Kissa "Open Access" ka

Though the one-day session hosted by IPPAI was named "Consumer Issues in Power" but the whole day had discussions more on the topic of Open Access in Maharashtra. The session was attended by representative from the state electricity regulator, state and private discom and transco, IPPs and EPC contractor.

 Increase in power prices have an impact on companies that are power intensive and who are already grappling with increase in prices of other raw materials. With prices in both the power exchanges falling steeply it becomes all the more salivating for companies to opt for open access. That makes business sense also. But why are the companies not doing so. Even the Electricity Act 2003 enables to do so. The problem lies in the words "but" and "if" that are part of the Act. The Electricity Act allows the SERC(State Electricity Regulatory Commission) to implement open access when the SERC thinks that it will not lead to unhealthy competition and financial(monopolistic) loss to the exchequer.

The Industry Association also provided their view on the subject. The Association also showed how Open Access will benefit the State Electricity Companies,something which NASSCOM does, regularly, to show how America benefited from outsourcing. It was not only the private sector companies(consumers) that had expressed their views. Even there was participation by government companies and one of them was the largest consumer of Electricity, the Indian Railways.

The State Load Despatch Center (SLDC) also has its limitation on implementing open access. Already the SLDC is not able to tackle the congestion management problem that arise due to collective transactions happening through the Power Exchanges. The infrastructure for Load Management is well geared for long term bilateral contracts but yet to  prepare for short term contracts which will increase if Open Access becomes a reality.

Open Access can be smoothly implemented with usage of modern tools available with us. Using forecasting tools and with availability of historical data, many of the uncertainties about supply and demand can be dispelled. What was missing in the discussion was innovation. Power sector in India has complex problems. Difficult problems call for better innovation. With modern day analytical tools solution can be found for the problems. Delaying implementation of Open Access can not be panacea for the Government. The Regulatory Commission can remain flexible till the policy is properly implemented but that should not give rise to sudden jerks which will become nightmare for the customers, IPPs, investors and the society at large. 

Can’t erase state power firms’ losses at one go !!

The article in the business daily, LiveMint, provides the quantum of losses of state distribution companies and its impact on achieving the target for power generation set up in the 11th plan.

Are Wind Turbine manufacturers going the Henry Ford way ?

The article  in New York Times speaks about how established power equipment manufacturing company like Siemens which is into other businesses also think about the wind energy sector.

Investors in the sector worry about government policies more than market volatility

The recent news that appeared in NYTimes article  sends some encouraging signal to the renewable energy sector. The renewable energy sector and more specifically wind power sector is becoming more of a mainstream industry than something that was looked upon as surviving under the aegis of government subsidies. Cases are generally referred to the WTO, when the government remains concerned about any sector that has the potential to generate employment but will be unable to do so due to cheap export of products or services. It is not only the government that remains quite confident about the potential of wind energy sector but also the companies that are into manufacturing of wind turbines.

But another article of Knowledge@Wharton refers about how investment in renewable sector has been affected after the economic crisis in Spain, a country that has been in the forefront of power production from non conventional sources. Excessive subsidies over the past decade has  led to over capacity in solar power production, which now is becoming difficult for the government to purchase at a price above the market rate.  In Spain the government is yet to declare the new policies that will affect the sector; causing uncertainty among investors. The Spanish experience can be a good learning for any government agencies while framing policies for the renewable energy sector.

More than market volatility, uncertainty in government policy acts as a deterrent for long term investors in the sector. In both the above mentioned articles this becomes visibly clear. This has led to outflow in some of the clean energy funds which have investment in the developed countries.

Same may not be said about the developing countries. Among the developing countries, governments of both India and China have taken more initiative in reducing green house gas emission. The Ministry of Power of Government of India has already introduced trading of Renewable Energy Certificate in two of the power exchanges. To measure the performance of a state, the Indian Central Government will also take into account environmental factors before providing any kind of financial assistance to the state.

To reduce the dependence on imported oil, China has set itself a target to become the largest producer of electric vehicle by 2012. The Chinese car market has been growing almost 50% a year.  Similarly, Israel also has set a similar goal to make its transport sector “completely free of petroleum” by 2020. Thanks to the technology and infrastructure developed by the Israeli start-up company Better Place.

Shai Agassi, founder and CEO of Better Place, while delivering the 2009 Alfred Deakin Eco-Innovation Lecture said “Things that brought us to the crisis, will not take us out of it.” 

COMMUNITY SUSTAINABILITY FOUNDATION

COMMUNITY SUSTAINABILITY FOUNDATION BY KENERGY WINDFARMS

Kenergy Wind believes that the whole community should benefit from the project, not just those with a direct financial stake. Kenergy Wind will allocate a portion of the Wind farm’s profits to the Community Sustainability Fund . This funding has been accounted for in all financial projections. Community Sustainability Foundation  is a charitable initiative by Kenergy wind farms  based in India dedicated to strengthening local communities, creating opportunities and tackling issues of disadvantage and exclusion. Community Sustainability foundations target grants that make a genuine difference to the lives of local people. It manages funds contributed by Kenergy Wind farms profits , individuals and organisations, building endowment and acting as the vital link between donors and local needs, connecting people with causes, and enabling clients to achieve far more than they could ever by themselves. Its an initiative to uplift the local community where the wind farms will be developed to ensure the development of the local community as well.

Kenergy Community Sustainability Foundation is spearheaded by Ms. Rashi Kapoor 

World's global energy forecast

Interesting Reading

Clifford Krauss article in NY Times on Global Energy Outlook.

Thinking globally acting locally

In the last World Economic Forum - India Economic Summit, Prof C.K Prahalad, was talking about how Indian companies have introduced business models to cater to the domestic customers. This did not require any path breaking innovations or creativity. Neither did Air Deccan innovate alltogether a new model of aircraft to ferry passengers at a cost as low as a glass of beer in any of the five star hotel across India nor did Hindustan Lever changed the composition of the shampoo. But both the companies were able to deliver their products and services to the "aam admi". Whether it is Bharti Airtel outsourcing the whole netowrk to IBM or Dr Aravind Eye Care clinic adopting the model of McDonald. All the leaders of the companies mentioned above had one thing in common. They thought globally but acted locally.

Can something similar happen to the energy sector ? Can power be delivered at a cost that would make providing power subsidy to farmers irrelevant ?  I know the questions that will prop in the mind of readers are about the gigantic challenges. The rate of addition to the existing capacities are abysmally low. There are lot of worries about how to achieve the traget set out in each of the five years plans. But those questions have remained for a long period of time and I do not see them being adressed in the near future.

So leaving the worries behind, we need to think globally and act locally. I belive the answer lies probably in decentralisation of power production and transmission. It is about changing the way power is produced and delivered. Producing energy using renewable sources will help in bringing decentralisation very rapidly and without much hassle.

With most of the countries embracing clean technology for power production the cost of equipments will also reduce. Here we have to take into account the benefits of globalisation. A recent article in New York Times mentioned about how the subsidies offered by Chinese government to the manufacturers of solar collectors help in reducing the cost. Even the most innovative companies of Sillicon Valley are not able to compete with the Chines manufacturers. This reduction in cost of solar collectors will be an incentive for local communities in India to set up their own power producing unit on a co-operative basis. As the plants will be run by the very people who will be the end consumer, I think many of the unasnwered question of yesteryears will not remain. Now suppose a village community has set up a local power producing unit based on solar power can also set up a small hydro unit that will be fully operational during rainy season. This will help in addressing the seasonal effects that hinder power production from any one particular renewable energy source. Usage of smart gird technologies can help the local people in adopting the most efficient means of using the transmission facilites. Smart grid techonolgies also enable in better forecasting of power consumption. So the whole operation of power production and transmission will be within the hand of local authority.

This model of power production and consumption can be done on a pilot basis to check out the feasibility. Successfull implementation will also help government to design their policies that may encounrage similar projects to be take up by other local communities.