What’s Liquid Fuel got to do with Grid Power?

In an earlier blog I posed a provocative question of whether cleantech would solve India’s convoluted foreign policy situation. Why not spend the billions of dollars on incentives for renewables and energy efficiency, I asked, instead of pursuing a fossil fuels pipeline plan from Iran which seems far from materializing anyway? I threw in US Nuclear deal and China trade relations (China competing for same pipelines via Pak) for some dramatic effect. I admit, the whole idea of cleantech being a panacea for India’s foreign relations web, was far-fetched and meant to be provocative.

Interestingly, I got a very good comment from a reader saying solving electric grid power problems is disjointed from the liquid fuel crisis. I disagree. Here’s why…

The reader’s observation holds true in most developed nations, and definitely so in the US, where liquid fuels are predominantly used for transportation, and almost none for grid (or equivalent captive) power generation. However, in countries like India, there is a significant linkage between liquid fuel (petrol/gasoline, diesel, kerosene) usage and the electric grid. Anyone who has lived in any part of India will know that most businesses in India have a backup power generator – usually either petrol/gasoline or diesel. Over the last decade these liquid fuel gensets have penetrated the residential market – apartment complexes, residential developments, and even individual upper middle class houses.

But the question of course is whether this linkage between liquid fuel and grid power is really significant enough to move the needle in the equation? After a little digging, I found some numbers. According to a recent Business Standard article, captive (non-grid) power generation in India amounts to 25,000 MW. That’s 17% of India’s entire power generation capacity. The article goes on to say the majority of that is diesel power. Even if that means only 50% of captive power generation is from diesel, that’s still a big link between liquid fuel and grid power. And this linkage only grows stronger as the diesel genset demand is growing 20-25% anually.

So in conclusion, I believe it’s a fair argument to say that cleantech efforts either to decrease power demand via energy efficiency solutions, or boost alternative sources of power (central or distributed genration), would both have the effect of decreasing liquid fossil fuel demand.

Green Ventures’ $300 million fund will boost India CDM projects

When the Kyoto Protocol’s Clean Development Mechanism (CDM) went into effect China, Brazil and India stood out as countries with greatest potential for carbon offset or reduction projects. You only need to look at CDM projects interactive map to realize that prediction was accurate: these three countries have the greatest concentration of dots representing project locations.

Take a closer look and you will see a difference. While China and Brazil are dominated by red and orange dots representing large scale projects, India is predominantly yellow representing small scale projects. It is in fact true that India has the largest number of projects, but they are smaller when compared with China’s. Now, a new entry into India’s CDM landscape may change that.

New York based Green Ventures International has launched a $300 million India Carbon Fund — the largest such allocation in the carbon credit space in India by a single private entity. The entire sum will be aimed at a wide variety of CDM projects including energy generation, distribution and efficiency. Registered under the name of “Green Ventures Advisors Pvt Ltd” with UNFCCC, Green Ventures will act both as a buyer and seller of Certified Emissions Reduction (CER) credits.

As founder and CEO Krish R. Krishnan points out, global financial & carbon players find the Indian carbon space very fragmented and difficult to navigate. In a recent interview with Mint, he said it took him two years to research and develop local understanding and networks in India. With offices in New York, London and Mumbai, his team is now well placed to connect India’s need for energy and cleantech with capital and technology from developed markets.

Not knowing the GVI team, its difficult to predict what kind of projects they may end up financing. They are open to the entire gamut and all mechanisms that CDM allows. But I think the market factors are ripe for large scale solar and energy efficiency in particular. Despite the huge potential, solar hasn’t take off in India because of cost. But solar cell prices are set to decline sharply as more silicon capacity comes online and around 50 VC-funded solar companies (many not c-Si) start itching for revenues. In energy efficiency, India’s large cement and agricultural sectors will prove to be low hanging fruit. Central and State (most recently Haryana) policies are increasingly lending support to such energy efficiency projects make them more attractive.

Anyway, here’s wishing Green Ventures a great success and hoping that its entry will spur cleantech activity to the benefit of India’s power-hungry masses and industry.

Cleantech: a panacea for India’s foreign policy mess?

American politicians of all stripes have jumped on the corn ethanol bandwagon in the name of energy security and some even propound ethanol will solve the country’s foreign policy problems related to Middle-East. By contrast, you can’t find many Indian politicians talking up alternative energy though like the Us, India’s energy needs have left its foreign policy in mess. At least to some extent, I agree with the US politicians. No, I am not proposing ethanol alone and certainly not corn ethanol. Instead I believe clean technologies (a.k.a. cleantech) in energy transmission and energy efficiency represent a not-so-obvious solution to significantly reducing India’s energy demand and curbing the need for “dirty” oil and gas.

First, let me explain India’s foreign policy “catch 22″ situation. That India is desperately trying to overcome internal resistance to complete the nuclear energy deal with US is no secret. What’s not as publicized is the fact that India has been trying to join hands with China to compete with western oil giants in bidding for some African oil & gas fields. Similarly, the long-standing proposal for an Iran-Pakistan-India natural gas pipeline isn’t common knowledge either.

Ironically, deeply distrustful of its new business partners – China and Pakistan – India continues to build its military might with help from the usual suspects: US, Russia, UK and Israel. Also, as unthinkable as it sounds, India started joint naval exercises with US and followed that up with joint military exercises with China at the same time.

Most recently, India’s space agency ISRO launched an Israeli spy satellite into orbit, upsetting both Iran and Pakistan, who now threaten to take the natural gas pipeline to China instead. The prospects of the Indo-US nuclear energy deal don’t look much better either. What a mess!

So here’s an idea: How about pouring the same billions of dollars into economic incentives and R&D support for distributed energy generation, reducing transmission losses and energy efficiency projects instead? India’s electric grid losses are legendary (26% of production on average and 62% in some states) and India’s agriculture and manufacturing sectors are no models of efficiency either. Take a look at these case studies by The 3 Country Energy Efficieny Project for an inkling of what the the most unglamorous of energy efficiency initiatives could achieve.

Seriously speaking, I reluctantly admit that cleantech will not solve all of India’s foreign policy troubles, but you cannot deny that we cleantech zealots may be onto something here, after all.