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Infrastructure

Background

India’s energy future: What role for the Bank?

26 September 2011

Notes of meeting, Washington DC, September 21, 2011

Speakers: Amulya Kumar Naya (Odisha Chas Parivesh Surekhsa Parishad), Srinivas Krishnaswamy (Vasudha Foundation), Justin Guay (Sierra Club), Niranjali M. Amerasinghe (Center for International Environmental Law)

Moderator: Elizabeth Bast, Oil Change International

Topic: India is witnessing a flurry of entrepreneurial activities which demonstrate the ability of decentralized, small scale renewable energy systems, combined with large scale energy efficiency measures, to support electrification and fill India’s energy supply deficit. Yet, the Bank’s country strategy to support India’s energy transition is unclear. The energy sector has the third largest share in World Bank’s nearly $40 billion worth of active and pipeline investments in India’s public sector. The largest portions of IBRD and IDA loans are exposed to restructuring the state-owned power utilities, hydro and large transmission projects, many of which are connected to ultra mega coal power plants. Meanwhile, IFC’s energy investments include support to the coal industry as exemplified by financing the Tata Mundra Coal Plant in Gujarat and the GMR Thermal Power Plant in Odisha through a financial intermediary. A range of risks in these projects have been identified while their sustainability is in question. As the World Bank develops its India 2030 Vision, and closes in on the country’s exposure limit, how will it shift lending patterns to ensure an environmentally sustainable future? Will the plan pave the way for innovative approaches to energy access focused on aggregating decentralised clean energy systems or support a continued reliance on coal-based power?

Amulya Kumar Naya

Spoke about IFC funding of a coal plant in Odisha through a financial intermediary. He emphasised that the energy is not being produced for local people but it is taking away people’s land, depleting water resources and undermining people’s livelihoods. There has been a lot of violence as people have tried to stand up for their community.

Mac Davies

Bank’s contribution to India is a ‘drop in the bucket’ so we have to make strategic interventions. India is reaching the single borrower limit which means the Bank has to be even more strategic with its lending.

India’s 11th government plan is targeting 8-10% growth. Power in India is not reliable. The government’s 2012 ‘access to energy for all’ goal will not be able to be met in that time period. India is not lacking good policies. There is an implementation gap and a huge governance issue in the power sector. We also have to think about building in climate risks in energy issues. Hydro-power might be the most vulnerable to the effects of climate change.

In India the World Bank is building on the policy framework in the country, making linkages with other sectors like water. Creating selective partnerships to build institutional capacity. Also undertaking rehabilitation programme for inefficient coal plants. Focusing on advisory services and also access to energy as well.

We agree with civil society that dams can be done well or poorly. We are trying to work with partners and companies to make sure they do it well and set industry standards. The question is not whether hydro will be developed, but how. In addressing gender issues, it is tricky in terms of power generation and transmission. It is easier to integrate gender in routing of electricity and where it goes. Social assessments of projects are done. Within that we can seek gender differentiated views.

On the distribution side, looking at household fuels there is the issue of indoor air quality. In South Asia World Bank is not as far ahead as other regions in introducing cook stove technology. World Bank would like to see wide distribution but India might not be where the World Bank begins.

Soumya Dutta (audience response)

WB says it is just a drop in the bucket but it often has large ripple effects. This has happened in India with education. WB is getting back into funding big hydropower. It is also engaged in integrated coastal management programmes that are endangering livelihoods of fisher folk and they have a large impact.

Srinivas Krishnaswamy

The dominant fuel for energy is coal in India – 54%, Large hydro is 22%. 45% of population doesn’t have to electricity. A large portion of the consumers are consuming very small amounts – under 50 KW hours/ month.

65% of households cook with biomass. There is large renewable energy potential in India. Wind generation 65-100 GW potential; Solar PV 20 GW by 2022. Roughly 30% of India’s demand can be met through renewable if there is an intent to do so.

Off grid renewable potential

  • 103,000 villages yet to be electrified
  • 54% of households don’t have access to energy
  • 70% of households without piped water
  • 35% of rural households depend on diesel generation to pump water

The belt across India that has large coal fired power plant concentration has very large amount of households without electricity. India’s next 5 year plan is meant to be a low-carbon plan and different states also have climate action plans. A number of states have meeting access to energy needs as a priority

The World Bank and USAID are in various stages of floating bids for decentralised renewable energy projects in India.

Justin Guay

There is stagnating coal production globally. Coal that is easy to access is being used up. We are having to now try and access coal that is harder to reach and is of lesser quality. As a result coal prices in key markets around the world are rising.