Archive for August, 2012

680,000,000 people without power in India is almost unimaginable. But it happened last week, and it was due to deficiencies in both capacity and transmission infrastructure.

The key to understanding energy is that it’s all about infrastructure. Renewable energy is great, but if you love renewable energy you have to love the transmission lines that will bring the power from where the wind blows to where the demand is located. North Dakota has the best wind resources in the country, but has comparatively little installed wind generation capacity. The reason is that there’s not enough transmission infrastructure to carry all that potential power across the Midwest to, say, Minneapolis or Chicago.

And as I’ve discussed in previous posts, North Dakota is flaring (i.e., burning as a waste product) about 100,000,000 cubic feet of natural gas per day because there’s not enough pipeline capacity to pump the stuff out of there. However, that might change if natural gas exporting takes off, and we can sell it to Europe at prices better than the current domestic price level. Again, it’s all about infrastructure.

So it is with India, which has not been able to make the necessary investments in its grid, and the private sector has not stepped in because the grid is completely controlled by the government. The WSJ reported that India has invested in transmission only half of what it has spent on new generation capacity.

But take it a step further. Most of India’s generation capacity is coal-fired, and railroads are the only efficient way to move coal from the mine head to the power plant. Assuming India solves its capacity and transmission issues, if the railroads have maintenance problems, all that money will look like it’s been wasted.

Well, we in the U.S. should not indulge in any schadenfreude over India’s blackouts. The U.S. has under-invested in its transmission grid for half a century, and we’ll need to put $566 billion just in the next eight years to keep it running.

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