krishna River. Dwindling water levels in hydropower dams have also reduced electricity production.

Hydropower dams were built as a solution to the intermittency of other forms of renewable energy production. As battery storage technology improves, and becomes cheaper, the potential for it to provide stable and uninterrupted electricity from renewable sources, such as wind and solar, becomes more likely. It will still be decades before this technology completely replaces fossil fuel technology, however, and political expediency might push states to continue to invest in other forms of electricity generation.

Pumped hydroelectric storage could operate as a bridging technology until the limitations of batteries are overcome. At times of high demand, power is generated by releasing water through reservoir turbines into a lower catchment reservoir. When electricity demand is low, and spare capacity is available, water is pumped back into the upper reservoir to be re-used. Efficiencies of 90 per cent in both directions are possible and little of the stored energy is lost. Pumped hydroelectric plants help to stabilise power grids and ensure there is continuous electricity available. They are also cheaper to operate than current battery technology. They are, however, still constrained by water availability factors of traditional hydropower dams and are net consumers of electricity. Pumped hydroelectric storage is a useful technology for storing power and stabilising electricity grids, but evolving battery technology could eventually make it obsolete.

India

Hydropower dams were dubbed the “temples of modern India” by Nehru in the 1960s. Since that time, however, the share of hydroelectric power in energy production has decreased from 45 per cent in 1960 to 12 per cent in 2013. There are a few key reasons this ratio was not maintained. Firstly, the steep rise in urban population led to the use of oil and gas as primary sources of supply. Population growth and urbanisation have been crucial factors in creating greater demands for alternative energy sources. For example, between 1971 and 2000, primary energy consumption in India went up by as much as four times. The capacity of hydro power grows very slowly in contrast to the progress of other renewables; hydropower capacity increased by 2,000MW between March 2014 and March 2016 whilst renewables increased capacity by 8,500MW over the same period, due to the high capital cost of establishing the facilities.

There is a negative perception of hydropower in many parts of rural India and especially in the north and north-east, where hydropower is most efficient. There is a great deal of pressure on local administrations to avoid hydropower from civil society. Civil society groups hamper the development of new hydro operations by blaming them for displacing large communities of people, arguing that 16 million people have been displaced by various water development projects around the country since the 1950s, this has recently been illustrated in the north-east. Water levels in some Indian reservoirs have declined due to increased power generation and higher evaporation rates. As rainfall and the climate of South Asia are becoming increasingly variable, the construction of hydropower dams to meet increased regional electricity demand appears to be an ill-thought out option.

A possible solution to the perceptions of hydropower and the dependence on fossil fuels in rural India is the implementation of small hydro projects. These would, on average, produce ten MW per turbine leading to poverty alleviation in many parts of rural India where poverty is high and hydro resources are undeveloped. The challenges are the high capital cost of establishing these projects, which administrations are reluctant to bear, and the poor quality of tributary waters in rural areas being heavily polluted with sediment, which can damage the turbines and the rate of energy production. The inefficiencies of these projects cause tensions within states and communities, raising stigma towards their implementation. These projects need to establish equitable sharing systems between communities and states if they are to be successful.

There are plans to increase the use of renewable energy, which could present a challenge to the development of hydropower. Prime Minister Narendra Modi’s goal is to generate 60 gigawatts of electricity from wind farms by 2022, from a current capacity of 27GW. Under Modi’s vision, solar energy could generate a further 100GW of electricity by 2022, from a current capacity of about ten gigawatts. The country is likely to struggle to achieve Modi’s grand vision as sources of renewable energy continue to be more costly than coal-fired power plants.

Oil imports are set to be a major source of energy production for industry and domestic use. This aligns with the Indian dependence on coal which is sourced in India, although of a very low quality. India is the world’s third-largest coal producer and the second-largest importer of the fuel. The Power and Coal Minister, Piyush Goyal, stated in 2015 that the country would increase domestic production and cease importing coal for electricity by 2017. Modi has also promised universal access to electricity by 2019, suggesting that decreasing the importation of coal could be difficult.

India’s developmental approach has to be weighed against the policies of regional bodies such as the World Bank and SAARC. The World Bank favours the construction of large-scale dams throughout the region. Whether this is appropriate for India, given the water security challenges that it faces, is questionable.

Nepal

Based on current trends, Nepal will require 10,000MW of electricity by 2040. There is bipartisan political support for the development of hydropower, with both the Nepali Congress Party and the United Marxist-Leninists out-bidding each other in their promises to develop the electricity source. Nepal, as with other South Asian countries, requires a diversified energy sector. The risk of earthquakes is particularly acute in the Himalayan country and this poses further problems for hydropower dams.

One major technical barrier to fully harnessing Nepal’s hydroelectric potential is the country’s hydrology. The rugged and mountain alpine terrain endows Nepal with plentiful moving water, but the south-west monsoon delivering it is inconsistent. About 80 per cent of the country’s rain occurs from June to September, the remaining 20 per cent falls as snow during the dry season. This discrepancy between when water is available and when it is needed year-round to generate hydroelectricity creates a complicated engineering challenge, leading to severe load shedding (planned blackouts), particularly in winter, of up to 18 hours at times. As with India, the unreliability of water supply is the major inhibitor for major investment in hydropower projects.

Pakistan

Prime Minister Nawaz Sharif has suggested that the power supply will be stabilised by 2018. Hydropower plants are under construction as are coal-fired plants, with Chinese backing. The 720MW Karot hydropower facility, under construction on the Jhelum River (a tributary of the Indus River) is the first project to be financed by the US$40 billion Chinese Silk Road Fund. The Pakistani energy sector is diversified among petroleum (42.7%), natural gas (42.2%), and hydroelectricity (10%). In Pakistan, dams have proven to be very effective at addressing issues of food and energy security and would be even more important in the context of climate change, even though, as in other countries in the region, mismanagement, governance and corruption are very serious issues in the water sector.

A threat to regional energy co-operation on the in South Asia was the recent snub of Pakistan by Modi who refused to attend the 19th SAARC Summit in Islamabad in November 2016. Modi, citing the September 18 attack in Uri, Indian-administered Kashmir, stated that ‘blood and water cannot flow together’ at a meeting on review of the Indus Water Treaty (IWT) of 1960. The meeting came as India weighed its options to hit back at Pakistan in the aftermath of the Uri attack that left 18 soldiers dead.

Bangladesh, Nepal and Bhutan have also made their reluctance to attend known to Islamabad. This move by Modi not only threatens security between the states but also threatens the collaboration on joint projects such as the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline. Many Indian officials have pushed for the maximum utilisation of the rivers allocated to India in the IWT, putting stress on Pakistan down river.

India will have a harder time sourcing energy from Central Asia if the isolation of Pakistan causes retaliation. This is a potential vulnerability for India and a stabilisation of the domestic power grid and regional relations is necessary to better ensure stability in the energy sector.

Regional Projects for Co-operation

There are examples of regional energy co-operation in South Asia. For instance, India and Bhutan have a close energy sharing relationship. The development of Bhutan’s hydropower, with Indian assistance, has contributed to a trebling of its GDP per capita since 2000, rising from $780 to $2,611 in 2014. At the same time, Bhutan’s hydropower has helped to mitigate the energy deficit of states in northern India. This case highlights the relevance of mutual-benefit approaches to water use to meet basic developmental needs, which in turn promotes greater environmental responsibility and unlocks economic resources for conservation. Political factors, compatible strategies of economic development and the sheer technical requirements of hydropower projects are crucial catalysts for co-operation.

Apart from petroleum products, coal, liquefied natural gas (LNG), and the limited electricity trade, no inter-regional energy co-operation is seen between South Asia and outside the region. Feasibility studies for some specific high-capacity inter-regional power and natural gas transmission systems, however, have been undertaken. These include the Central Asia-South Asia (CASA 1000) power link, Iran-Pakistan-India natural gas pipeline, and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline. The TAPI project has progressed to being a Gas Pipeline Framework Agreement, initiated in 2008, followed by an intergovernmental agreement signed in 2010.

Parts of South Asia could benefit from closer regional integration. With funding from the World Bank, the CASA-1000 project aims to create a regional electricity market that harnesses the water resources of Central Asia to help alleviate shortages in South Asia. The project will take surplus hydroelectricity from Kyrgyzstan and Tajikistan in the summer months and transport it via transmission lines to Pakistan and Afghanistan. CASA-1000 faces immense challenges, not least the volatile Afghan security situation and deteriorating dams constructed during the Soviet era. It is in the interests of the region to resolve the tensions in Afghanistan for the security of its energy supply and regional stability. India must also contend with hydropower development in China, which is the upper riparian of numerous rivers that flow through India.

casa-1000

CASA-1000

The CASA-1000 project was conceived in 2006 and seeks to deliver surplus energy from the Central Asian countries of Kyrgyzstan and Tajikistan to energy starved Afghanistan and Pakistan. During the summer months, melting snow fills hydropower reservoirs beyond capacity in Central Asia and electricity demand rises in Afghanistan and Pakistan. A 1,200 kilometre powerline could take this surplus energy to South Asia and, in return, the Central Asian republics would receive some much needed revenue. There is growing speculation, however, that Afghanistan might no longer be a part of the project and all 1,300MW of electricity would be exported to Pakistan alone.

Even if Afghanistan were to drop out of the project, the infrastructure would still need to traverse its territory to get to Pakistan. Political unrest and corruption are seen as the main barriers to success. Insurgents often target electricity infrastructure leaving vast areas without power, sometimes for weeks at a time. Electricity shortages appear to be growing in severity in Kyrgyzstan and Tajikistan, perhaps stalling the project before it is even built. Downstream, Uzbekistan fears that the electricity network could increase demand for water among its upstream neighbours and potentially rob it of its own water supplies. Its former president, Islam Karimov, warned – perhaps unsubtly – that building hydropower dams could provoke a regional conflict between his own country and its neighbours.

The United States has long shown a willingness to increase the connectivity of Central and South Asia, seeing it as a way to push Russia out of the region and bring stability to Afghanistan and Pakistan. It, along with the World Bank, has provided funds to the CASA-1000 project. The success of this project depends heavily on the co-operation between states in the region. This has been brought into question with growing militancy in Afghanistan and India-Pakistan tensions. The project aims to satisfy the increasing energy demands of South Asia but relies on the stability and progress of Central Asia.

Conclusion

Hydropower projects are unlikely to become a major source of stabilisation for South Asia in the near future. The region must overcome its internal issues of poor governance, security concerns, interstate tensions and water scarcity if it wishes to balance regional energy demand.

Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.

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