Scarcity Limits Power throughout the Region
Power plants require a substantial amount of water for cooling purposes and for operations. But nearly two-thirds of India’s power plants are located in water-scarce or water-stressed areas. And nearly 80 percent of the plants planned for the future will be located in such areas. This conflict illustrates the importance of taking water related risks into account when planning future developments.
India is home to more than one billion people, and the vast majority of its population is under the age of 35. With a rapidly growing population and increased industrialization, India’s water demand is expected to outpace supply by 50 percent in 2030. Already today, water shortages are creating delays in construction of new power plants, causing a decreased return on investment for power companies.
It is important to take water resources into consideration before deciding what kind of energy producing plant is best suited for development., but sometimes a nation has no choice but to place power plants in water-scarce areas. Every decision has tradeoffs, and in some instances the tradeoffs can be severe. In the case of India, its decision to locate its energy supplies in water-scarce areas will likely require the implementation of innovative water management approaches to preserve energy reliability.
According to the World Resources Institute, the power sector investors and analysts are making long-term bets on water that, in the future, might no longer be reliable. They need to start assessing their exposure to water-related risks when considering long-term investment strategies.