New business for new renewables

By Sunita Narain
Last Updated: Thursday 11 June 2015

renewablesIt was a trade exhibition abuzz with the restrained chatter of busy suited executives at company stalls making contacts and finalising deals. Nothing out of place except that this trade was about renewable energy technologies, which have unconventional reasons for growth. First, these technologies are seen as the most economical and feasible source of energy for millions of people unconnected to the electricity grid and having no electricity to light their houses or cook their food. This energy poverty is disabling and needs to be eradicated. Introduction of decentralised and improved technologies paves the way to catapult the poorest of the households into the most modern systems. Secondly, these technologies—from wind and solar to biomass—provide cleaner low-carbon energy options to combat climate change. These are future systems critical for survival of all.

Strangely enough the gathering knew none of these objectives. For them it was just a business, made lucrative by public investment. It was only business as usual. But this is a fundamental disconnect. The fact is that the business of renewable technologies is based on a different rationale and different and explicit social objectives. The fact also is that this business, because of these objectives, is being supported through public financing and subsidy. Therefore, the business is not about the usual, but the unusual.

This unusual business requires different models of growth, which can promote entrepreneurship, innovation and profit, but for common and environmental good. If this does not happen, the public subsidy and public goodwill for this business will be lost. The future will be squandered. We know that the fastest penetration of new energy sources is most likely to happen in regions still growing in provisioning of basic necessities. The already rich have built their energy infrastructure; they are energy reckless. They need to move to clean energy, for their massive carbon footprint is taking the world down. According to the International Energy Agency, the growth of primary energy supply in OECD countries is expected to be 0.3 per cent annually, while in India it will be the highest at 3 per cent annually between 2009 and 2035. The infrastructure is being built now; it is most appropriate not to “lock out” renewable and clean energy.

We also know that the countries ahead in building new energy infrastructure also have the largest number of poor people, who do not have access to energy. The same Paris-based energy agency’s global data book also tells us that there is huge energy poverty in the world and that this energy source is still priced higher than conventional energy systems. Here lies the nub of the problem. The poorest need access to what are currently the most expensive systems. This is possible only with massive public-financed programmes that drive down the cost.

It is not as if renewable energy is per se a new venture. Currently, 10-12 per cent of the primary energy supply comes from renewable sources (not counting hydroelectricity). But new renewables—technologies of the future —still make up only 1 to 2 per cent of this supply. The rest comes from biomass systems of the poor like the stove that burns wood or cow dung. These are the clients who can now either take the next step on the energy ladder to kerosene or LPG, or can jump to the top of the ladder by moving to modern biomass energy sources. These are the same clients who are in the dark and today have the option of selecting decentralised mini-grids for their energy needs. But if these are the people who are the targets of the new venture, then business is completely out of touch with its customers.

The future is becoming dark. The same business with the same wheeling and dealing to make a fast buck is taking over the future. A few years ago, when the Centre for Science and Environment studied the wind energy scenario in India, it found that the business had subverted the purpose for profit. Wind farms set up across the country were generating little energy. It found that the business of wind had the worst characteristics of the market: it was closed, monopolistic and unregulated. The turbine manufacturer was also the energy supplier. Capital incentives given to this crucial sector were used to create investment, not power.

The solar scam—where a single company, LANCO, a coal power major, used every dirty tactic in the corporate larder to subvert government guidelines and take over the public subsidy package—is another instance of this business going the wrong way. This is not the business of clean energy. This is the dirty business of dirty energy. The problem also is that nobody wants to talk about this “aberration”. The proponents of clean energy are social and environmental advocates. They do not want to rock the boat. As a result there is no public scrutiny of or research on this new business. The circle of knowledge and influence in this sector is limited to consultants who want the business and industry, which is in the business itself. It is in everybody’s interest to keep a tight lid on the murky side of the operations. “Don’t ask, don’t tell” is their motto.

It’s time to change. This time, for the better, not worse.

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  • Observing the problems of my

    Observing the problems of my native village in Bihar,it struck me that for the poor, fuel and energy are more scares than food. Fertile lands, MNREGA/Indira awas and infrastructure projects has removed hunger. But there is no access to LPG, afew litres of kerosene are inadequate for cooking and not enough biomass. They steel wood from plantations for their hearth, damaging whatever litle trees are left. It is also a source of social tension.
    CSE should study and highlite it.

    Posted by: Anonymous | 9 years ago | Reply
  • Dear Ms. Sunita Narain, I

    Dear Ms. Sunita Narain,

    I enjoyed reading your article in which you have made several interesting observations. The suited-booted executive brigade are at their old trick again - but this time it is to sell renewable energy technologies. As you so rightly pointed out, they are completely missing the plot as they are totally out of sync with the requirements of those in need of these frontier technologies.

    But that is the way the world works these days, I guess. I was at the India Wood 2012 recently. The blurb said that it was "the largest international Woodworking Industry Expo outside USA and Europe". There were suited-booted executive everywhere busy signing contracts and making deals. A multitute of stalls - all selling the latest machinery and equipment. Not one stall, unfortunately, where there was information about how to grow a tree!

    C'est la vie!!

    Posted by: Anonymous | 8 years ago | Reply
  • Dear Ms. Sunita

    Dear Ms. Sunita Narain;

    Please allow me to start with the end of your article first. In the last para; it has been mentioned ÔÇ£As a result there is no public scrutiny of or research on this new businessÔÇØ. Then, what are the CSE-type NGOs meant for? Just to highlight this issue OR follow it through the end and provide real and concrete findings and suggest solutions. I thought you would be doing it!!

    Firstly, in my view businessmen do business for business objectives and not for social objectives. The social objectives are limited to their voluntary CSR efforts and just that. It is the job of the government to think how to create a business scenario which can in larger perspective meet the social objectives too. If you believe that social objectives are not being met in renewable energy business, better blame the government rather than businesses. On the government side, only providing hurriedly-prepared and poorly-implemented public subsidy packages will not work without having long-term plan in sight and acquiring adequate comprehension of the renewable energy market/business in the country. Does our government have it? And your article proves the very same. In fact, such subsidy packages should be prepared by the government in close consultation with the like-minded businessmen, if government desires to aim at social objectives. But we have a GAP and this gap kills the social objectives. What you have referred as ÔÇ£fundamental disconnectÔÇØ in your article, the root cause of it is this gap between the government and renewable energy business entity and not the ignorance of ÔÇ£busy suited executivesÔÇØ in that trade gathering. This gap causes subversion of social purposes for profit. Only government can fill this gap by being proactive in listening to what renewable business people/market have to say. And of course, we expect CSE to work hard and fulfill its duties to help government fill this gap. Highlighting this issue is just one of the steps. Go forward, Ms. Narain!! You can do it.

    Secondly, I am very against ÔÇ£complete decentralizationÔÇØ of renewable energy, which is being seen as one of the benefits of renewable energy to reach remote places. I am for renewable energy but against its decentralization. Decentralization has to have its limit otherwise the costs of production will always be on the higher side and overall efficiency will always be on the lower side. Also in case of renewable energy, we should strive for (clean) renewable energy and its efficient distribution and use. And that can be made possible by setting up large scale renewable energy based power plants (on a par with fossil fuel based) be it solar, wind, or biomass across the country and connect these plants to the national power grid. If we want to reach remote places, reach them via the grid. That is futuristic and that is what India should do in the times when other countries are moving to smart grid. That is real energy infrastructure. Putting up thousands of small scale renewable energy units is short sighted, inefficient, economically unsustainable, and environmentally unfriendly approach. This is a short-term and bad solution for tackling energy poverty in the country. Limit such units to a few depending upon the case. But regrettably the government focus seems to be different and that is why we are drifting away from the social objectives that have been underscored in your article.

    Therefore, Ms. Sunita Narain, please help the national and state governments craft harmonized policies, plans, and procedures which can amalgamate renewable energy with fossil fuel based energy and be complementary to it rather than compete and be parallel to it. That will never work and you will continue to blame businesses for it. So please ÔÇ£Do ask (government) and do tell (businesses)ÔÇØ and fill the GAP. That will bring the change for the better!!!

    Yours sincerely,

    K D Bhardwaj

    Posted by: Anonymous | 8 years ago | Reply
  • Dear Sunita Narain, Thank you

    Dear Sunita Narain,

    Thank you for your intelligent article.

    You write:

    "... there is huge energy poverty in the world and that this energy source is still priced higher than conventional energy systems. Here lies the nub of the problem. The poorest need access to what are currently the most expensive systems. This is possible only with massive public-financed programmes that drive down the cost."

    In 1988 Springer Verlag published Olav Hohmeyer's important booklet "Social Costs of Energy Consumption". (ISBN 3-540-19350-2). This showed that taking social costs of conventional energy into account its total cost more than doubled. On that basis wind energy, even then, was already competitive with conventional energy.

    Global fossil-fuel consumption subsidies amounted to US$ 312 billion in 2009 and US$ 558 billion in 2008. Global producer subsidies are estimated by GSI to be US$ 100 billion annually. (Global Subsidies Initiative, Geneva, policy brief "A High Impact Initiative for Rio + 20 : A pledge to phase out fossil-fuel subsidies", August, 2011.)

    The figure of US$ 312 billion for fuel consumption subsidies (excluding producer subsidies promoting domestic exploration, extraction or refining) is taken from the International Energy Agency (IEA) ,Paris, report World Energy Outlook 2010 (Executive Summary).

    Koplow D.,in "Nuclear Power : Still not Viable without Subsidies", Union of Concerned Scientists, Cambridge (Massachusetts), February, 2011, pp. 129-132 states : ÔÇ£And once again, [ as in the past] these subsidies to new reactorsÔÇöwhether publicly or privately ownedÔÇöcould end up exceeding the value of the power produced (4.2 to 11.4 ┬ó/kWh, or 70 to 200 percent of the projected value of the power).ÔÇØ (p. 3)

    So "the hub of the problem" is the elimination of unfair subisidies on conventional and nuclear power generation and incorporation of their social costs into their prices.

    Posted by: Anonymous | 8 years ago | Reply
  • Hi, I run a school in a

    Hi, I run a school in a village in Neral near Karjat and have been plagued by power shortages for over 5 years. Am desperately seeking sustainable energy options but with no success. Can anyone please help?

    Posted by: Anonymous | 8 years ago | Reply