Photo: Adrian Fisk/WPN

BIRDS ON WIRES, attracted to the garbage, in slums like Dharavi often cause shorts that knock out power to entire neighborhoods.

How did it get to this point? Simply put, the electricity business in India has proven to be a financial minefield. Take the 2184‑MW Dabhol power plant near Mumbai. Had it become fully operational, this one facility might have wiped out almost half of Maharashtra state’s shortfall in generation capacity. As it stands, just the 740-MW first phase was completed, and it operated for only a short time before the plant was shuttered in 2000. Last May, Ratnagiri Gas and Power, a company jointly owned by seven companies including the National Thermal Power Corp., headquartered in New Delhi, and the Maharashtra State Electricity Board, took over the plant, which runs on naphtha, a product of the crude-oil refining process. But with oil prices at record highs, Ratnagiri has so far not resumed daily operations, because electricity from a naphtha plant would be prohibitively expensive.

Mumbai’s power companies have also been burned in the past when building new generating plants. Because India did not have a unified national grid or regulatory mechanisms that could facilitate power trading until just recently, there was no way to sell excess electricity. That inability spelled economic disaster for the 500‑MW coal-fired plant at Dahanu, which was commissioned by Mumbai-based Brihanmumbai Suburban Electric Supply (BSES) during a short-lived economic boomlet in the mid-1990s. The plant was erected in anticipation of increased demand, which did not materialize until just recently. In the meantime the expenses associated with Dahanu crippled BSES, and in 2003 Reliance took over the plant along with the rest of BSES’s Mumbai operation.

A decade on from the Dahanu debacle India is a different place. People here are bullish on their economic future, a feeling underscored by the thousands of Indians returning home from abroad to seek their fortune. “There is a collective belief that the economic surge that we’re seeing this time is here to stay,” says Grove-White. And thanks to maturing power-­trading mechanisms and a new regulatory environment facilitated by the Electricity Act of 2003, Tata officials are confident that they can get a decent return on investment in new plants. “We’re going to have to take a big deep breath and say, we’re going to invest,” Grove-White adds. “We know what we need to do, and we will sell this output ultimately.”

In fact, with an infusion of cash from the private sector several new plants are now under construction or soon will be. A 250‑MW coal-fired unit is scheduled to come on line at Tata’s Trombay complex in March 2008, with another 250‑MW unit slated to follow in 2009. India’s central government is also stepping up, awarding contracts for four so‑called ­ultramega coal-fired power plants of 4000 MW each. They will be constructed by various Indian companies, including Tata.

The move to create more generating capacity in response to surging demand underscores an essential dynamic governing energy planning the world over, according to Clinton J. Andrews of Rutgers University, in New Brunswick, N.J. “Economists prefer you to build infrastructure in response to demand because then you won’t waste any of it, and engineers prefer to build it ahead of demand because then you always have enough capacity,” he says. “In the electric-power industry, engineers’ influence is decreasing, and the economics and business perspective is gaining strength. That means that everywhere we see power systems operated closer to the margin, including the U.S. And certainly in Mumbai, they have the added complication of being undercapitalized, so that they can’t build as many power plants as they need.”

In Mumbai, a delicate dance goes on between the companies that generate and distribute the city’s electricity and the state regulator, which acts primarily as a consumer advocate, always looking to keep the price of electricity as low as possible. But the current situation forced the regulator’s hand in April, when the Maharashtra Electricity Regulatory Commission approved rate hikes for Mumbai customers of up to 27 percent for residential consumers and up to 75 percent for commercial and industrial users. Andrews, director of the program in urban planning and policy development at Rutgers’s E.J. Bloustein School of Planning and Public Policy, agrees that raising prices might help Mumbai’s situation in both the long and short terms.

“Usually part of the solution for a city like Mumbai is to start charging enough for electricity,” Andrew points out. “That does two things. First, it creates a stream of revenue that you can use to borrow money against for building power plants. Second, it dampens demand, especially if you can do time‑of‑day metering, which encourages people to do peak shifting and peak reduction.”

Indeed, Maharashtra state has recently introduced what are known in India as time-of-day tariffs for industrial customers, according to Rangan Banerjee, professor of energy systems engineering at the Indian Institute of Technology, Bombay. There are four time slots under the new tariff schedule: morning peak from 6 a.m. to 11 a.m.; evening peak between 6 p.m. and 11 p.m.; and two off-peak troughs, where demand dips, from 11 a.m. to 6 p.m. and from 11 p.m. to 6 a.m. The idea is for users in heavy industry to shift load-intensive operations to off-peak hours when the costs are lower.

It’s a good idea, says Banerjee. But so far the plan has been a bust. “When the tariff was introduced, there was also a price rationalization,” he explains. “Before, industry was subsidizing commercial customers and agriculture by paying the highest tariffs. When we shifted from the flat tariff to the time-of-use tariff, industry’s bill was reduced. So they haven’t yet perceived an incentive to off-shift.”

Despite the slow pace of adoption, Banerjee is convinced that such demand-side management will eventually win the day. “Load management and energy efficiency are more convenient options than shedding the load and much cheaper than building new plants. But demand-side management [DSM] is not going to offset any power plants completely. We’re going to have new power plants and DSM, because whatever we build we’re still going to have shortages.”

Mumbai’s power companies know that electricity shortages will become acute in just a few months. Throughout the spring, Tata, Reliance, and BEST have waged a public-­awareness campaign on TV, radio, billboards, and flyers. The goal is for citizens to conserve 20 percent of energy usage by turning off electrical equipment when it is not required, running large appliances such as washing machines at off-peak hours, minimizing the use of air conditioners during peak time, using compact ­fluorescent lamps in place of incandescent bulbs, and switching off the power to the advertising billboards during the evening peak. (One wonders whether those billboards promoting energy conservation will also be darkened.)

The message from the power companies is clear: to get through the tropical summer without significant load shedding or blackouts, Mumbaikars will have to sacrifice a few of the conveniences they’ve come to enjoy over the past few years. If they don’t, the noise of TVs, washing machines, and espresso makers might be replaced by the sound of matches being struck in the dark.

To see all of Spectrum's special report on The Megacity, including online extras and audio and video exclusives, go to http://spectrum.ieee.org/moremegacity.