Has India’s Energy Sector Really Transformed?

SL Rao

Most importantly, Piyush Goyal, the Union Minister for Power and Renewable Energy, Coal, and Mines has cleared the coal sector’s Augean Stables, which were riddled with corruption, theft, and inefficiency. Coal is easily available today, imports have fallen, and global prices have fallen along with those of oil and gas.

Falling domestic demand has sent coal prices lower as well. Power is surplus despite power plants working at a low average plant load factor of 60 percent. But at the same time, around 30 crore people remain without electricity.

Does This Indicate A Transformation?

Not so much. On the positive side is the coal availability and price situation, increasing but still inadequate interstate transmission capacity, some reduction in transmission and collection losses.

But state-owned power distribution companies do not generate enough of their own funds to buy power from within the state or from outside. This is because tariffs remain uneconomical for the distribution companies.

States have violated the law that permits open access for distribution companies to purchase cheaper power from other states. Instead, they buy expensive power from within the state.

Ruling parties treat power as a public good which must be available to all, irrespective of their ability to pay. This has meant that power is given free or below cost to many households, for agriculture in many states, and to some other favoured consumers. Agricultural use of free or cheap power has led to a surge in water-intensive crops like rice and sugarcane, often on soil that is unsuitable. Outcomes range from saline soil to depleting groundwater and river water levels.

The government just ends up accumulating large stockpiles of rice. Compounding that, the Government of India has a minimum support price policy that encourages cereals even when the demand is falling. It has no relation to water availability and use for the crops.

There has been no improvement in gas supplies to operate stranded power generation capacity. Even when gas is available, demand may not be sufficient. Gas generation is flexible and can usefully back-up variable generation from renewables.

Renewable Energy And Efficient Appliances

Wind and solar renewable energy capacities have gone up significantly, as have some small hydro-electric projects. Governments incur subsidy expenditure in promoting renewable energy, but regulators have failed to enforce renewable energy obligations, resulting in a loss of revenue for the generators of clean power. State power distribution companies have not been compelled to meet renewable energy obligations in their total power supply mix.

Progress has been made on energy efficiency. The distribution of LED light bulbs has helped conserve a significant amount of power, as have other measures initiated by the Bureau of Energy Efficiency. This may well have resulted in some decline in demand for generated electricity.

UDAY Scheme: A Stop-Gap Fix

The power sector benefited from the Ujwal DISCOM Assurance Yojana (UDAY) scheme, which reduced debt on the books of state distribution companies by getting the corresponding state government to take over the debt. This, however, has not made any of the distribution companies profitable, but the saving in interest costs has freed some cash.

The UDAY scheme is the best that the Centre can do since electricity is a concurrent subject in the Constitution.

The scheme needs to be seen, not as a solution, but as short-term relief. Power distribution is a state subject, and ruling parties are populist about electricity pricing as they are able to woo large electoral voting blocs.

This is made possible via the appointment of state regulators who are mostly compliant, often from the community of retired bureaucrats who have served in the same state. Until regulators are appointed for their independence, courage, and lack of subservience to ruling governments, there can be little change in the dire financial position of power distribution companies.

It is apparent that fundamental change still eludes the power sector.

UDAY is merely transferring some distribution debt to state governments. It does not tackle the problem of below-cost tariffs and significant inefficiency caused by government ownership.

The only way state governments can indefinitely continue taking on power distribution debt as it accumulates, is via the annual budgetary exercise. But doing so will divert funds from vital state spending – on human capital, law and order, and the building of infrastructure.

There is no option but to charge users a tariff that is remunerative to the company.

Regulate Well, Build Capacity, Store Better

Regulators must have the authority to punish those responsible for below-cost tariffs, and delays in Aggregate Revenue Requirement filings. Transmission and distribution losses, poor collection, and theft of electricity must be targeted, monitored and failures severely penalised.

Interstate and intrastate transmission capacities are grossly inadequate. Governments are the primary investors in this space, more so because private investors are put off by long and frequent government delays, and the consequent costs.

Delays in giving government clearances on land, environment, forest and others have held up many a project, keeping out subsequent private investment.

While India is taking rapid strides in renewable energy, and there are heavy government subsidies involved, there is little investment in backup storage capacity to make up for a shortfall when there is no sun or little wind.

This storage can be of water, batteries or as flexible generation capacities in gas or coal.

In sum, the energy and especially the power sector in India has experienced an uncoordinated set of policies that have left this vital sector largely in government hands and running at a loss. Foreign investment is most unlikely in such a sector. The domestic investment that has taken place is not very profitable. Their supply is either confined to large users or use other means to cover costs.

Huge investment has been made in the power sector, but it needs more. The present surplus is artificial and not due to demand satisfaction, as much as to poor revenues. The energy sector must be approached in its entirety, policies must be integrated for the private as well as public sector to run it in a way that is remunerative.

SL Rao is a Distinguished Fellow Emeritus at The Energy and Resources Institute (TERI), and was the first chairman of the Central Electricity Regulatory Commission.

(This article was originally published in BloombergQuint.)


View original Post on: https://www.thequint.com/environment/2017/04/03/energy-sector-transformation-renewable

The truth behind India’s electricity exporter status

India’s per capita electricity consumption is one-fifth of the global average


India’s efforts to sell electricity to its eastern neighbours might bring strategic and diplomatic benefits and also open new frontiers for exploring electricity generation opportunities in the region. Photo: Mint


The ministry of power last week claimed that India had become an electricity exporter for the first time.

“As per Central Electricity Authority (CEA), the designated authority of government of India for cross border trade of electricity, first time India has turned around from a net importer of electricity to net exporter of electricity,” the ministry said in a statement, adding that upcoming cross-border transmission lines with Nepal, Bangladesh and Myanmar will continue to increase sales.

India exported around 5798 million units of electricity to Nepal, Bangladesh and Myanmar, which is 213 million units more than the import of 5,585 million units from Bhutan during the April-February period in fiscal year 2016-17. Exports to Nepal and Bangladesh increased 2.5 and 2.8 times, respectively, in the last three years.

Does India’s status as an electricity exporter mean that it has started producing surplus electricity?

The reality is a large number of India’s households are still living without electricity. Available government data shows there is a discrepancy in the percentage of villages electrified as against the share of rural households electrified. The former set of figures is often cited to portray India’s electrification challenge as an already accomplished one.

What explains the wide gap between the share of electrified households and villages? According to the Deen Dayal Upadhyaya Gram Jyoti Yojana website, a village is deemed electrified if basic infrastructure such as distribution transformer and distribution lines are provided in the inhabited locality as well as the Dalit Basti hamlet (where it exists), and electricity is provided in public places like schools, panchayat office and health centres. Here’s another interesting thing. For a village to be considered electrified, at least 10% of total households have to be electrified. But the actual supply of electricity is not mentioned in the definition of electrification.

Such a definition means that village electrification numbers have little bearing on the supply of electricity in reality. Data from 2011 census shows that almost one-third of the households in the country were dependent on kerosene as a source of lighting, with the situation being worse for rural households. This is even as over 84% of villages had been electrified in 2011-12, as per data with the Centre for Monitoring Indian Economy (CMIE).

International comparison also underlines the fact that Indians consume much less electricity in comparison to their peers. The ratio of domestic and world electricity consumption (per capita) was broadly similar in India and China in 1990. Latest data shows that China has surpassed the global average in terms of power consumption, whereas India is still stuck at its pre-reform relative electricity consumption levels. In 1990, India reported 273 kilowatt hour (kWh) of electric power consumption, as against 511 kWh in China and 2,120 kWh in the world. In 2013, these figures were 765 kWh, 3762 kWh and 3104 kWh, respectively, as per World Bank data.

India’s efforts to sell electricity to its eastern neighbours might bring strategic and diplomatic benefits and also open new frontiers for exploring electricity generation opportunities in the region. Such developments, however, should not make us oblivious to the fact that a large majority of Indians are still living in darkness in villages which have been declared electrified on paper.


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Why tiny electric planes and $25 tickets could be the future of regional air travel

Imagine taking your next trip of a couple hundred miles. New York City to Boston, for example. Or Houston to Dallas. Tampa to Miami.
The obvious choice now might be to drive. But what if you could show up at an airport at one of those cities, bypass security checkpoints, board a small hybrid-electric plane with luggage in hand, and be on the ground at your destination in about an hour — all for $25 each way?

A company called Zunum Aero hopes to make that a reality, so that future travelers who normally take a car, bus or train for regional trips won’t think twice about flying. The Washington state-based start-up says that since 2013, it has been developing a fleet of hybrid-electric planes that would make those kinds of inexpensive, short-haul flights possible.

The company has some heavyweight investor partners, including Boeing HorizonX and JetBlue Technology Ventures, subsidiaries of their respective companies. It also faces a number of competitors and obstacles, particularly battery limitations. But if successful, it could significantly change regional air travel, where options have shriveled and costs have crept up in recent decades.

“Think of it as Tesla of the air,” said Bonny Simi, president of JetBlue Technology Ventures. “[Or] think of it as an electric bus in the air.”

Zunum Aero emerged from “stealth mode” on Wednesday to announce its ambitious goals: to be flying routes of up to 700 miles (think Atlanta to Washington, D.C.) by the mid-2020s and then routes of up to 1,000 miles (think Los Angeles to Seattle) by 2030.

The start-up also laid out an array of promises: Door-to-door travel times cut in half. Lower operating costs. Airfares that would be 40 to 80 percent lower. All on quiet hybrid aircraft that would produce 80 percent less emissions. Indeed, part of the company name was inspired by “tzunuum,” the Mayan word for the hummingbird, for the bird’s speed and efficiency.

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“To be perfectly honest, we’ve been wanting to tell the story for four years,” Zunum Aero chief executive Ashish Kumar told The Washington Post. “What we’ve been building towards is really exciting and we believe fundamentally is going to change the shape of regional aviation.”

Kumar thinks operating costs for the company’s hybrid-electric planes could be 40 to 80 percent lower than for conventional aircraft. A small range-extending generator would be integrated into early planes, kicking in on longer flights where battery power isn’t enough. The eventual goal would be for battery technology to become advanced enough to have planes relying entirely on electricity, eliminating fuel costs altogether, Kumar said.

There are several reasons that people rarely choose to fly for short regional trips. Flying often means allotting extra time for getting to the airport, going through security and then boarding. Also, the airline industry’s shift to larger planes and big-city hubs created what Kumar calls a “regional transport gap.”

Flights from midsize cities are now often routed through hubs, meaning door-to-door times for those trips are no better than they were 50 years ago, Kumar said. And air options for smaller communities have been dwindling or disappearing, he added. Today, 97 percent of U.S. air traffic comes from 2 percent of the more than 5,000 airports in the country, according to the 2014-2034 FAA Aerospace Forecast.

 Zunum Aero’s target regional markets. (Courtesy Zunum Aero)

About 95 percent of trips under 500 miles are taken by car, according to the U.S. Department of Transportation’s National Household Travel Survey. For trips between 500 and 750 miles, about 61 percent of travelers drive and 34 percent fly. For trips between 750 and 1,000 miles, a little more than half of travelers fly and 42 percent drive.

Kumar and his team think this is where electric-hybrid planes can step in. Whereas a Boeing 737 today seats anywhere from 85 to more than 200 passengers, a Zunum plane would have from 10 to 50 seats. Because the Transportation Security Administration imposes fewer regulations on smaller aircraft, those passengers would likely be able to skip long security lines. Removing luggage check-in options also would save on time on the ground, he said. The resulting trip would feel more like a cross between private corporate air travel and hopping on a bus.

Still, the company is not without its competitors and detractors. This year, a Massachusetts-based start-up called Wright Electric announced similar plans to roll out “zero-emissions electric airliners designed to save money and our planet” within a decade. The Y Combinator-backed company, however, told BBC News that it was relying on continued advances in battery technology.

“The battery technology is not there yet,” Graham Warwick, technology editor of Aviation Weekly, told the BBC. “It’s projected to come but it needs a significant improvement. Nobody thinks that is going to happen anytime soon.”

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It remains too early to tell what the commercial aviation industry will look like by the mid-2020s and whether one-way fares in the $25 range would be feasible then. Even now, it is not unheard of for low-cost carriers such as Frontier or Spirit to offer double-digit airfares on domestic routes.

That hasn’t stopped others from diving into hybrid-electric aerospace projects. Airbus has also been developing its “E-Fan” hybrid electric aircraft since 2014, and in 2015 it became the first all-electric twin-engine plane to cross the English Channel. Though the “E-Fan” has only two seats, Airbus is hoping the technology will lead to a regional airliner or helicopter.

Plans for helicopter-esque electric “VTOL” (vertical takeoff and landing) aircraft have also been emerging from Silicon Valley lately. The Verge’s Andrew J. Hawkins reported that Uber, Airbus, the Defense Advanced Research Projects Agency, or DARPA, and Google co-founder Larry Page are all working on developing their own VTOLs.

“Because nothing says ‘I’m very rich and I hate traffic’ like a flying car project,” Hawkins wrote for the technology site.

In a statement, Boeing HorizonX said it was confident in investing in Zunum Aero “because we feel its technology development is leading this emerging and exciting hybrid-electric market space.”

Simi compared the push for hybrid-electric planes to the airline industry’s advancement from strictly propeller planes to jet aircraft.

“It’s that type of transformation,” Simi said. “We’re very excited about where this is going. It’s still very early, of course. We now have a seat at the table at what we believe is going to be an amazing change.”

Read more from The Washington Post’s Innovations section.

View original post on Washington Post: https://www.washingtonpost.com/news/innovations/wp/2017/04/08/why-tiny-electric-planes-and-25-tickets-could-be-the-future-of-air-travel/?utm_term=.a857b3158473&wpisrc=nl_innov&wpmm=1

Why the Cost of Living Is Poised to Plummet in the Next 20 Years

Dr. Peter Diamandis Jul 18, 2016

People are concerned about how AI and robotics are taking jobs, destroying livelihoods, reducing our earning capacity, and subsequently destroying the economy.

In anticipation, countries like Canada, India and Finland are running experiments to pilot the idea of “universal basic income” — the unconditional provision of a regular sum of money from the government to support livelihood independent of employment.

But what people aren’t talking about, and what’s getting my attention, is a forthcoming rapid demonetization of the cost of living.

Meaning — it’s getting cheaper and cheaper to meet our basic needs.

Powered by developments in exponential technologies, the cost of housing, transportation, food, health care, entertainment, clothing, education and so on will fall, eventually approaching, believe it or not, zero.

In this blog, I’ll explore how people spend their money now and how “technological socialism” (i.e., having our lives taken care of by technology) can demonetize living.

As an entrepreneur, CEO or leader, understanding this trend and its implications is important…it will change the way we live, work, and play in the years ahead.

How We Spend Our Money Today

Spending habits around the world tell a pretty consistent story — we tend to spend money on many of the same basic products and services.

Take a look at how consumers spend their money in three large economies: The United States, China, and India.

In the U.S., in 2011, 33% of the average American’s income was spent on housing, followed by 16% spent on transportation, 12% spent on food, 6% on healthcare, and 5% on entertainment.

In other words, more than 75% of Americans’ expenditures come from housing, transportation, food, personal insurance, and health.

In China, per a recent Goldman Sachs Investment Research report, there is a similar breakdown — food, home, mobility, and well-being make up the majority of the expenditures.

Interestingly, in China, consumers care significantly more about looking good and eating better (and less about having more fun) than in the U.S. — nearly half of consumer income goes to clothes and food.

In India, with a population of 1.2 billion people, expenditures on food, transportation, and miscellaneous goods and services are most prominent.

Rent/housing and healthcare represent a smaller portion of expenditures.

These differences likely represent cultural differences in each of the three very different countries — but overall, you see that the majority of expenditures are in these top 7 categories:

  1. Transportation
  2. Food
  3. Healthcare
  4. Housing
  5. Energy
  6. Education
  7. Entertainment

Now, imagine what would happen if the cost of these items plummeted.

Here’s how…

Rapid Demonetization — What It Means

To me, “demonetization” means the ability of technology to take a product or service that was previously expensive and make it substantially cheaper or potentially free (in the extreme boundary condition). It means removing money from the equation.

Consider Photography: In the Kodak years, photography was expensive. You paid for the camera, for the film, for developing the film, and so on. Today, during the megapixel era, the camera in your phone is free — no film, no developing. Completely demonetized.

Consider Information/Research: In years past, collecting obscure data was hard, expensive in time if you did it yourself, or expensive in money if you hired researchers. Today, during the Google era, it’s free and the quality is 1000x better. Access to information, data, and research is fully demonetized.

Consider live video or phone calls: Demonetized by Skype, Google Hangouts, the list goes on:

  • Craigslist demonetized classifieds
  • iTunes demonetized the music industry
  • Uber demonetized transportation
  • Airbnb demonetized hotels
  • Amazon demonetized bookstores

Demonetizing ~$1M Worth of Stuff We Take for Granted

In the back of my book Abundance (page 289 of the recent edition), I provide a chart showing how we’ve demonetized $900,000 worth of products and services that you might have purchased between 1969 and 1989.

900,000 worth of applications in a smart phone today

People with a smartphone today can access tools that would have cost thousands a few decades ago.

Twenty years ago, most well-off U.S. citizens owned a camera, a video camera, a CD player, a stereo, a video game console, a cellphone, a watch, an alarm clock, a set of encyclopedias, a world atlas, a Thomas guide, and a whole bunch of other assets that easily add up to more than $900,000.

Today, all of these things are free on your smartphone.

Strange that we don’t value these things when they become free. We just expect them.

So now, let’s look at the top seven areas mentioned above where people globally are spending their cash today and how these things are likely to demonetize over the next decade or two.

(1) Transportation

The automotive market (a trillion dollars) is being demonetized by startups like Uber. But this is just the beginning.

When Uber rolls out fully autonomous services, your cost of transportation will plummet.

Think about all of the related costs that disappear: auto insurance, auto repairs, parking, fuel, parking tickets. Your overall cost of “getting around” will be 5 to 10 times cheaper when compared to owning a car.

This is the future of “car as a service.”

Ultimately, the poorest people on Earth will be chauffeured around.

(2) Food

As I noted in Abundance, the cost of food has dropped thirteenfold over the past century. That reduction will continue.

$ <ol>f <p><em>r capita disposable income spent <ol>n food in the United States

As noted in the chart above, the cost of food at home has dropped by >50%.

Additional gains will be made as we learn to efficiently produce foods locally through vertical farming (note that 70% of food’s final retail price comes from transportation, storage and handling).

Also, as we make genetic and biological advances, we will learn how to increase yield per square meter.

(3) Healthcare

Healthcare can be roughly split into four major categories: (i) diagnostics, (ii) intervention/surgery, (iii) chronic care, and (iv) medicines.

(i) Diagnostics: AI has already demonstrated the ability to diagnose cancer patients better than the best doctors, image and diagnose pathology, look at genomics data and draw conclusions, and/or sort through gigabytes of phenotypic data… all for the cost of electricity.

(ii) Intervention/Surgery: In the near future, the best surgeons in the world will be robots, and they’ll be able to move with precision and image a surgical field in high magnification. Each robotic surgeon can call upon the data from millions of previous robotic surgeries, outperforming the most experienced human counterpart. Again, with the cost asymptotically approaching zero.

(iii) Chronic/Eldercare: Taking care of the aging and the chronically ill will again be done most efficiently through robots.

(iv) Medicines: Medicines will be discovered and manufactured more efficiently by AIs and, perhaps in the near future, be compounded at home with the aid of a 3D printing machine that assembles your perfect medicines based on the needs and blood chemistries in that very moment.

It’s also worth noting the price of genomics sequencing is plummeting (as you’ll see below, at five times the rate of Moore’s Law). Accurate sequencing should allow us to predict which diseases you’re likely to develop and which drugs are of highest use to treat you.

The plummeting cost to sequence the human genome (Source: NHGRI)
The plummeting cost to sequence the human genome (Source: NHGRI)

(4) Housing

Think about what drives high housing costs. Why does a single-family apartment in Manhattan cost $10 million, while the same square footage on the outskirts of St. Louis can be purchased for $100,000?

Location. Location. Location. People flock to high-density, desired areas near the jobs and the entertainment. This market demand drives up the price.

Housing will demonetize for two reasons: The first reason is because of two key technologies which make the proximity of your home to your job irrelevant, meaning you can live anywhere (specifically, where the real estate is cheap):

(1) Autonomous Cars: If your commute time can become time to read, relax, sleep, watch a movie, have a meeting — does it matter if your commute is 90 minutes?

(2) Virtual Reality: What happens when your workplace is actually a virtual office where your co-workers are avatars? When you no longer need to commute at all. You wake up, plug into your virtual workspace, and telecommute from the farm or from the island of Lesvos.

The second technology drivers are robotics and 3D printing, which will demonetize the cost of building structures.

A number of startups are now exploring how 3D printed structures and buildings can dramatically reduce the cost of construction and the amount of time it takes to build a building.

For example, a company out of China, WinSun, is 3D printing entire apartment buildings (see picture below):

6-story building 3D printed by Winsun
6-story building 3D printed by WinSun.

(5) Energy

Five thousand times more energy hits the surface of the Earth from the Sun in an hour than all humanity uses in a year. Solar is abundant worldwide. Better yet, the poorest countries on Earth are the sunniest.

Today, the cost of solar has dropped to ~$0.03 kWh. The cost of solar will continue to demonetize through further material science advances (e.g. perovskite) that increase efficiencies.

(6) Education

Education has already been demonetized in many respects, as most of the information you’d learn in school is available online for free.

Coursera, Khan Academy, and schools like Harvard, MIT and Stanford have thousands of hours of high-quality instruction online, available to anyone on the planet with an Internet connection.

But this is just the beginning. Soon the best professors in the world will be AIs able to know the exact abilities, needs, desires and knowledge of a student and teach them exactly what they need in the best fashion at the perfect rate.

Accordingly, the child of a billionaire or the child of a pauper will have access to the same (best) education delivered by such an AI, effectively for free.

(7) Entertainment

Entertainment (video and gaming) historically required significant purchases of equipment and services.

Today, with the advent of music streaming services, YouTube, Netflix and the iPhone App Store, we’re seeing an explosion of available selections at the same time that the universe of options rapidly demonetizes.

YouTube has over a billion users — almost one-third of all people on the Internet — and every day, people watch hundreds of millions of hours on YouTube and generate billions of views.

Image credit: Shutterstock

Dr. Peter Diamandis was recently named by Fortune Magazine as one of the World’s 50 Greatest Leaders.He is the founder and executive chairman of the XPRIZE Foundation which leads the world in designing and operating large-scale incentive competitions.

He is also the co-founder and executive chairman of Singularity University, a graduate-level Silicon Valley institution that counsels the world’s leaders on exponentially growing technologies.

Diamandis is also the co-founder and vice-chairman of Human Longevity Inc. (HLI), a genomics and cell therapy-based company focused on extending the healthy human lifespan.

In the field of commercial space, Diamandis is co-founder and co-chairman of Planetary Resources, a company designing spacecraft to enable the detection and prospecting of asteroids for fuels and precious materials. He is the also co-founder of Space Adventures and Zero Gravity Corporation.

Diamandis is a New York Times bestselling author of two books: Abundance – The Future Is Better Than You Think and BOLD – How to Go Big, Create Wealth and Impact the World.

He earned degrees in Molecular Genetics and Aerospace Engineering from MIT, and holds an M.D. from Harvard Medical School.

His motto is, “The best way to predict the future is to create it yourself.”

Solar-Panel Roads to Be Built Across Four Continents Next Year

Solar-Panel Roads to Be Built Across Four Continents Next Year

Electric avenues that can transmit the sun’s energy onto power grids may be coming to a city near you.

A subsidiary of Bouygues SA has designed rugged solar panels, capable of withstand the weight of an 18-wheeler truck, that they’re now building into road surfaces. After nearly five years of research and laboratory tests, they’re constructing 100 outdoor test sites and plan to commercialize the technology in early 2018.

“We wanted to find a second life for a road,” said Philippe Harelle, the chief technology officer at Colas SA’s Wattway unit, owned by the French engineering group Bouygues. “Solar farms use land that could otherwise be for agriculture, while the roads are free.”

As solar costs plummet, panels are being increasingly integrated into everyday materials. Last month Tesla Motors Inc. surprised investors by unveiling roof shingles that double as solar panels. Other companies are integrating photovoltaics into building facades. Wattway joins groups including Sweden’s Scania and Solar Roadways in the U.S. seeking to integrate panels onto pavement.

To resist the weight of traffic, Wattway layers several types of plastics to create a clear and durable casing. The solar panel underneath is an ordinary model, similar to panels on rooftops. The electrical wiring is embedded in the road and the contraption is topped by an anti-slip surface made from crushed glass.
A kilometer-sized testing site began construction last month in the French village of Tourouvre in Normandy. The 2,800 square meters of solar panels are expected to generate 280 kilowatt-hours at peak, enough to power all the public lighting in a town of 5,000 for a year, according to the company.
The electricity generated by this stretch of solar road will feed directly into the grid. Another test site is being used to charge electric vehicles. A third will power a small hydrogen production plant. Wattway has also installed its panels to light electronic billboards and is working on links to street lights.

The next two sites will be in Calgary in Canada and in the U.S. state of Georgia. Wattway also plans to build them in Africa, Japan and throughout the European Union.

“We need to test for all kinds of different traffic and climate conditions,” Harelle said. “I want to find the limits of it. We think that maybe it will not be able to withstand a snow plow.”

The potential fragility joins cost as a potential hurdle.
“We’re seeing solar get integrated in a number of things, from windows in buildings to rooftops of cars, made possible by the falling cost of panels,” Bloomberg New Energy Finance analyst Pietro Radoia said. “On roads, I don’t think that it will really take off unless there’s a shortage of land sometime in the future.”’

One square meter of the solar-panel road material currently costs between 2,000 ($2,126) and 2,500 euros, which includes monitoring, data collection and installation costs. Wattway aims to bring the price down to be competitive with ordinary solar farms by 2020.

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5 unanswered questions after Tesla’s big solar roof and battery announcement

As the dust settles, the details of Elon Musk’s new solar-plus-storage offering remain unclear

For a while now, Tesla has situated itself as the Apple of the electric storage and transport industries. It streamlines the design of an existing technology, makes it sleeker and sexier, while expertly marketing it to cultivate an upscale, but mass-market following.

The company first did it with its electric vehicles, producing sought-after luxury cars and then gradually moving toward less expensive models. And it brought residential energy storage into the consumer mainstream last year when it unveiled the Powerpack, the first generation of its home battery.

Now Tesla is leveraging its planned acquisition of solar installer SolarCity to do the same thing with residential solar and storage. Last Friday, CEO Elon Musk unveiled a slate of integrated solar roof and battery storage offerings that mimic the design of traditional roof shingles and eliminate the external mounted panel design.

The glass PV tiles, available in a number of common roof colors, will cost “less than a normal roof plus the cost of electricity,” Musk promised, and will integrate with the Powerwall 2, the second generation of Tesla’s home storage system.

That new battery is powerful enough to run the refrigerator, sockets and lights of a four-bedroom house for a day — or indefinitely when combined with the solar system, Musk said, touting a future where everyday consumers have a solar roof, battery and electric vehicle.

But like Tesla events of the past, those general operational and cost promises are about as much detail over the specifics of the battery and the solar system as Musk divulged all night. Details about the panel efficiency, battery life and overall cost were left out of Musk’s presentation, leaving a number of open questions about the sleek new Tesla offering and its potential impacts on the market.

1. Solar roof specifications

Just as Tesla was not the first to offer electric vehicles or home batteries, it is not the first in the integrated solar panel market.

While not widespread for the residential market yet, a number of large buildings have demonstrated the effectiveness of solar technologies integrated into their designs, including the National Air and Space Museum. And Greentech points out there are a number of integrated solar roof installers on the market already, though no runaway commercial successes.

Integrated PV technologies are appealing for their sleek design, but are more expensive than existing rooftop solar models that are simply bolted to a homeowner’s roof. Typically, integrated PV does not generate power with the efficiency of traditional panels, which can more easily be faced toward direct sunlight.

Beyond his promise that the Tesla roofs would cost less than traditional ones over time, Musk offered no pricing or efficiency details on the new solar roofs, as well as no insight as to how power contracts with consumers would be structured. Currently, SolarCity contracts typically guarantee solar output for 20 years, but most roofs are expected to last longer.

Other financial aspects of owning the PV roof, such as its impacts on a mortgage, resale value, homeowner’s insurance and other aspects of property value remain unclear, though those are issues that continue to bedevil the residential solar sector at large.

It also remains to be seen how the glass panels perform in the field. Typical solar panels require regular cleaning to achieve maximum output, and it’s unclear whether homeowners would have to regularly wipe down their PV rooftops to generate energy.

Tesla solar roof styles


Available in different styles, Telsa’s solar roofs are designed to mimic traditional styles.


2. Battery specifications

A bit more is known about the solar roof’s partner — the Powerpack 2.

At the event, Musk said the new 7 kW, 14 kWh battery will cost $5,500, including a custom inverter. That capacity outpaces both the first iteration of the Powerpack and a larger, 10 kWh model Tesla discontinued last year.

That size battery is likely better suited to the average American homeowner, GTM reports, but little is known beyond its size and price. Tesla did not release details about the expected efficiency or cycle life of the Powerwall 2, or the second iteration of its Powerpack grid-scale battery, released Thursday evening.

Cycle life, or the number of cycles a battery can perform before degrading to a certain level, is expected to be crucial for customers of both the residential and grid-scale batteries. Using a home battery to store and discharge solar from a PV roof typically uses at least one cycle a day, as do grid services such as ramping or shifting renewables generation.

The rate at which batteries degrade determines how long they can be used before needing replacement, and often forms the foundation of energy storage contracts with utilities. But Tesla has never publicly released degradation curves or other performance information regarding their energy storage systems or car batteries, which some companies consider proprietary information.

Tesla currently offers an eight-year “unlimited mile” warranty for its Model S electric vehicle batteries, but makes no commitment to replace the $44,000 car battery after that time.

survey of Tesla owners by EV advocate Plug In America last year showed that the Model S generally loses about 5% of its capacity within the first 50,000 miles of driving, but the jury is still out on how the batteries will perform once they reach the end of the warranty period.

tesla solar roof batteries


Tesla’s new Powerwall is more rectangular than its predecessor.


3. Solar and storage markets

But even if the integrated PV and storage market is not large yet, Tesla is not without competition.

There are a number of companies installing integrated solar roofing projects, Greentech notes, including names like SunTegra and Solarmass. There’s also a sizeable list of high-profile failures, like SunEdison’s Ready Solar and PV shingle offerings from Dow Chemical and PV.

As impressive as the design of integrated solar shingles is, Greentech’s Eric Wesoff points out that hasn’t been the biggest issue in commercializing it with other companies. Instead, it is launching a pricey, newfangled environmental technology through a conservative roofing industry.

“PV panels and roofing have very different roles, and I’ve observed that combining the two compromises both at a premium cost,” the editor wrote in an open letter to Musk.

If Tesla can succeed in convincing consumers and the broader industry that its roofs are indeed cheaper and more durable than traditional designs, its brand recognition and reputation could help it make inroads. But it remains to be seen how the company will go about sharing the technology behind its new combined offering.

Currently, Tesla makes many of its electric vehicle patents public, but other aspects of its business are strictly vertically integrated. The company does not sell its cars through third party dealerships and even uses a different charger outlet than other EVs.

With the planned merger with SolarCity, Tesla appears to be spreading that vertically integrated model to its energy offerings, creating an all-in-one distributed energy company. If it continues that trajectory, that could see it stop selling batteries to third-party installers like Sunrun, which currently uses Tesla batteries for its residential solar offering and would be a direct competitor with a merged Tesla.

4. The SolarCity merger

Musk’s event on Friday was about more than unveiling a new product — it was also a chance to show Tesla investors the promise of a merger with SolarCity, the largest residential rooftop installer in the U.S.

Since Tesla announced its intent to buy the company in June, some analysts and shareholders have reacted skeptically. Musk is SolarCity’s chair, his cousins run the company, and many saw the move as a bailout for the residential installer, whose business model relies on hefty debt financing to support its model of no-upfront-cost solar leases.

Tesla’s unexpected third quarter profit, reported last week, gave pause to some of the most anxious shareholders, and Musk’s unveiling of an exciting, integrated product could buoy support for the acquisition.

If that goes badly for Musk, the future of the new solar roof option appears in doubt. In a “master plan” for Tesla unveiled in the summer, Musk hinted at a new integrated solar offering and warned that it would be impossible to offer it if SolarCity remained a separate company.

Whether shareholders view the solar roof offering as an exciting new extension of Tesla’s business or a risky bet on an unfamiliar market remains to be seen. They vote on the merger Nov. 17.

5. Utility sector impact

Musk often frames his business moves as part of a larger strategy to clean up the electricity and transport sectors, allowing them to run on renewable energy and modern energy storage.

That broad vision is one shared by a number of policymakers, including U.S. leaders who signed the Paris Climate Accord last year. But just how deep that decarbonization of the power sector affects utilities remains to be seen.

Fossil generators are sure to feel the impacts, and many are already dealing with widespread coal plant retirements. But Musk said that the future for electric utilities in this cleaner future remains bright.

Powering new electric vehicles will increase demand for electricity, making utilities more critical to the modern energy system and assuaging concerns of a financial “death spiral” for the sector. Going forward, Musk predicted the grid will eventually reach an equilibrium with about one-third of power coming from distributed energy and two-thirds from utilities.

“I think it’s a very bright future for utilities and rooftop [solar],” he said.

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Utilities Harnessing Bitcoin Technology for Electricity Revolution

September 15, 2016


Bitcoin technology is starting to seep into the electricity business, shaking up the way payments are managed every time a light switch is flipped.

From New York to Vienna, researchers and utilities are adapting the cloud-based ledger system used to track bitcoins as a replacement for slower administrative systems that require constant human input and multiple spreadsheets. Once set up, the database, called blockchain, automatically records individual actions within a system, formats them, and stores the results in a secure online listing available to anyone anywhere with access.

The need for such speed? Utilities are shifting away from a century-old arrangement where they monopolized both supply and distribution. Now, independent wind and solar farms are feeding into power grids in short, sometimes unpredictable intervals that require transaction systems to be more nimble and decentralized. Utilities including RWE AG in Germany and Fortum OYJ in Finland are looking to blockchain technologies to do just that.

“There’s a change in the business model on the way, and they’re trying to figure out how to participate in this new world of distributed energy,” said Lawrence Orsini, the founder of New York-based blockchain developer LO3 Energy.

Orsini said his company has been approached by 26 utilities to consult on how they could modify the way they make transactions. In addition to coping with increased volumes of renewable power, utilities want to track the use of new products from rooftop solar panels to electric-car charging.

Blockchain has already secured a beachhead in industries ranging from finance and insurance to car leasing and music streaming. It’s turned into a craze on Wall Street, with firms such as JPMorgan Chase & Co., Barclays Plc and Wells Fargo & Co. researching how to use it for trading. Energy is next on the horizon.

“I see it as complimentary to renewables,” said Michael Liebreich, chairman of Bloomberg New Energy Finance. “The old system of a few big power plants and vertically-integrated utilities didn’t really need blockchain.”

In Germany, RWE has been testing blockchain for electric-vehicle charging and on a platform where consumers can trade green energy independently of utilities.

“Our hypothesis is there will be a machine-to-machine economy in which machines carry out transactions among themselves,” said Carsten Stoecker, who heads blockchain research at RWE’s innovation hub. “Decentralized internet technologies like blockchain will become the transaction layer for this.”

Creating the space where those transactions can occur is bringing together a wide range of workers with expertise in energy, finance and information technology.

“It can be described as the exchange of goods versus money in real time,” said Juliane Schulze, who oversees business development at Vattenfall AB, the Nordic region’s biggest utility. “We have many of these transactions with our customers and internally in our company. Theoretically, these could all be put on a blockchain.”

The Vienna-based startup Grid Singularity is working on a decentralized digital platform allowing people to buy and sell energy. It expects to test its blockchain with power plants by year end, said Tobias Federico, its market design leader.

“A parallel market will develop and this energy market based on blockchain will have to establish its credibility slowly,” Federico said. “Then we’ll gradually make a transfer from the old to the new world.”

Some utilities are already preparing blockchain trials. Vattenfall plans to test it on its Powerpeers online platform, a website that lets customers buy and sell electricity without going through the utility, said Claus Wattendrup, general manager of Vattenfall Europe Innovation GmbH.

Demand Response

Fortum is also planning a pilot in the next year that may allow tests in so-called connected homes, where consumers manage appliances through internet connections.

“Blockchain might make it easier to have demand response of small loads, and it would be easier to fit more renewables such as wind and solar to the energy system,” Fortum Chief Technology Officer Heli Antila said.

The technology will need to prove itself in pilot projects within the next two years while its main areas of application will evolve, said Axel von Perfall, senior manager at PricewaterhouseCoopers AG. He expects that electricity consumers will save money from the direct contact with producers while many intermediaries like energy traders and sales companies will we be needed less or not at all.

“Blockchain doesn’t mean the end for utilities, but their role will change,” von Perfall said. “They have the chance to develop and operate the centralized platforms of the energy market of the future.”

LO3 Energy’s Orsini is weighing projects with utilities from Europe, the U.S., Australia and Africa. He sees vast potential.

“Energy is the largest use for blockchain on the planet, larger than financial services by several factors,” Orsini said. “The world runs on energy. It doesn’t run on money.”


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Moving Beyond the Generation Fixation: Grid Transformation Key to Delivering on Paris

Attending the annual BP Statistical Review of World Energy 2016 launch event in June, I watched BP Chief Economist Spencer Dale invoke lessons from history. “Even if renewables continue to grow faster than any other energy technology in history,” he said, “we are unlikely to meet carbon emissions reductions targets set in Paris last December.”  On its own, ballooning investment in renewable energy technologies is simply not enough to accelerate the transition to a climate-compatible energy future. Instead, it is becoming clear that fundamental electricity grid transformation is key to delivering on Paris climate commitments.

The year is 1878. The city of Paris is hosting the third annual World Fair, featuring the latest in fine art and innovative machinery. For the first time in history, 64 electric street lamps, running the length of the Avenue de l’Opera from the Louvre to the Palais Garnier Opera House, are lit with the flick of a switch. The electricity illuminating the stunned Fair-goers is sold from a utility company not far away, sent through transmission lines emanating from a coal-powered generator. Benefiting from huge demand and economies of scale, electric grids like this grew rapidly, quickly becoming the dominant technology in the global energy market. The fundamental blueprint of these grid systems has changed little for nearly 140 years.

Now fast forward to December 2015. Fueled by an increasingly unanimous scientific mandate and public appetite to mitigate climate change, 188 nations submit action plans, known as “Nationally Determined Contributions” or NDCs, during the landmark COP21 climate negotiations held in Paris. Among other measures, many NDCs outline ambitious targets to rapidly transition national energy grids, nearly all of which still depend heavily on fossil fuels, to renewable and sustainable sources of energy.

Source: BP Statistical Review 2016, Spencer Dale

Big changes are already underway. Reassured by strong commitments to clean energy by many governments in the build-up to COP21 and despite the global plunge in fossil fuel prices, private sector investments in renewables are soaring while technology costs are falling. As a result, 2015 easily broke records for renewable energy, with the largest global capacity additions seen to date. The world now adds more renewable power capacity annually than it adds from all fossil fuels and nuclear energy combined. Coupling this trend, carbon emissions from energy consumption have stalled for the first time in nearly a quarter of a century.

An Inconvenient Reality

The fact remains, however, that these trends must continue to accelerate dramatically to meet climate change mitigation targets. The International Energy Agency’s 450 Scenario sets a benchmark energy scenario consistent with the goal of limiting the global increase in temperature to 2 degrees Celsius by limiting greenhouse gas concentration in the atmosphere to around 450 parts per million of carbon dioxide (CO2). To achieve this target, the 450 Scenario projects global carbon emissions levels falling by 5.5 percent every year for the next 20 years. For context, that is double what we achieved in 2015, every year for the next 20 years.

As they are currently designed, it is highly unlikely that modern electricity systems can displace enough fossil fuel-powered generation to reach, much less sustain, these emissions reduction levels. Putting aside the many socio-economic trends that are projected to create pressure for increased global energy supply, a root cause of this issue is the underlying architecture of electricity grids.

Run nearly exclusively as natural monopolies, these systems have changed little since their invention in 1878. In an electricity system powered exclusively by fossil fuels, nuclear, or large hydropower, this market structure makes a lot of sense. By granting utility companies monopoly rights to provide electricity to consumers, governments can ensure access to affordable and reliable electricity services. Guaranteed a captive market for electricity, private sector utility investors are much less averse to paying for expensive and centralized power plants, electrical grid expansion, and maintenance.

Put simply, conventional electricity systems rely on a fundamental transaction in which utility companies earn a stable monetary return in exchange for supplying electricity reliably for consumers and for their investment in grid infrastructure such as transmission lines and power plant assets. The continued viability of this system, where power flows in one direction, is being threatened as new technologies are allowing both information and electricity to flow back and forth from the grid and electricity consumers.

Disruptive Technologies: Dispersed Ownership

Living up to their namesake, disruptive technologies are unsettling the balance of conventional grid systems. Rapidly emerging and increasingly affordable technologies and practices—such as distributed renewable energy generation, combined heat and power systems, co-generation, energy storage, micro and smart grids, and demand-side management tools, just to name a few—are allowing electricity customers to begin providing energy assets to the grid themselves. The benefits of this trend should not be underestimated. Aside from their obvious impacts on reducing carbon emissions levels, distributed energy technologies are becoming a critical tool in addressing energy access in underserved and rural areas.


Solar water heaters in Saint George’s, Grenada
Source: Philip Killeen, 2016

So far, electrical utility companies have clearly been losers in this trend. As new technologies enable ever greater numbers of consumers to defect from the grid or become “prosumers”—providing energy assets to the grid themselves—utilities are losing their ability to earn returns on those assets. Once considered only a theoretical scenario, many utilities are now experiencing the “utility death spiral,” where grid defection is dividing utility maintenance costs among a smaller customer base, driving electricity rates higher and prompting further defections.

Fundamentally, this dynamic pits utilities against consumers and, more importantly, against the drive toward a sustainable energy future. Facing declining and uncertain profit margins, utility companies are unlikely to support initiatives to integrate higher shares of distributed renewable energy, such as rooftop solar. Already, in many cases, utilities actively oppose these efforts.

Utility-Scale Is Not a Silver Bullet

Facing growing public pressure to contribute meaningfully to climate change mitigation, it is understandable that national governments often prioritize large utility-scale renewable energy projects as an efficient way to quickly displace fossil fuel-powered energy generation. This sentiment is reflected in the bias toward large (e.g., megawatt (MW)-scale and up) renewable energy power plants installed in 2015. For example, by the end of the year more than half of global solar photovoltaic (PV) capacity was in projects of 4 MW and larger while the average size for wind turbines delivered to market in 2015 was 2 MW. How these projects can be efficiently integrated into conventional electricity grids, however, is proving to be a critical roadblock to meaningful progress.

China’s growing energy system is perhaps the clearest example of this challenge. Most recently reflected in China’s NDC, which targets supplying 20 percent of electricity demand with renewables by 2030, China is quickly building an impressive track record. The country has installed 145 gigawatts (GW) of wind power alone by the end of 2015. However, nearly 33.9 GW of this electricity went unused in 2015, the equivalent of annual electricity consumption for 3 million American households.

Among other factors, this tremendous waste of wind energy has been directly linked with China’s antiquated electrical grid infrastructure. Nearly 80 percent of the country’s wind power capacity is installed in sparsely populated northern territories, meaning that it has to travel a long way to reach sufficiently large electricity demand markets in the south. Given wind’s intermittency and the lack of sufficient energy storage facilities in China’s grid system, the vast majority of this energy must be consumed as it is produced. Unfortunately, the electricity transmission infrastructure has not kept pace with the rapid growth of wind turbine installations, and much of this clean energy and emissions reduction potential is wasted.


Layered Policy Is Key to Grid Transformation Post-COP21

China’s stuttering experience with wind power and the opposition seen globally from utility companies against disruptive energy technologies highlights the need for carefully planned and coordinated grid development. Realistically, this coordination can be achieved only by adjusting financial incentives in the market to align the interests of utility companies with the global push toward sustainability. This re-alignment can, and should, start at the government level with layered policy reform, providing regulations and incentives tailored to specific characteristics and scales of various renewable energy opportunities.

For large-scale renewable power projects, open-market policies such as tendering systems are emerging as a key tool. Tendering systems utilize auctions in which prospective project investors compete to secure a development contract from the government. Investors bid a price per kilowatt-hour (kWh) of electricity produced, representing the lowest possible guaranteed returns needed by the investor from the government to install the power plant profitably. Competitive underbidding ensures that the government minimizes expenditure on the plant itself, hypothetically conserving funds to support transmission infrastructure development. Furthermore, since auctioned project size is pre-determined by the government, tendering policies can ensure that expanded generation is coordinated with regional supply needs and network expansion constraints. In Brazil, these systems have reduced wind farm installation costs by 44 percent from 2009 levels and are being used to integrate unprecedented levels of solar in India.

For small-scale distributed renewable energy generation, net metering policies are already becoming widespread, requiring utility companies to compensate prosumers for excess electricity supplied to the grid. Criticism of these programs has noted that if prosumers are entitled to full retail rates for their electricity, then they also should contribute to maintenance and development costs of the electric grid. It is worth noting, however, that distributed generation offers certain benefits to utility companies, including avoided costs for investment in ancillary power plants, fuel costs, and lower loss rates in the transmission and distribution system. On the other side of the equation, falling technology costs for renewable energy equipment and cost-saving impacts of disruptive technologies are likely to help reduce customer opposition for modest contributions to grid maintenance in net metering programs.

While by no means a comprehensive review of emerging renewable energy policies on offer, tendering and net metering policies are strong examples of how layered government interventions can accelerate transformation of the energy sector. The certainty that they offer to both large- and small-scale power producers is critical to reducing perceptions of market risk and increasing investment in emerging energy technologies. Perhaps most critically, the positive track records for these policies are demonstrating how accelerating the decline of global greenhouse gas emissions rates can stimulate, rather than hinder, future economic growth.

25 years of reforms: Meet Indian banking sector’s poster boys of liberalisation

Before 1991, the Indian economy was under the control of the government; the banking industry was chained as well. If there was one segment that did not even have a shade of private entrepreneurship, it was banking. As then Finance Minister Manmohan Singh brought in economic reforms, there were actors in the regulator and industry who helped change the face of Indian banking. MC Govardhana Rangan profiles those early heroes:
C Rangarajan, RBI Governor 1992-1997He changed face of Indian banking

The state of Indian banking prior to 1991 was different from today. Banks made no mention of profits or losses; they did not fix deposit or lending rates. There were no capital adequacy norms, nor rules for bad loans. To open a branch in Gumidippoondi, near Chennai, or sanction a high-value loan, a bank had to wait for months for Reserve Bank of India’s permission.

A financial marketplace didn’t exist. RBI dictated the exchange rate, based on what the ruling class and bureaucrats felt it should be. They, and not bankers, also decided who got loans. Bankers did not do banking, others did. That is till C Rangarajan became the RBI governor. Indian public sector banks are still largely in bad shape, but there’s competition and consumers have been able to fund their dream homes and cars through loans. Also, individuals have made fortunes by buying bank stocks in two decades. All thanks to the banking reforms Rangarajan shepherded from 1992 to 1997.

“If you look at Indian reforms, it was all about enabling price discovery,” says Indira Rajaraman, a former member of RBI board. “The discovery of the external price of the rupee was necessary. Without that, you did not know the value of imports or exports. He (Rangarajan) partnered the reform effort to discover prices.”

Besides playing an active role in rupee devaluation as deputy governor, Rangarajan laid the foundation for modern Indian banking without having to turn the economy, markets and banks inside out. There was some resistance when he prescribed capital norms and he had to convince stakeholders that this was essential to make the system vibrant and viable.

“The argument that government banks do not have to follow prescribed capital adequacy ratios as (the) public are indifferent to the level of capitalisation in a public sector bank does not recognise the fact that banks are commercial entities and not departments of government,” Rangarajan said in a speech in 1997.

“He (Rangarajan) laid the foundation for a modern banking system as he recognised that a vibrant and competitive banking system was central to the reforms being undertaken,” says former RBI deputy governor Shyamala Gopinath. “The capital adequacy and prudential norms were phased in over a period with clarity on destination and timelines that made the process sustainable.”

Under Rangarajan, private banks came into being. He unleashed the competitive spirit in Indian banking, resulting in the HDFC Banks and ICICIs of today. He was instrumental in ending the government’s abuse of its position by monetising debt, which had made monetary policy ineffective and undermined RBI’s independence.

The inauguration of the HDFC Bank in Mumbai in 1994. Its first corporate office and full service branch at Sandoz House, Worli, was inaugurated by the then Union Finance Minister Manmohan Singh, the architect of India’s liberalisation.

“Rangarajan’s imprint was not only confined to monetary policy, it also extended to elimination of automatic monetisation and a shift in issuance of government bonds to market-based auction system that reduced fiscal dominance of monetary policy and led to the development of government debt markets,” says Gopinath.

The unfortunate part is his reforms were discontinued and the RBI became hesitant about moving ahead because of a deep-rooted suspicion of markets. “In financial markets, there are more disappointments,” says N Vaghul, former chairman of ICICI, who was called in to be a part of the deliberations of the Narasimham Committee on financial sector reforms within a week of undergoing heart surgery. “We thought we would create liberal financial markets. It is a disgrace.”

HDFC Bank’s Deepak Parekh, then RBI govenor C Rangarajan and FM Manmohan Singh at the inauguration.

(From left) A younger Aditya Puri and Deepak Parekh of HDFC Bank with then finance minister Manmohan Singh.

How HDFC and ICICI Bank chartered new paths



N Vaghul, former chairman, ICICI

He Ushered in new financial landscape

N Vaghul did not build the institution. But he knew who could. If ICICI Bank and its affiliates have thrived and its executives are dotting the Indian financial services landscape today, it is largely due to Vaghul the visionary. A commercial banker who started his career in State Bank of India, Vaghul became the youngest chairman of a state-run lender – Bank of India – at 44. He quit banking in disgust due to interference from bureaucrats.

But things changed when Rajiv Gandhi needed someone with financial acumen, and then RBI governor RN Malhotra called upon Vaghul to head ICICI. He turned a staid term-lending institution into a vibrant financial powerhouse with interests ranging from stock broking to lending to infrastructure, with insurance and advisory rolled into the mix.

“Term-lending was more like a venture capital dotted with failures but without an upside from success,” says Vaghul, who turned 80 on July 22. “I concluded we would not last long if we continued the way we were.”

Many financial supermarkets have come into being since liberalisation in 1991, but the thought leader for all of them was undeniably Vaghul. If IDBI, UTI and SBI all ventured into various wings of financial services, they all took a leaf out of ICICI’s strategy authored by Vaghul.

“Vaghul had big institutional dreams,” says Shikha Sharma, chief executive of Axis Bank, who was groomed by Vaghul and KV Kamath at ICICI. “Vaghul is a dreamer, teacher, parent.”

His ability to engage comfortably with people at various levels without being conscious of hierarchy made him an acceptable leader.

In pre-liberalisation days, when the public sector occupied the commanding heights of the economy, a job in SBI was considered a high achievement. Those who got such jobs stayed with the organisation till retirement. But Vaghul quit to take up teaching at the National Institute of Bank Management when a militant Shiv Sena union was poised to make trouble for him as HR head of SBI. The party at that time had an anti-south Indian platform.

He had an uncanny ability to spot talent, pushing hard to get Kamath back from Asian Development Bank to ICICI. “Mr Vaghul ensured the right succession,” says Sharma. “Even though Kamath had left ICICI, Vaghul got him back.”

What’s his talent-spotting secret? “There is no set formula,” says Vaghul. “It comes from experience. You look at the person’s sense of commitment, sense of loyalty.”

Kamath says Vaghul is a visionary. “Mr Vaghul has the ability to stay current in a rapidly evolving business and at the same time apply his vast compendium of knowledge gained over the years,” says Kamath, who would create one of India’s best financial supermarkets in ICICI Bank. “He is always willing to embrace change. Add to that the fact that he is a lateral thinker and probably one of the most brilliant minds that I have met anywhere.”

The Industrial Credit and Investment Corporation of India (ICICI), as it was known then, was no different from Industrial Development Bank of India (IDBI) or Industrial Finance Corporation of India (IFCI). If 25 years later ICICI is miles ahead, it is because Vaghul saw no future for the lender unless it was transformed. “He had the ability to understand seminal changes were underway with the revolution in technology, and had the willingness to accept them,” says Kamath.

ICICI Bank is today worth Rs 1.52 lakh crore; IDBI Bank, which had a bigger market share in 1980s, is at about a 10th of that, while IFCI has almost faded into irrelevance.

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Solar Parking Canopies Exceed Savings Projections at San Dieguito Union High School District

Solar Parking Canopies Exceed Savings Projections at San Dieguito Union High School District

Solar shade canopies installed at two North County San Diego schools, La Costa Canyon High School and Canyon Crest Academy, have saved San Dieguito Union High School District (SDUHSD), more than $4.4 million in energy costs to date.

OpTerra Energy Services worked with SDUHSD on program development, financing, design, and construction of the 2MW solar PV covered parking structures. As part of the project development process, OpTerra also guarantees projected energy savings of more than $10.4 million over 15 years. Beyond the guarantee, the system is projected to, provide SDUHSD an additional savings of more than $12 million through the warrantied 25 year life of the panels. In addition to the money the District now saves on electricity costs, the sale of Renewable Energy Certificates (RECs) generated by the system provides SDUHSD with a new source of revenue.

Part of San Dieguito Union High School District’s 2MW solar system, which has generated $1.6 million in energy savings to date over the past five years.

Part of San Dieguito Union High School District’s 2MW solar system, which has generated $1.6 million in energy savings to date over the past five years.

With a successfully performing solar installation for over five years, San Dieguito UHSD stands out as a leader in renewable energy across San Diego County schools.  OpTerra designed and built the carport shade structures in 2010 and continues to operate, maintain, measure and guarantee the system’s performance. Project costs were offset by a $4.7 million rebate from the California Solar Initiative and other available funding from the American Recovery and Reinvestment Act.

Current Superintendent Rick Schmitt shared, “Using a dynamic set of funding streams to support our project, the solar canopies have saved the district millions so far. And that money is put right back into the classroom. On top of that, students are able to witness firsthand how energy efficiency and sustainability affects each and every one of them.”

District leaders were excited to work with a partner who had a proven track record of installing other large solar power projects in the education market, in addition to developing hundreds of projects that improve energy efficiency and provide renewable power for other public and private-sector entities.

Former Superintendent Ken Noah oversaw the development of the project during his tenure from 2008-2013, stating that, “San Dieguito’s mission is to provide a world class education for all students through quality programs that engage students and inspire achievement. The savings from this solar project with OpTerra helps us meet these critical goals.”

The positive impact of SDUHSD’s solar project will continue to guide new development across the District, including the new additions at Earl Warren Middle School which will include solar generation as part of its construction.

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