India 2008. You have received an email with a brief video of your three-year-old daughter doing an impromptu dance. You click ‘open’, the video begins, and then abruptly starts buffering. You wait patiently. Still buffering … For a few glorious seconds, the frame unfreezes, and the video resumes before again buffering. Data is the culprit.
You have received the umpteenth reminder to renew your DTH subscription. You ignore it, as you binge-watch another series in HD on your large screen LED using broadband data. Data is the redeemer.
India is clearly gorging on wireless data. It has been a remarkable transformation from expensive and unreliable data usage to fast and virtually free data availability.
No, this is not about the telecom revolution that data has brought about in India. I am visualising a similar phenomenon in the power sector—from expensive and erratic supply to reliable and inexpensive, even free, power in the near future. So, is power the new telecom?
If in 25 years telecommunications can mutate from booking lightning trunk calls to free intercity calling, why can’t power mutate from darkness and load-shedding to abundant and free power supply?
Judged by any parameter the telecommunication revolution in India has been astonishing and it needed three crucial elements for it to come together: private sector entry into the market, opening of spectrum and access to capital, especially FDI.
The power sector has been a laggard but there are now sure signs of the winds of change blowing in its direction. What is more, the impact of a telecom-like revolution in power undoubtedly has the potential to be infinitely more profound.
I am not making a facile argument. Because it is a sector of such critical importance, it is also that much harder to reform what with several decades of sloth and vested interest. So, while it is exhilarating to imagine a scenario in India where electricity is reliable, accessible to all and virtually free, the journey is going to be arduous.
The importance of the energy sector in the larger scheme of things cannot be overstressed. In his book ‘The Audacity of Hope’, former US President Barack Obama states: “A nation that can’t control its energy sources can’t control its future.”
It will be no exaggeration to say that more has happened in the Indian power sector in the past 10 years than the preceding several decades. But that’s not enough. This sector needs a telecomesque growth trajectory. Latest Telecom Regulatory Authority of India (TRAI) figures show the number of internet subscribers has grown at a CAGR of 43% between 2006 and 2018. What is more, the number of subscribers is likely to double by 2021, with IP traffic growing four-fold at a CAGR of 30% by 2021.
The telecom boom has come about on the back of unbridled assumptions of growth. India’s power sector needs similarly aggressive and non-linear planning. The assumptions we make in the growth in the demand for power needs of be orders of magnitude higher than is the case at present.
Let me explain. The basis for the projection of demand is wrong because it is based on historical rise in demand for power, which has never been anything more than steady. With the unshackling of the sector, the hunger for power in India is going to experience hockey stick-like growth. At present, power supply in rural and semi-urban areas is erratic and inadequate, while in metropolises it is unreliable and expensive. Which is why we, as individuals and in groups, conserve power and use it sparingly.
If generation becomes more than sufficient and evacuation efficient, the hunger for power would be truly unleashed and the growth in demand could be telecomesque.
The conservatism in planning also means that if and when power demand rises humongously, the grid and the transmission lines will not be able to support that demand. Hence power planners need to think out of the box, telecom-like, to create a transmission and distribution infrastructure that can support exponential growth in demand for electricity.
For all this to happen, the power sector needs unrestricted access to capital. Private sector investment gave wings to the telecom story and the power sector will soar only on the back of similar investments all along the power value chain, especially in T&D.
History shows us that when the hold of monopolies loosens, good things start to happen and consumers benefit. Private entry into power distribution is unlocking efficiencies, albeit slowly, and this will eventually put consumers in charge of their own destiny. They get to choose the power service provider and that choice will drive rates downwards. Just as the telecom scenario. Think what has happened to telecom rates with the arrival of Jio in late 2016!
Technology is fast changing the way energy is produced and consumed. Technological advances like the smart grid are increasingly going to turn power into a retail market too. Balance of power, a la telecom, is shifting from the seller to the buyer.
Smart metering is a game-changer for India’s power sector. The smart meter technology is pivotal both for the buyer and the seller in optimising energy use, enabling both to save energy and cut costs. Utilising a range of technologies, it will allow for communication between the buyer and the seller to take place real-time. A smart meter records electricity consumption to short intervals and relays it back to the utility. In the Indian context, smart meters are even more valuable, for they will enable discoms to address billing inefficiencies that contribute to their well-documented troubles.
The transformation of Indian telecom from a monopolistic behemoth to a competitive environment has been something of a paradigm shift. A similar shift is more than likely in the critical power sector if we carry forward the momentum that the sector has gained in the past few years.
Those used to seeing the power sector in India as the eternal laggard may be surprised to read these sanguine thoughts, but I am not daydreaming. In any case, everything, but everything, starts as someone’s daydream.
Pratik Agarwal, Managing Director, Sterlite Power
Source: Financial Express