Old Source, Old Trick, But new Fervour

Hope invariably comes from fresh thoughts. Twenty summers ago, India had no choice other than to reform its economic policies. What began as a crisis, it eventually created new opportunities almost in every sector of India’s economy and raised the aspiration of people.  Driven by renewed hope, the economy graduated to a new orbit of growth leaving behind its past—pathetic GDP growth rate of 3.5 percent forever.

The effervescence of new energy reflected in the variety of products that swarmed the market. It satisfied the new generation of consumers and thereby created new segments of market. However, with the rise in population and increase in production of goods, the consumption of energy too went up. The threat of global warming and its consequence—climate change loomed large on the horizon.

While the economy continued to grow, paradoxically, the existing systems of energy production, primarily from coal and gas, showed the inevitable—the law of diminishing returns. Exploring new reserves of coal became a hurdle, as the mining of coal cannot be at the cost of the environment. Importing of coal from Australia and Indonesia would not be viable for long, as these countries would raise the price of coal for export.  Like all good things in life, the party can’t go on forever.

But the rising demand-supply gap of energy that the country faces could turn out to be a blessing in disguise. The alternative could be exploring and seeding green power. “The old wisdom of generating power from water with minimum annoyance to the surrounding areas is all set to be back,” says an enthusiastic analyst working with an energy consulting services company.

A report on Indian power sector analysis suggests that India is rated as one of the top three countries for renewable energy investment. Apart from Solar, Wind and Biomass, the writing on the wall is in favour of Hydro power. The reasons are obvious. It is clean, which means it has the potential to reduce carbon foot print. On the top of it, hydro power is cheap, requires minimum maintenance and would give the much needed comfort of energy security. In Canada, there are examples of hydro power which have been running for more than 70 years.

There are two votaries of hydro power: one in favour of big dams, which play a multi-purpose role and the other, is run-of-the-mills projects. Despite the shining example of Bhakra Nangal in Punjab, which play multi-purpose role from storing water, generating power and irrigation, the big dams are notorious in submerging huge tracts of land, displacing large local population and disrupting fragile ecosystem endangering rare species of flora and fauna. The track record of rehabilitation of the displaced is equally bad.

The flavour, therefore, has shifted to the no-frills, which in essence are single purpose projects. Called run-of-the-mill projects, they would only generate electricity and are carried out in regions with a lot of slopes. Water from a stream running through a mountain is made to fall on a turbine and the water is put back into the river. As a result, the original flow of water is maintained and the surroundings are not disturbed. The displacement of population is significantly less. “Not more than 100 families are displaced in this kind of projects,” says an analyst working with an energy consulting services company. A typical run-of-the-mill mini hydro power plant could be anything between 90MW and 100MW. But it could also be as low as two to three MW and go up to as high as India’s largest plant currently under construction at Teesta, which is expected to generate 1,200MW. What’s interesting, the run-of-the-mill is an old thought in a new era, which would help the economy to grow without driving the displaced population to penury and damaging the ecosystem.

The history of micro hydro power plant in India is more than a century old. The first hydropower station was a small hydro power station of 130 KW commissioned in 1897 at Sidrapong near Darjeeling in West Bengal. The old wisdom is back—with a new hope and fervour.

Renewable Hope for Power

Necessity, as they say, is the mother of all inventions. A silent revolution is brewing up to find new energy solutions. The use of renewable energy is no more confined to cookers, geysers and lanterns—or, lighting a house by fixing solar panels on the building’s roof top.

The human mind has explored the unthinkable and pushed the renewable energy research to the next orbit.  Bertrand Piccard has demonstrated that the solar energy could be used to power a plane, which has four 10 HP electric engines similar to a scooter and weighing not more than 1600 kg like a small sports car. The solar plane’s founder says that the idea came after his first non-stop round-the-world trip in a balloon some ten years ago, when he was shocked by the large amounts of fossil fuel it consumed. What he learnt in the process of developing a solar plane is equally profound. “We are not trying to create an aviation revolution but a change in the mindset of the way people think about clean energy solutions and how it can be used in society," he added.  The plane is made of composite materials and has over 11,000 silicon cells covering the wing.

Italian Renaissance’s master Leonardo da Vinci’s stroke of ingenuity is also visible in some pockets of excellence. Like Vinci, who observed nature to create master pieces from paintings to design of a helicopter, Daniel Nocera, a professor of chemistry and energy, and his team at Massachusetts Institute of Technology has observed the process of photosynthesis in plants for years—how the plants breathe and produce power. They are now trying to replicate that model artificially to produce enough electricity from a bottle-and-half of water, however dirty, to power a small home. Tata Group has signed with Nocera to market the technology, when it would be ready. The initiative, if it succeeds, could reinvent rural electricity supply and provide a viable energy solution to about three billion people worldwide who don’t have it—and yet generate enough profit to sustain it.

The humble biomass may not be in that league of sophistication, but many are harnessing the rustic natural resource to generate green electricity—marrying profit with saving the environment. A lot action is happening in biomass, as the Energy consulting firm InfralineEnergy’s comprehensive report “Evaluating the Attractiveness of Business Opportunity in Biomass Power in India”, says “The opportunity could be gauged from the fact that India is a country blessed with abundant natural resources. The biomass among them is the most promising resource which does not have the inherited precincts as the solar energy—dependent on light days; and wind energy, which has site specific restrictions.”

Apart from showcasing the opportunities and best practices in the sector on the basis of economic analysis and forecasting, the report from the energy consulting firm predicts, “the total biomass power installed capacity by the end of 2013 is expected to be 2395 MW. By 2015 under the BAU, total installed capacity expected to be 4643 MW and in optimistic scenario, 5584 MW. Total bagasse cogeneration power generation capacity by the end of 2013 is expected to be 4576 MW. At the end of 2015 under the BAU and optimistic scenario, total installed capacity for bagasse are expected to be 5290 MW and 5464 MW, respectively. The return on equity could be above 26 percent for the investors.” The challenges, always offer, new opportunities for the fertile minds.  

Hope for Coal Outside

India’s economy requires energy to drive and sustain its high trajectory growth. Though the country has huge reserves of coal, much of it can’t be extracted because of the reserves’ intricate location. According to an energy market research report, the government-owned Coal India Ltd, which controls 18 billion tonnes of coal reserves—much of it is proven, is responsible for production of the country’s 80 percent of the coal. The demand-supply gap from coal power production, however, is increasing. The electricity generation, steel production, cement manufacturing and other industrial processes requires more coal than before to run their operations—and meet the needs of their consumers.

Analysts observe that beneath the excitement circling around new and renewable sources of energy, the age-old coal industry is anticipated to contribute more than 50 percent of the primary commercial energy requirements of India till 2032 and beyond. Even though the domestic coal reserves are vast, the demand-supply deficit of coal is estimated to grow at a CAGR of 17.2 percent till FY 2017. The domestic coal industry’s challenges such as exploration, technical, environmental, high-ash in domestic coal and logistical issues have compelled India to import 11 percent of total coal consumption, which is expected to rise to 15 percent for power sector alone by FY 2017. India’s planned investments of more than INR 2 lakh crore over the entire coal value chain may not be sufficient to secure future coal requirements, points an energy market research report.

InfralineEnergy’s “Global Coal Acquisitions and Imports: Opportunities and Sustainability Assessment for India” report suggests that coal import is bound to rise. The analysis is based on the recent Central Electricity Authority’s notification to design boilers with a 70:30 coal blending ratio (indigenous vs. import). The report states that apart from blending requirements and superior quality parameters, the coal industry is likely to see converging price trends of imported and domestic coal. Consequently, Indian companies would rely more on imports. The inclination for global hunt for coal has started. Indian companies have acquired overseas coal assets at lucrative locations such as Mozambique, Indonesia and Australia.

As for the future, the report advises that the efforts require a planned politico-economic strategy to effectively counteract aggressive players such as China and de-risking from the rising coal prices and escalating price tag of overseas coal deposits. Australian floods and Japan earthquake have resulted in structural changes in global coal industry’s trade pattern, along with disruptions from pirate attacks to coal vessels which has resulted in a loss of around $ three billion in global seaborne trade in 2010.

The report details new frontiers such as New Zealand and Kazakhastan, which require proactive approach to reap the early mover advantage. Certain nations have been identified which offer a favourable prospect for clinching long-term import deals without owning the coal mines and there are others which require infrastructural development to encourage foreign investment.

The rising import of coal would attract investment in infrastructure related to coal logistics. The port sector in India needs a complete overhaul with fluctuating global freight rates and growing need for panamax and supramax vessels to manage the rising coal imports. A lot of action is waiting to happen.

Market Solar as Luxury

There’s no dearth of construction of new residential buildings. In some places, the rise of the new structures is vertical and in some pockets, it’s horizontal. You don’t have to go there to know how they would look like and what all would be there once they are ready. Anyone living in Delhi and surrounding areas is swarmed with SMSes telling their flashy names and their unique features. A little query would inform that these buildings have everything, excepting powered by renewable energy.

When these buildings would be occupied, each of them would use almost all the gadgets available in the market. There is no harm in it. What remains unsaid is that these devices would draw power from the grid. Inevitably, the surrounding low and middle-income colonies would have to satisfy with inadequate supply of energy from the same grid. Even those living in the newly constructed ‘luxury homes’ would use diesel operated generators to meet the shortfall of electricity supply, and contribute, thereby, to pollution and global warming.

What surprises that none of the builders thought of using renewable energy to power these homes. There’s enough scope on the rooftop for fixing solar panels. The lighting of the building could also be managed with solar energy. A renewable energy research report says that the process is smooth, if the generated electricity from solar is consumed within the building. The problem arises if the surplus energy is put into the grid. It requires bi-metering, unlike today’s meter which works only in one direction—one is charged for the amount of electricity one uses. In the West, if the electricity generated from the rooftop is put into grid, then it’s measured and surplus energy is put into opposite direction to be utilised by other people.

The argument that solar energy is too expensive hardly holds water, when the buyers of these homes can afford all the luxuries. What’s more important is the intent. Affordability is always relative. Luxury is always for the upper crust of society. If this category of people can afford Merc, BMW, Harley Davidson, why wouldn’t they pay for a house designed in such a way that the energy requirement is supplied by tapping intelligently solar energy, the most readily available renewable energy.

If one goes by the price tag of the ‘luxury homes’, the profile of the potential buyer is those who prefer to eat high priced organic food, spent the weekends in natural surroundings and have a second home in the hills. Why wouldn’t they pay more to make a green lifestyle statement?