Order & Stability in Power Supply

 

India's markets in electricity are roiled by low and unstable prices, with uneven service quality.

Shyam Ponappa   |   July 1, 2021

Is it good for consumers when prices crash? After an intuitive “yes”, reflection on one’s own and society’s long-term interests, as in the example below, may lead to the realisation that quality cannot be sustained below a reasonable price. In the same way, overambitious targets without detailed plans and unrealistic policies create turbulence and instability, such as financing not being available for constructing coal-based power plants. This will mean shortages unless sufficient power is available from new sources.¹

Energy considerations are simultaneous problems, and solutions must consider interconnected factors. A third issue is bringing order and stability to electricity markets, for which India needs investors with significant capital willing to invest at scale for slower payback than in high-tech aggregation, for example. The groundwork must be done to handle large-scale targets and projects, because big players operate at scale, avoiding smaller projects. The opposite aspect is the integration of rooftop solar for net metering,² which has been capped this year at 10 kW, thereby excluding the most promising upscale residential and corporate categories. Another aspect that needs resolution is the financial capacity of distribution companies.

The case of SoftBank’s investment in solar power in India and its exit is an example of the difficulties of bringing order and scale to India’s power sector.

SoftBank’s Solar Gambit in India

In 2015, Japan’s SoftBank Group CEO Masayoshi Son announced the intention to invest $20 billion in India in solar projects through SB Energy (SBE), a venture with Bharti Enterprises and Taiwan’s Foxconn. It seemed ideal for India. With abundant sunshine and a big potential market, the logic for large solar projects was always compelling. Prime Minister Narendra Modi had raised the solar target for 2022 from 20 GW to 100 GW. India had about 4 GW largely from rural and rooftop projects, priced 50 per cent higher than power from coal. Despite a good start, in time, SoftBank’s price expectations proved to be too high.

Prices fell thereafter because of cheap solar modules from China, and increasing competition, perhaps influenced by SoftBank’s exuberant presence. SBE’s winning bids dropped from Rs 4.63/unit in December 2015 in Andhra Pradesh to Rs 2.45/unit in Rajasthan in May 2017, which SBE maintained was profitable. Solar power became half that of coal. Bids dropped as low as Rs 1.99 in December 2020, as lower-cost pension funds bid aggressively. However, prices firmed up this year, and winning bids in May ranged from Rs 2.51 to Rs 2.69.

Meanwhile, SoftBank could not get the government to offer a massive tender of 900 GW, more than double India’s capacity, despite announcing an increased investment intent of $60-100 billion.

Facing regulatory problems such as land not allocated for transmission lines, delays in payments, and attempts at renegotiation of its power purchase agreement in Andhra Pradesh, SoftBank began losing interest. Ironically, prices now are near the Rs 2.70 that SBE had bid in 2018 for 1 GW of a tender where the government expected a much lower bid from SBE for the full 3 GW tender, and rejected other similar bids, accusing SBE of cartelisation. Last month, SoftBank sold its solar assets to Adani Green Energy Ltd (AGEL) and shifted its solar focus to the US. It continues to invest actively in Indian high-tech, however, committing $2 billion in 2021 by the end of May.

This is insufficient solar capacity from an environmental perspective as well as in terms of opportunity cost, i.e., the available solar energy. The short point is that India needs investors like SoftBank, with the capacity and willingness to invest in slower-payback infrastructure.

The government could not entertain large bids to the extent that SoftBank was willing to invest (assuming a tender for 100 GW, of their expressed interest in 900 GW). The preponderance of coal will continue because the current annual tendering capacity is 6-8 GW. This means higher costs and carbon footprint until the government is able to accommodate larger-scale investor interest. It will require resolution of a serious obstacle, the stressed financials of state distribution companies, realistic tariff expectations, and larger tendering capacity.

SBE focused on quality and scale, outsourcing its clean design and installation to high-quality Engineering, Procurement and Construction contractors. Its low-cost finance and capacity were offset by a high cost structure, in a low-bid environment. India may not be ready for such investors, because price trumps quality, even if quality is reasonably priced. But we do need to nurture serious investors willing to invest in electricity and other infrastructure.

Our markets in electricity, telecom and broadband are roiled by low and unstable prices, with uneven service quality. Our interests would be best served if our policies aim for integrated, stable services at reasonable prices that might not necessarily be least cost in the interests of efficacy. This is what we need to drive the economy in a sustained manner, to provide its foundation and fuel its growth.

Government policies and regulations need to be configured towards overarching objectives that are aligned or at least not contradictory. Various streams within and across sectors must be integrated, such as fuel sources and electricity generation, to converge towards objectives. This will require Central and state governments to evolve integrated plans and develop interdepartmental coordination processes to steer the energy sector.³ A prerequisite is resolving the financial problems of state distribution companies, including payment discipline.

If a genuine effort is made to work through these and scope a large, practicable solar tender (of 5 GW or 10 GW), with a process of repeating/escalating it over time, the government could seek to initiate discussions for such contracts with two or three select investors.

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Shyam (no space) Ponappa at gmail dot com

1:   "Does India need more coal power?"

https://www.business-standard.com/article/opinion/does-india-need-more-coal-power-121062901741_1.html

2: See “The economics of ‘net’ and ‘gross’ metering: The Punjab example”: https://carboncopy.info/rooftop-solar-and-discoms-a-case-of-putting-the-cart-before-the-horse/

3: India had an Integrated Energy Policy, compiled by the Planning Commission for 2006 to 2030: (http://niti.gov.in/planningcommission.gov.in/docs/reports/genrep/rep_intengy.pdf). If discontinued, this needs updating with probabilistic modelling, and conversion to action plans through interdepartmental processes empowered to execute these plans

Policies & the Public Interest

The public interest calls for real reforms for equitable growth.

Shyam Ponappa    |    October 4, 2018

Everyone understands that users need high-speed broadband links for a countrywide transformation, through access to education, healthcare, and much else including opportunity. The lofty aspirations of the New Digital Communications Policy 2018 (NDCP) are 50 Mbps “to every citizen”, 5G, and so on, whereas the reality is a plan for two Wi-Fi hotspots per village. Surely, mere aspirational statements after inordinate delays cannot help attain high-speed “broadband for all”. Nor can a gutted market bereft of policies to induce the required capital for connectivity and network efficiencies. The NDCP epitomises overstatement juxtaposed with the realities of poor services. Key reforms have been consigned to a future imperfect limbo: reducing additional taxes (from an exorbitant 32 per cent), achieving more efficient spectrum use, and the like. Our needs are staggering, but what we have so far are statements of intent without real policy changes in the public interest.

A similar approach has played out in the manufacture of electronics and solar power. India’s mobile revolution depended entirely on imports of network equipment, software, and handsets.1 Likewise for solar power, India has relied on imports. Recent efforts to elicit interest in manufacturing solar equipment locally received lacklustre response, because of perceived inadequacies in policies and incentives.

The crux of the matter is how public interest, which many of our politicians, administrators and analysts claim as their motivation, is construed. An additional wrinkle is of being “pro-poor”. What does the “public interest” mean, and how does “pro-poor” fit in other than by perpetuating poverty? Some proponents regard the “aam aadmi” as being synonymous with the public interest, and others “the masses”, or “the poor”, or farmers. There is also segmentation by exclusion, such as “not those who own vehicles”. Exclusions also apply to manufacturing, such as cars or two-wheelers, because they add to pollution and congestion on roads. So also to air conditioners, refrigerators, and so on, perhaps from the confusion of conflating market principles with socialist ideas of “luxury goods” having a pejorative taint, whereas our need is for engines of growth, except in sin goods and services. In fact, the automotive sector provides a model for coordinated policies (except for fuel pricing).2

Our fuel pricing is puzzling, because while it affects the majority, it is treated as affecting only the affluent (many of whom are also likely to be very productive). Affluent consumers comprised around 27 per cent of India’s population in 2016, and may grow to 40 per cent by 2025.3 Constraining productivity and output is surely not beneficial except in containing imports, especially when productivity is declining (see Chart). Yet, this is the effect of high taxes on inputs. This is why there’s a genuine need for the evaluation of alternatives to demand compression and high taxes.

Labour Productivity in India - January 2010 to November 2017

Source: https://www.ceicdata.com/en/indicator/india/labour-productivity-growth

What, indeed, is the definition of public interest?  Here is a version:

It is the welfare or well-being of the general public, by which the whole society has a stake that warrants recognition, promotion and protection of the government and its agencies.

The overall public interest is about society as a whole, unalloyed by divisive or fractious special interests. It is not the welfare of any individual, group or company. In seeking to maximise overall welfare, however, there need to be trade-offs and selective regulations for justifiable subsets, such as the underprivileged, or in spatial planning for town and country, or sectoral regulations for energy, exports, or automotive products. Yet, while the criterion should be public welfare, the arguments we encounter are mostly for special interest groups. Rarely is there a consideration for the welfare of society as a whole.

How might a holistic approach to public interest alter the stance to policy making, administration, analysis and advocacy? Consider this example from Brazil after the global financial crisis of 2008.

Brazil suffered decreasing exports, lower investment, and a credit crunch with deleveraging, resulting in lower incomes and tax collections, and higher unemployment. The government’s response in 2008-09 was a selective reduction in taxes, together with increased liquidity, and reduced interest rates to the most affected sectors.4

These policy changes reduced a tax component, initially in the automotive sector for a quarter, later continued for about a year. This was extended to consumer durables/electrical appliances, and to building materials, the latter for about 15 months. For some products such as stoves and small washing machines, this tax was reduced to zero. Meanwhile, taxes on cigarettes were increased. The result was an increase in tax revenues from higher production and consumption, after an initial fall in tax collections.

Simulation is a useful way of evaluating alternative scenarios. Converted to cash flows, these inputs can be used to shape policies, because cash flows are an essential measure of reality.

A compelling reason for scenario planning is that coordinated policies could yield higher growth than foreign borrowings without systematic policy support. A policy framework with lower interest rates and good infrastructure (energy, logistics and communications) could accelerate growth, thereby attracting capital despite current account imbalances. Such alternatives deserve to be evaluated against the approach of higher interest rates to attract, then struggle to retain foreign capital (when there is a flight to quality, raising interest rates in emerging markets is usually ineffective), with lower growth.  Lower rates would also facilitate redeeming NPAs, as banks could profit from rising bond prices.

It is in the public interest to analyse alternative approaches, including input costs and taxes. Areas such as the allocation and management of coal, automotive fuel pricing and automotive manufacturing, and spectrum allocation and management need such analyses. In finance, the alternatives are of inflation targeting, taxes to reduce the fiscal deficit, high interest rates to attract/retain foreign capital, and managing imports, against scenarios with lower taxes, interest rates, and coordinated policies as in the automotive sector for manufacturing and logistics in sectors such as electronics and solar power equipment.

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Shyam Ponappa at gmail dot com

1: Sanjib Purohit, NCAER, March 14, 2018

2: http://www.siamindia.com/uploads/filemanager/47AUTOMOTIVEMISSIONPLAN.pdf

3: https://www.bcg.com/en-in/publications/2017/marketing-sales-globalization-new-indian-changing-consumer.aspx

4: [Input-Output Matrix study of tax reductions-Brazil-2014]

The Tragedy of The Unused Commons

Hope for the good sense and guts to grasp the nettle and take decisions that are bold as well as wise.

“The tragedy of the commons” as you may recall, refers in economics to the overexploitation of shared resources because of unregulated access. The tragedy results from shared resources being depleted or degraded because users pursue their own interests, contrary to the common good. This leads to unsustainable depletion or degradation. The atmosphere and oceans are examples of such shared resources.

There are also reverse situations, in which resources that are available for the benefit of society are unused, to the detriment of the common good. In such cases, there are opportunity costs from disuse that result in detriments, because the benefits of use are foregone. India’s abundant sunlight is a good example. Given its abundance, a reasonable expectation might be that extensive innovation and market organisation would be focused on harvesting this potential energy. Alas, India is a laggard in innovation relating to solar power.

Another resource that is neither depleted nor degraded by usage but underused is radio frequency spectrum. The opportunity cost for unused spectrum is therefore even greater than for a degradable mineral resource such as coal, resulting in an extreme tragedy of unused commons.

Some Issues Need Resolution

The situation today is that swathes of spectrum are unused because of our inability, perhaps unwillingness, to develop the appropriate regulations and organisation to benefit from them. This is true of all unused and underused radio frequency spectrum, although some of it is the most useful means for broadband connectivity for the majority of our rural and semi-urban population. It would also give more urban users less expensive access. For both sets, judicious use would enhance productivity and improve living conditions.

The entire thrust of the Digital India initiative requires these enabling policies and procedures, that is, the administrative rules and regulations that would enable the use of presently unused and therefore wasted spectrum. There are, of course, many other steps required than merely putting in place the regulations. The market structures and organisation have to be created under government leadership with other stakeholders in industry and civil society that would permit sustainable use of “the commons” — namely, the spectrum, if it were a shared resource instead of being apportioned in silos.

At present, private operators in this sector, except one, have too much debt, very low profitability, and insufficient network coverage. Services can be good in some locations, but countrywide, are spotty and not universally accessible. Yet, operators apparently want auctions, not now but at some time in the future (perhaps next year), for the essential resource that is the prerequisite for building the coverage that they don’t have although they are sorely needed, as they have been for years. While clearly impractical because of how auctions soak up capital, limiting subsequent investment in networks because of the deprivation of capital, operators reportedly want auctions in order to reduce competitive threats. 

Another baffling aspect of our reality is that the administration and regulator took no effective action to prevent the destruction of existing market structures in the telecom sector when there was a disruptive new entrant. Although, with overwhelming resources from unrelated activities, unsustainable strategies and tactics could be construed as jeopardising India’s current and future productivity. Meanwhile, the administration and the regulator dithered, debating theoretical concepts of what constitutes anticompetitive or predatory activity, and the judiciary remained on the sidelines.

Yet another aspect of puzzling inactivity is that there have been no steps to test certain promising technologies for permitting their use through appropriate policies in India, such as TV White Space or the development of MIMO — Multiple-Input-Multiple-Output — using arrays of antennas, yielding (a) greater throughput (b) over longer distances (c) to more users, thereby improving spectrum capacity for broadband. While initial tests for TV White Space, conducted after a delay of several years, have been promising (disclosure: the author was associated with some), proposals for larger follow-up trials have stalled. Without these, policymakers can’t even consider policies that would enable the development and use of TV White Space devices for extending optical fibre from gram panchayats to hundreds of thousands of village users.

In the press, confusing articles short on facts make policy formulation even more difficult and risky in this already technically and financially complex space. One instance is an article about Maharashtra’s Village Social Transformation initiative avoiding TV White Space because this technology has problems with security clearance, in addition to Foreign Contribution Regulation Act clearance for Microsoft’s sponsorship of the pilot. There's no mention of the real problem in India: getting permission to use TV White Space for purposes other than for Doordarshan’s broadcasts. The security risk in these frequencies is the same as in other frequencies, and transmission in any band can be monitored.

Another article suggests the government is considering allocating a high-speed wireless frequency band of unused spectrum (V band or 60 GHz, which is like short-range wireless optic fibre) on a first come, first served basis “which is a gross violation of the Supreme Court order”. Somewhere down the page is a surmise that since the Broadband India Forum is advocating de-licencing of this band and foreign companies support it, this “means that it should be allocated without auction on first come, first served basis”. The Broadband India Forum in its white paper clearly recommends aligning with an international standard, the Harmonised European Standard.1

 According to this, low power equipment within specified emission limits in this band doesn’t need a licence, like Wi-Fi, which is de-licenced spectrum that is open access and not allocated for exclusive use. Other de-licenced spectrum would not need to be allocated either, although in India, bands such as 60 GHz could be restricted to authorised operators.

It needs government intervention to cut the Gordian knot and initiate discussions on pooling spectrum for networks and working out practicable, sustainable options. Here’s hoping good sense and guts will help to make a start.

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Shyam (no-space) Ponappa at gmail dot com

1: "V band - 60 GHz: The Key to Affordable Broadband in India"

White Paper by Broadband India Forum, November 9, 2016

http://www.broadbandindiaforum.com/img/White%20Paper%20on%20V-BAND%20Revised%20Final.pdf

Transformation, or Drift?

We need transformative policies and incentives with purpose, especially in solar power and digital infrastructure.

Shyam Ponappa   |   August 7, 2014

An uneasy sense of drift has set in after the anticipation that accompanied the swearing-in of the National Democratic Alliance government. Surely, the government understands that its real task is to build on hopes and expectations, to channel energies, to organise and coordinate for results, even perhaps try bipartisan teams? The opportunity is to overcome factionalism and harness people's energies, instead of floundering in disunity. We need transformative policies, programmes and incentiveswith purpose.

Resolute efforts in specific sectors can change this sense of the same old same-old. Two aspects of infrastructure that need early attention are: first, solar power, and second,digital infrastructure (see "A great start by Modi government", June 5, Business Standard).

Solar power, critically important in its own right, is essential for digital infrastructure because of the poor grid supply. Disappointingly, the steps taken are more of the same. For instance, the renewal of the national solar mission. for an increased 1,500 megawatts, is on the same lines as before - that is, a 30 per cent subsidy for solar farms, accelerated depreciation and renewable energy credits (RECs) that provide subsidies for a fixed period. While the target is higher, it is minuscule compared to the potential, and relative to other energy sources. For distributed user installations, interest-free loans seem ineffectual, because the high prices are unchanged, although payable in instalments - hardly ground-breaking.

Could the government try a more radical incentive of zero tax on equipment in addition to a 30 per cent subsidy, with immediate reimbursement and stiff penalties for misuse? Lower capital costs would probably induce much more extensive deployment, spurring manufacturing and innovation through sheer volume. This is likely for solar farms as well, and these incentives could be made available if such farms are really desirable. The government would lose upfront taxes on equipment, but avoid the cost and complexities of the RECs and accelerated depreciation, while gaining taxes downstream from increased productivity.

Similarly, in communications, we need countrywide access to broadband at reasonable prices. Users could benefit from applications such as education at all levels, from secondary school to college to continuing education for adults, healthcare; e-commerce; remote working/telecommuting; government services, information; and entertainment. Of course, once we have broadband, we'd need the range of useful, attractive content and services that result in improved user satisfaction, as well as productivity. These "supplementary effects" will undoubtedly take time to develop and play out, but the prerequisite is the access.

On this score, the much-awaited spectrum sharing recommendations are sorely disappointing. Their intent is puzzling because they are so restrictive, limiting sharing to two operators who have acquired frequencies in the same band in the same manner, with a cap of 50 per cent.

Build and Run Communications Networks Like Roads

Perhaps the telecom regulator's recommendations on spectrum sharing are an opening gambit to explore active network sharing. The logic for network and spectrum sharing is compelling. With India's self-created spectrum constraints and genuine deficiencies of capital and network coverage, the rational approach for our developing economy would be to optimise their use, as with roads. For this, active network sharing, including radio access networks and spectrum, is the most efficient solution, as is the case for roads.

Unfortunately, our policies are at the other extreme, of spectrum auctions and exclusive networks. This is least efficient for extending underdeveloped infrastructure services, as building and operating multiple exclusive networks requires the most resources, including capital. Auctions may be a reasonable alternative where there's existing infrastructure, and the issue is of allocating resources to whoever can make the best use of them. In our situation and given our needs, the way we build and operate roads may be a better alternative to achieve coverage.

To see why, compare the contrasting approaches of building communications networks with highways and roads. Road developers not only don't have to pay auction fees for the right to build roads, they are paid periodically for the construction of the assets. Ownership of the assets is then transferred to the state or other agency, and all road tax and toll payers may use the facilities. Similarly, all licensed operators could have access to communications networks on payment. While payback periods are often longer for roads, the nature of the financial flows are the same: capital must be invested in building the network before revenues are generated from users. People need to be informed and educated about this inescapable process.

Sparsely populated rural areas have lower revenue potential than urban areas. Hence, communications networks and services in rural areas lag because of commercial considerations. This deprivation is aggravated by front-loading auction fees for spectrum, which curtails investments in the networks and services in areas with lower potential. Also, unless operators pool resources, exclusive usage militates against full utilisation of the infrastructure. Our policies should reflect all this, instead of restricting spectrum access and sharing, including for 3G.

The real irony is that the pay-for-use principle is well accepted for roads; yet the opposite principle of auctions is used for communications networks. This is the unintended consequence of accepting auctions without thinking through what we need in our circumstances compared with advanced economies, and how to achieve those objectives.

Our spectrum policies have resulted in small bands of non-contiguous spectrum holdings that severely restrict capacity. Besides, operators have to invest heavily simply to protect the assets built. Yet countrywide broadband services need more spectrum to be used much more effectively to facilitate last-mile access. The kind of solution we need is for all remaining spectrum to be used for a common-access network, owned by a consortium of operators, including state-owned Bharat Sanchar Nigam and Mahanagar Telephone Nigam as "anchors". Once integrated with existing networks, operators can commercially deploy services with enhanced capacity, for which they pay as they use, and get paid. Broadband can be revolutionised by setting this up and converting spectrum fees to pure revenue sharing, as happened for mobile telephony with licence fees years ago. With the benefit of hindsight, the fees can be set low from the start, with regulatory oversight to avoid predatory pricing, and growth will most likely explode.

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Shyam nospace Ponappa at gmail dot com

A Great Start (for the Modi government)

With miles to go, and many details to resolve

Shyam Ponappa  |  

June 5, 2014

The National Democratic Alliance government has made a terrific start. Time will tell how this plays out, but it has begun decisively and set a sure tone. With such an unequivocal mandate, it would have helped to avoid jarring notes like the appointment of the principal secretary to the prime minister through an ordinance. Besides, the government has already shown wisdom in its actions in not rolling back the previous government's good schemes and in extending senior administrators' incumbencies.

If this wise approach continues to show in their thinking and action, greater support is likely from civil servants, citizens, and perhaps even opposition politicians, resulting in better outcomes. It's a question of pulling together towards common goals, or pulling in different directions. Think of the indecisive second term of the United Progressive Alliance (UPA), and recall that it was the Bharatiya Janata Party that stalled the functioning of Parliament on many occasions, including measures such as the induction of the Goods and Services Tax (GST). The general perception, however, was of a dithering UPA unable to coordinate and achieve results. In other words, impressions are more important than the reality of untidy facts.

This is why it's important that the PM and his team consciously create a good impression and carry people along. If they can do that, they are likely to achieve a great deal for us all. Instead, if they are perceived as heavy-handed, roughshod, and not going through due process, the salutary effects of exemplary leadership and governance are likely to be lost. The two-thirds who voted for others recently might well begin to converge, so that an opposition that is currently non-existent because it is dispersed, begins to coalesce. This could obstruct a high-handed government, or even try to pull it down. The result, as before, is likely to be irresponsible shouting matches and disruptive behaviour in Parliament that have stymied efforts to improve our lot.

The Tasks Ahead

There's so much that needs to be done in so many areas to recover our growth prospects and potential that it is truly daunting. For instance, consider infrastructure, and take just one aspect of it: energy and power supply. This covers many things:

• The need to build electricity generation from all sources;
• The supply of fuels, including the mining, transportation and pricing of coal, the development and pricing of hydrocarbons, hydroelectricity, nuclear fuel, and alternative energy sources;
• The requisite transmission and distribution systems, and their finances; and
• Issues related to retail pricing and collection in the context of our difficult legacy of unsustainable giveaways.

In addressing these, there are a couple of priorities suggested for the new government:

1. Infrastructure & Digital Access

The government seems serious about infrastructure. The PM's 10-point guidelines to his ministers begin with infrastructure reforms, mentioning health, water, education, roads, and energy as priority areas, with a separate mention of e-auctions for transparency.1 Given this, one would expect that digital networks are an integral aspect of desirable infrastructure that provide people access to e-governance services.  However, if digital networks are not mentioned specifically among the government’s priorities, their importance is likely to be lost in the ensuing activities.  Meanwhile, the situation in the sector is complex and confusing, with conflicting demands from private sector contenders, state-owned operators MTNL and BSNL, I&B, and the Finance Ministry’s need for short-term revenues.  This is why issues relating to communications infrastructure deserve to be addressed and resolved with high priority, and the government needs to explicitly recognise this.

2. Solar Power: Incentives & Promotion

A baffling aspect of our energy policies is why solar power has not become a centrepiece of our daily energy use. Much of the country gets so much solar radiation for most of the year that it should be an obvious focus for an energy-hungry developing economy. It should be possible, one would think (without knowing how simple or complex it would be to engineer the solutions), to use solar power when it is available, and grid power when it is not. The ministry of new and renewable energy had a scheme for partial capital reimbursement and soft loans for individuals and groups until the end of March 2014.² It doesn't appear to have been particularly successful.

Surely our priority should be to devise and implement schemes that actively encourage individuals and groups to invest in distributed solar generation for themselves? A long-term approach may require feed-in tariffs and grid modifications, as well as changes in administrative policies including taxes, to ensure (a) a significant increase in solar power (b) with more locally manufactured equipment. In the short term, an appreciable increase can result from enabling changes in rules and procedures, and the reimbursement of some capital costs combined with reduced excise and taxes.

The scope at the macro and micro levels is immense, encompassing multiple ministries that add up to a vast tangle, like an immense Gordian Knot. Add the other aspects of infrastructure, and the list seems endless: networks that are essential to enable e-governance and productivity through communications, transportation - e.g., rejuvenating the railways, disentangling the stalled process of building highways and roads, air and water transport, water supply and sewerage, and so on. All these have to be addressed within the constraints of the fiscal situation, inflation, restrained economic momentum, employment generation, budgetary limitations, and the reconfiguration of asset pricing to make financial returns attractive relative to property and gold without disrupting property values and the banking system. It will certainly help if our energies converge on the tasks focussed on realising the requisite goals, instead of being frittered away on disunity and fratricidal skirmishing.

Despite the daunting tasks ahead the prospects are solidly encouraging, because of a clearly mandated government. Another positive factor is the swing in votes favouring development over regressive caste and religious affiliations or hand-outs. This happened abruptly, without warning. If such tremendous change is possible so quickly, imagine what good leadership and honest governance could pull off with an inspired and supportive citizenry.

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shyam nospace ponappa at gmail dot com

1: "Energising economy figures on Modi's 10-point agenda", Business Standard, June 3, 2014: http://www.business-standard.com/article/politics/energising-economy-figures-on-modi-s-10-point-agenda-114052900618_1.html2: https://www.nabard.org/english/installation_of_solar.aspx

Initiatives For Renewable Energy

Shyam Ponappa / New Delhi February 07, 2008

There is an urgent need to organize for solar power & biofuels in India

...We need a comprehensive and integrated, silo-busting, problem-solving approach. This is in contrast with coasting along on a post-feudal-colonial mélange of currents and tides, with the brigandage of opportunistic politics fed by our (the voters’) greed for short-term benefits, resulting in our grotesque populism...

...Our leaders acknowledge repeatedly that infrastructure is India’s great need. Yet, they take no steps to marshal forces to draw up a credible strategy and execution plan. This is what needs doing...

...We have to “engineer” our way ahead, i.e., take active steps to build and develop our solutions, not passively wait for something good to happen...


Recent developments in renewable energy, e.g., cellulosic ethanol and concentrating solar power, underscore the urgency of pulling ourselves together on these fronts.

Cellulosic Ethanol

At the Detroit Auto Show in January, General Motors made a startling announcement: it had invested in a biofuel startup. This startup, Coskata, is one of uber-investor Vinod Khosla’s bets in renewable energy. Coskata claims it can produce ethanol from cellulosic sources at reasonable cost. The feedstock can be woodchips, grass, straw and agricultural waste from crops such as corn and wheat, even plastic and other carbon waste such as old tires. Coskata’s process needs much less water: less than the volume of ethanol, not three to four times as for other methods. Argonne National Laboratory reports that the process generates 7.7 times the energy used, and reduces CO2 emissions by over 80 per cent compared with petrol. However, this is in the laboratory, and Coskata has to prove it can scale up. This is planned by 2011, starting with a pilot plant this year.*


Coskata converts feedstock using heat into synthesis gas or syngas, comprising primarily carbon monoxide, hydrogen, and carbon dioxide. This gas is processed by proprietary microorganisms to create ethanol and water. In contrast, other bio-fermentation processes usually create a number of complex alcohols in addition to ethanol. Coskata’s microorganisms reportedly have greater tolerance to impurities in syngas than processes that use chemical conversion. The ethanol and water are separated using a membrane technology that is estimated to cost only half as much as processes such as distillation. Overall, Coskata achieves the highest conversion efficiencies for ethanol.

Solar Power — No Rain In Spain

Southern Spain is known for its sunshine and scarce rain. Capitalising on this “deficiency”, Spain is becoming the leader in the revival of Concentrating Solar Power (CSP), i.e., focusing heat from solar radiation to generate electricity, pioneered in California. In the 1970s, nine solar thermal plants were built at Kramer Junction in the Mojave Desert to produce 354 Mw, then forgotten in the rush for fossil fuels.

Outside Seville in Spain, 600 reflectors focus solar radiation to the top of a concrete tower 40 storeys high. This is Abengoa’s Solúcar project, which converts radiant energy into heat, driving steam turbines that generate about 10 Mw of electricity at an estimated cost equivalent to $50-70 a barrel. The capital costs are high but the fuel is free, and there are no noxious emissions. Photovoltaic generation costs nearly double CSP, but has the advantage of modularity: small units can be used for individual homes, while CSP needs large amounts of capital and land.**

A different CSP design using parabolic troughs is used by Spanish company Acciona in a 64 Mw plant commissioned last summer near Las Vegas in Nevada.**

Relevance for India

These are instances of developments that deserve focused attention in India — another area where we have an urgent need to set about organising ourselves out of our chaotic ways. My aim — fond hope — is to initiate or precipitate action. Ideally, through an agglomeration of our imagination and ability, we will develop a sound process of analysis, goal setting, and then proceed with the follow through to achieve these goals. But we have to apply ourselves for this to happen; these are complex issues, and need informed analysis and decisions.

We need a comprehensive and integrated, silo-busting, problem-solving approach. This is in contrast with coasting along on a post-feudal-colonial mélange of currents and tides, with the brigandage of opportunistic politics fed by our (the voters’) greed for short-term benefits, resulting in our grotesque populism, in lieu of the much greater deferred gratification of pleasing cities and countryside with the appurtenances of proper governance: sidewalks and drains, transport, administration and order, hospitals and schools. We have to “engineer” our way ahead, i.e. take active steps to build and develop our solutions, not passively wait for something good to happen.

This applies across the board in the broadest “spatial planning” sense that integrates housing and land use at all levels with commercial, industrial, cultural and scientific activity, transportation, and all governance and infrastructure: water, sewerage, energy, communications. Infrastructure being the first level of enablement, it is an essential starting point.

Plan Outlays — Necessary But Not Sufficient

Our leaders acknowledge repeatedly that infrastructure is India’s great need. Yet, they take no steps to marshal forces to draw up a credible strategy and execution plan. This is what needs doing. Only money won’t do, because delivery systems and processes have to be developed, i.e. planned, then built from scratch.

Finance is certainly a requirement, but it is not the only one. Equally critical is coordinated implementation. This needs human resources and organisation, with the technology, systems and processes to make it work. All these must mesh in a goal-oriented organisational form in an enabling environment for good outcomes. This requires a combination of the regulatory aspects of government together with the social aspects of human dynamics, including the availability of trained people for production and delivery, and well-developed markets with all the necessary attributes, starting with demand. Therefore, funding is only one critical step.

Creating Institutional Delivery Systems & Processes

Our need is to create the requisite institutional systems and processes. This is probably best done with an open, collaborative approach — if we can pull it off. “Our need” means primarily for the government to act, and secondarily for all of us, given how we are set up. We — in all our spheres: private, corporate and governmental —have to do this ourselves, and stop hoping somebody else will do it for us.

No individual or single-domain point of view can do the job. Just as considerable national effort is directed at expanding India’s access to fossil fuels, there needs to be serious, coordinated effort by people with diverse skills and expertise to aggregate, analyse, present information on developments, and help make decisions in these alternative energy areas. We don’t need more government agencies, but we do need to configure a group to get the job done. The key is to aggregate the domain and process expertise — from existing ministries/departments, agencies and the private sector — focused on the purpose at hand.

shyamponappa@gmail.com

* http://www.coskata.com/

** www.technologyreview.com/microsites/spain/solar/
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