The world is getting hotter but we still have not figured out how to implement solar energy in our cities and use it for industry. However, there are some who have spent over forty years turning this dream into reality. Dr Charles Gay, President of Applied Solar at Applied Materials, a $8.7-billion semi-conductor company, grew up poor in a farm in California where they had to burn wood to cook. At school, he figured out the world has to be independent of oil and has spent his lifetime on solar research. Solar apart, he has participated in civil rights movements for black people in the early sixties. He believes India can leapfrog a generation on solar which could be set up on home rooftop and can then supply power to the grid. This movement he feels can create a future of cities. However, he warns there there are too many stakeholders when it comes to commercialising solar power and says they should get together to make solar a reality. Even in countries like the USA where the total installed capacity is 1050.9 GW, less than 1 per cent of the power requirements come from solar. India has a total electricity generation capacity of 211,500 MW, of which less than 1 per cent is solar power. Gay talked to BW|Businessworld's Vishal Krishna about how Applied solar manufacturing cells and wafers for solar panels fit right in to markets like India, which plans to have 20 GW solar power by 2020. Excerpts of the interview: Where do we begin, the world is thinking solar, but can it be a viable proposition?There are jobs (created) to make raw materials, jobs to make the equipment, jobs to make the solar panels, jobs to install the solar panels, jobs for the electronics and the maintenance. It’s a win-win situation. For the environment, it’s a good clean energy source, for global economies it means creation of jobs. It is an exciting time for solar because of this convergence of recognition of the importance of sustainable climate considerations along with economic competitiveness. There are basically three application segments – a home rooftop, a commercial building rooftop, and power plants. So, in the US, many of the power plants range in size from 200 to 700 megawatts. A coal burning power plant is usually 700 megawatts in size. In the US, some of the solar power plants that are being installed are the same in size. People usually meet their own energy need with their own solar panel on rooftops. There are examples of communities today in Davis, California -- which is near the state capital Sacramento -- of zero energy communities. These are communities that can generate the electricity that they need for their own corporate quality of life. Here in India, the commercial building application is a very good one. You know people work in offices in the daytime and they like to have air-conditioning or at least ventilation and fans, lighting, so there’s a perfect match between when the sun is shining and when people need the energy in a commercial building. So companies like Tata Power have very good business models for providing electricity through solar and they can provide the electricity at a price less than the grid; and of course make it reliable, so you have the electricity 24 hours a day or whenever you might need it in a very reliable way, which is very helpful.Are there companies in India that have created sound business models out of solar in India?Yes, there are quite a few companies like Moser Baer, ITC’s Wimco and the Yash Birla that have initiated various kinds of businesses that will facilitate solar power generation. This is a very interesting time in many ways. There’s a good parallel, I think, between the evolution of solar and the evolution of automobiles. Automobile industry, in the USA, had thousands of companies with different ideas which eventually consolidated to a few companies. Looking back, is something like that going to happen in solar?That was a very exciting time of innovation and creativity around manufacturing of automobiles, the creation of infrastructure and also the commissioning of manufacturing units for automobiles. As time passed, these thousands of companies narrowed down to a dozen or two companies globally. But they created lots of jobs, lots of manufacturing jobs and with the scale of cost coming down, many people could afford automobiles. Also, it was representative of autonomy, some independence in a way where people could choose where to go and when they wanted to go there. Imagine if you could do this with electricity, in a certain sense having your own electricity provides you to choose what you want to do with it and how well to use it. Yes India and China are becoming economically powerful and with the quality of life improving, a large fraction of the population are looking for self-reliance. So in many ways, kind of along the lines of Gandhiji’s message to all of us to be self-reliant, being able to provide for our needs. In India solar can actually create self-reliance in rural areas. Bringing electricity to individual homes, you can have a TV or radio or light, this gives young people an opportunity to learn. Here in Bangalore, I don’t know if you are familiar with a company called Selco. Harish Hande is a world recognised innovator for his business models for rural electrification, and he’s very creative. He’s done things like put solar on schools and when kids come to school he makes it possible for them to bring a small light that they can charge while they are in school and take back the lamp to study with at night. And I have for many years now, say for more than 15 years, have a foundation that I run called Greenstar which focuses on rural electrification. We go to villages and install solar-powered community centres. One of the first we did in India was a pilot programme in Hyderabad in 1997 and basically made it possible for village tailors to use solar to run, basically convert treadle sewing machines to electric sewing machines, with the solar panels. Is solar more of an experiment in rural regions?Yes, a lot of this is small entrepreneurs who aren’t seeking self-recognition or promotion but who are really very creative in being able to use electricity effectively all the way from the rural village to your large urban power plants now. It is a lesson to learn from them as solar brings a good balance into the grid. Typically in a utility network system, 40 per cent of the capital would be in the coal burning power plant, 60 per cent is the wire cost, and if you can put power along the length of the wire, you don’t have to add more wire. You can use the existing infrastructure far more cost effectively. So innovations are possible depending on the goals of the state electricity board, for example, the relationship that entrepreneurs can create with government infrastructure. So this is a time of great innovation, a time of business innovation, a time of technology innovation that is coming together.What about the USA, where is solar heading?The US has tremendous wind reserves that more or less go north to south from the middle of the country, so from Texas to North Dakota, say kind of like a wind valley for America, and in Texas a major project is under way that has an average price of electricity at 6 US cents a kilowatt hour, combines wind and solar. This 600 megawatts of wind and 400 megawatts of solar is being installed, and so in combination it’s a very good matching of the resource, and Texas is famous in the US as kind of a unique state, and very independent, and so they have their own utility wire system that can easily make good use of this hybrid of wind and solar to bring costs down even more. Policy is incredibly important especially for the smart grid for making information transparent. Knowing where’s the power needed, when is it needed and then you can use weather forecasting very effectively here to model how much you know if it’s going to be. You can gauge whether it is hot tomorrow and I need extra power, whether I can plan for it. Again we need to utilise the entire infrastructure more effectively, and there’s a very strong tie between weather and energy consumption for example. In the US, the government has created what is called the investment tax credit, different governments have different financial instruments that they made use of. So in the US the investment tax credit has made it possible for new business models to come and these companies are raising money. Recently there was a public offering of a company called Solar City. Similarly, there are home solar companies called SunRun, and Sungevity. These businesses will install solar on your roof and sell you electricity at a price less than the utility price for electricity in exchange for getting to use your roof. They connect to the grid, so in Europe and Japan there’s what’s called a feed-in-terra, this means if you put solar on your roof and you send the electricity into the grid and you are paid a fixed price for that energy guaranteed for 20 years. So it is important to maximise energy delivery and it is possible to work closely with banks to have access to finance and to be able to utilise the feed in terra basically as an investment. Will the next two decades be the time for solar energy?Solar is low risk and low project risk as well, unlike traditional coal and gas plants. In electricity generation, usually there’s time to get a permit and time for construction costs before any cash flow happens. In solar, the time from defining a project to cash flow is extremely short, so on a cash flow basis solar is becoming far more prevalent because the risk of construction delays and unknown risks and questions whether this will work or not are reduced so much. The time to money is reduced so much that in Europe, which is a better example, the majority of the new power generation is solar. Increasingly in the US a large fraction of new generation is solar, coal burning power plants are near the end of their life in the US, which are well over 40 years old, and now many of them don’t meet the environmental control requirements, and are either being replaced with gas turbines or with solar.
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The views on economic feasibility of biofuels are divided. The nay-sayers say biodiesel needs a large infrastructure and proper supply chains — both missing in India. But Earth100, a five-year-old company, is out to prove them wrong. In May this year, the company has put out a fleet of 10 cars (Mahindra Scorpios) fuelled by 100 per cent bio-diesel. Before that, as a pilot, it was operating two such cars for Jindal Steel & Power (JSPL) since January 2013. Offering a leasing solution, Earth100 is working with manufacturers, corporate houses and government to promote biofuel. Founded in 2008 under the NODWIN group of companies, Earth100 started out as an execution wing of an idea proposed to Goldman Sachs’ Bangalore office to reduce their carbon footprint. “Goldman Sachs asked us to come up with out-of-the-box ideas to improve the Bangalore office’s energy consumption. We suggested bio-diesel cars, which they liked and wanted us to implement,” says Megha Rathee, Earth100’s COO. Initially, Earth100 was reluctant to execute the idea, she says, but wanting to prove the commercial viability of such vehicles decided to plunge in. The first project failed owing to poor quality bio-diesel from a private vendor in Gujarat. “We had some amazing successes and some disastrous experiences, and realised that the quality of biofuel was not consistent,” says Rathee. So Earth100 switched to Chhattisgarh Biofuel Development Authority (CBDA), which gave them Jatropha-derived fuel at Rs 42 per litre. “We then decided to move to leasing such cars to others,” says Rathee. The next stop was JSPL. Sushil Maroo, director at JSPL, says the company agreed to Earth100’s proposal as it wanted “to minimise the use of fossil fuel and support use of biofuel”. Of the 60 cars at JSPL’s Gurgaon office, 10 are run on biofuel by Earth100. “We are willing to add such cars,” says Maroo. The cars have been hypothecated to Jindal Power, and will be transferred to it after four years. “The key reason for going along with this model of leasing was that in this process, we are creating our own asset while promoting a green initiative,” says Maroo. Under the current model, Earth100 buys the Scorpios at about Rs 9 lakh per unit, and an additional Rs 25,000 for the modifications (most of which is absorbed by Mahindra & Mahindra, or M&M, as it has already invested that money in R&D). “They (M&M) want this to succeed to a scale where they can go to the mass market with it. We are essentially their experiment bay,” says Rathee. The fuel, bought from CBDA, is provided to the lessor from a dispensing stall that Earth100 sets up on its premises. Earth100 has company-specific contracts. Based on the number of cars and the distance that each car has to run, it charges Rs 12-22/km. The capital to buy the cars and set up the supply system comes from the lessor company, and is paid back to it. “It is a kind of a no-interest loan that the company wanting to implement bio-diesel cars gives us. In return, we provide the supply chain for running the cars,” says Rathee. Earth100 is 70 per cent owned by Akshat Rathee, NODWIN’s founder; 20 per cent is held by JSPL (who invested in Earth100 two years back); and another 10 per cent is with a private investor. The initial investment, however, was from Goldman Sachs, says Rathee. Operationally, Earth100 has been profitable from the beginning, she says, as it is simply buying the cars and the fuel and putting the two together for another company. EARTH100 YEAR OF FOUNDING: 2008WHAT: Provides biofuel-run cars, especially as part of CSR initiatives WHY: Has support from big corporate names such as Mahindra & Mahindra (for technology) and Jindal Steel & Power (consumer) WHO & HOW MUCH: 70% held by Akshat Rathee (NODWIN); 20% by JSPL; and 10% by a private investor COMPETITORS: Battery-run cars REVENUE: Not availableWith only 10 cars on the road and another dozen in the pipeline, Rathee agrees that Earth100 is a small player. But the plan is to raise the number of such cars to 50 by the end of 2013, and have pilot projects in Bangalore and Mumbai as well. She also says that Earth100 can have 200-300 such cars over the next three years. “The idea is to make it profitable. We don’t want to be a charity because that is not sustainable in the long run.” Earth100 is tying up its model to CSR requirements of companies on the argument that biofuel is an economically feasible green solution. Rathee says using biofuel can reduce a company’s diesel bill (see ‘When It Makes Sense’), as well as increase the vehicle’s life by three years owing to the better quality of the fuel. Also, though the fuel used in India to run vehicles can be mixed with 5 per cent biofuel, it is set to increase to 20 per cent by 2017. Most vehicles at present can run on 20 per cent blends. But the biggest hitch in the plan is that biofuel is not openly available and no private player is permitted to sell it. The domestic market is limited and the supply is erratic. In addition, there are concerns that large-scale conversion of crop land to oilseed plantation will hamper food security. Rathee argues that Jatropha is just one source, and that the company hopes to move to third-generation biofuels derived from algae. “We have tried different feedstock, and believe biofuel has multiple sources. For example, in India, we could use cooking oil. The wasted oil from street food joints can be converted to biofuel — it is being done all over the world, why can’t it be done here?”mmatbworld(at)gmail(dot)com(This story was published in BW | Businessworld Issue Dated 17-06-2013)
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From crude to coal, cheaper commodities augur well for both government and industry.Click Here To View Graphic: Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 20-05-2013)
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Reliance Industries (RIL) has faced numerous crises in the past four years — the export market for petroleum products, petrochemicals and polyester was shrinking; domestic markets in the organised retail sector were no better. Moreover, its natural gas production from the Krishna-Godavari (KG) D6 basin was barely a third of its peak output. But unfazed by the crisis, as RIL’s CFO Alok Agarwal says, “We used this as an opportunity to consolidate our businesses.”The export-focused Jamnagar refinery helped increase its forex revenues; 60 per cent of its revenues come from exports. A decrease in petroleum prices in 2008-09 was offset by higher volumes. RIL reduced expenditure by 36 per cent through lower conversion costs, selling expenses and exchange rate gains. The firm has already ramped up its retail operations. Analysts are waiting for its capital expenditure to start delivering, retail to turn profitable and 4G to live up to potential. — Nevin JohnA Four-Wheeled DriveWhen India won the cricket world cup in 1983, Kapil Dev was advertising Mahindra Tractors. Three decades on, in 2011, when India won the cup again, M&M was selling sedans and sports utility vehicles (SUV), apart from tractors, of course. “In 2008 and 2009, when everyone was bogged down by the slowdown, we invested in increasing capacity... So when the demand finally went up, we were prepared with new models and high capacity,” says Pawan Goenka, president of the automotive and farm equipment sectors of the group. Some of the new launches like the XUV 500 and the Xylo drove M&M’s sales growth. In fact, SUV variants contribute about two-thirds of M&M’s revenues from utility vehicles. Going forward, “performance in the segment will depend on how players are able to price, position and rejig new or existing products,” says Abdul Majeed, national automotive leader at PricewaterhouseCoopers. “As many players will enter the segment, we may not be able to maintain our high marketshare. But we will grow in volume,” counters Goenka. — Sachin Dave(This story was published in BW | Businessworld Issue Dated 20-05-2013)
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Oil & Natural Gas Corp posted a 40 per cent slump in quarterly profit, lagging expectations, as lower average crude prices during the period and higher costs and write-offs hurt margins.The state-run company reported a net profit of Rs 3,389 crore for its fourth quarter ended March, down from Rs 5,644 crore a year earlier.Analysts on average, had expected the company to post a net profit of Rs 4,708 crore for the quarter, according to Thomson Reuters Starmine data. Net sales rose 14 per cent to Rs 21,389 crore.Shares of ONGC, India's second-biggest company by market value, closed 0.3 per cent higher ahead of the results. The stock has risen nearly a quarter so far in 2013, outpacing a 5 per cent rise in the sectoral index.(Reuters)
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A fire broke out late on 16 May' 2013 at state-run refiner Hindustan Petroleum Corp Ltd's Visakhapatnam refinery on the east coast, said officials at the unit. The fire, which was put out immediately, resulted in the shutting down of a 3 million tonnes a year crude distillation unit (CDU) at the refinery, one of the officials said. The extent of the damage and losses due to it is not yet known. HPCL operates an 8.3 million tonnes a year refinery at Visakhapatnam. It runs another 6.5 million-tonne refinery at Mumbai on India's western coast.(Reuters)
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Petrol price was slashed by Rs 3 per litre on Tuesday, 30 April, the steepest reduction in rates in over five years.The fourth reduction in rates since March means that petrol in Delhi will cost Rs 63.09 a litre with effect from midnight tonight as against Rs 66.09 per litre currently.Rates will vary from city to city depending on local sales tax or VAT.In Mumbai, petrol price has been cut by Rs 3.15 to Rs 69.73 per litre, while the fuel in Kolkata will cost Rs 70.35 from tomorrow as against Rs 73.48 per litre. The reduction in rates in Chennai would be Rs 3.18 per litre to Rs 65.90.Today's price cut comes after three consecutive rate reductions on the back of falling international oil prices. State-owned oil firms, which revise rates every fortnight, had from April 16 cut petrol price by Rs 1.20 a litre in Delhi.On March 16, the rates were cut by Rs 2.40 per litre and by Re 1 in the following fortnight.The price cut announced Tuesday is the steepest since December 2008 when rates were slashed by Rs 5 to Rs 45.62 per litre.Announcing the reduction, Indian Oil Corp (IOC), the nation's largest fuel retailer, said that since the last price change, international prices have declined from USD 116.61 per barrel to USD 107 a barrel.Rupee-US dollar exchange rate too improved from Rs 54.51 to a US dollar to Rs 54.26. "Thus, it has been decided to pass on the benefit to customers and accordingly the aforesaid reduction in the retail selling price of petrol is being affected," an IOC statement said.(PTI)
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India is calling in specialist monitors to improve the poor quality of coal it is getting for its power stations. Indian utilities complain that poor quality coal reduces the efficiency of power stations, requiring more fuel and an increased need for the costly disposal of pollution.Last month, India's largest utility NTPC refused to pay for coal viewed as substandard, prompting Coal India to respond by suspending supplies and raising concerns of blackouts. "We have already engaged CIMFR (Central Institute of Mining and Fuel Research) and they are carrying out the sampling and analysis," said Niladri Roy, a general manager at Eastern Coalfields Ltd (ECL), a subsidiary of Coal India.But to further adddress the problem, the government is planning a tender for independent coal quality sampling by September, in which international verification companies such as SGS and Bureau Veritas are taking part."Coal India has had a long-standing Joint Sampling scheme in place with their consumers which ultimately ended...We have participated in the tender floated by Coal India for independent verification of their coal supplied to their consumers," said Erwin Oosterveen, business development manager with Bureau Veritas.Indian utilities have become increasingly reliant on imported coal because domestic production is lagging demand, but the quality of many of these imports is dropping.Low quality coal exports (known as sub-bituminous supplies) from Indonesia, the world's biggest exporter of thermal coal, have risen steadily in the past five years, especially to China and India.India's government is desperate to avoid a repeat of a huge blackout last year, when half of the country's 1.2 billion people lost access to the power grid.But with imported coal costing around 50 per cent more, some power companies are facing huge losses unless they push up power customer prices, something state governments are resisting.Last week, India's National Aluminium Company, which uses large amounts of the fossil fuel for its power supply, said it had started cutting output because of a lack of domestic coal supply.China Also Takes StepsChoking on pollution and keen for more efficient electricity production, China also wants to improve the quality of its coal supplies. In a move to reduce pollution and help domestic producers, which have struggled to compete with Indonesian suppliers, China may soon ban lower quality imports."This move does fit in with the policy of promoting 'more efficient' growth. Also, the growing concern over pollution is likely to have played a part," Australian bank Macquarie said. "Blending of coal to meet minimum requirements should open up large potential for traders," the bank added.Coal is the dominant fuel to meet booming power demand in most emerging markets.Asia's two biggest coal users, China and India, with other emerging economies have in recent decades ramped up coal use to account for more than half of current global demand.But the most economical reserves of the fossil fuel are fast being depleted, leading to a drop in the quality of what remains.(Reuters)
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