Intro: This week on Socio Economic Voices we have Dr. GAURAV BHATIANI Director - Energy and Environment, RTI International in an exclusive interaction with Senior Journalist Mahima Sharma where the expert emphasizes the need for restructuring power distribution companies, empowering urban local bodies, enhancing climate resilience and prioritizing public private partnerships to boost India’s economic development. He adds that clean technologies and innovative approaches can minimize damage to the environment, promote green growth and discusses how international collaboration can enable improved environment, climate smart cities, promote circular economy and energy efficiency. Read on and know more…
MS: What kind of Budget Allocation (please share a complete breakdown) towards 2023-24 is required in India in the energy and environment sector? And why?
GB: The energy sector has attracted significant private capital over the last few years, particularly in renewable energy generation. However, achieving the 500 GW target is ambitious and challenging. Simultaneously, there is concern that India’s 2070 net-zero target is too far out to support the Paris Agreement goal of limiting global temperature rise to 1.5 C.
To accelerate clean energy transition, the budget should drive strategic investments with high impact and support sectors where private investments are not feasible. Simultaneously, the center should enable strengthening of enabling frameworks such as regulatory bodies and support institutional strengthening and capacity development. The following should be the key priorities:
1. Prioritize Distribution Reforms which remain incomplete even two decades after the Electricity Act 2003. Even as ATC losses have reduced below 20% (preliminary estimates for FY 22), aggregate financial loss (after adjusting for subsidy received and grants) increased to over $10 billion in FY 21. Data for FY 22 is not available. While access has expanded, the quality of supply remains poor, except in a few cities. Financial losses and poor quality of supply are a drag on the Indian economy as most customers need to invest in back-ups, thereby paying a substantially higher cost of electricity. Others must learn to adapt to living without it. Financial losses and antiquated networks (state transmission and distribution) are also a bottleneck to expanding renewables, electric vehicles, and energy efficiency. We need to acknowledge and take substantive policy action and accelerate investments. The budget provides an opportunity to demonstrate leadership by directing policy attention and funds in this area.
2. The other area to focus is to prioritize investments to improve performance of coal-fired generation. It is critical to clean-up our environment and to enhance the efficiency of thermal power stations. There are multiple opportunities, but investments should be directed in relatively newer plants, i.e., those less than 15 years old. Simultaneously, older, and inefficient ones should be retired at an accelerated pace. One priority is to control Sulphur emissions. Flue Gas Desulphurization units need to be installed urgently as directed by the MoEF&CC. Further, ESPs in many plants require upgrade and supplementary investments to improve performance and efficiency. Many state-owned plants require additional investments to improve heat rate, reduce auxiliary consumption, coal washing and managing ash. Given that coal fired generation contributes to 75% of the total, a scheme for cleaning up thermal generation will be a perfect complement to the renewable energy push. India should also accelerate research, enable, and incentivize adoption of technologies for carbon capture, utilization, and storage, since we will continue to use fossil fuels for the next few decades.
3. Research and Development – Technology development, testing and commercial demonstration require central investments, specially to support scaling up of clean energy deployment. Charging infrastructure is one area where central investments have the potential to catalyze transition. Another potential game changer is pumped storage where the center can play a facilitating role by supporting feasibility analysis, development of standardized business models, bidding framework and investments in select projects.
4. Agriculture Demand Side Management and energy efficiency – Limited progress has been made in reducing wasteful electricity consumption for groundwater pumping. Given the risks involved in Ag DSM, DISCOMs and ESCO companies have been reluctant to invest. It is relevant to create a credit risk guarantee mechanism, for example under the expanded KUSUM scheme.
5. Forest and Wetlands – India’s NDC includes an ambitious target on forestry. Investments in protecting natural and dense forests and wetlands offer significant climate adaptation benefits in addition to acting as heat sinks. There is a need to prioritize investments in this sector.
Overall, the Centre should play a facilitative and enabling role to accelerate clean energy transition and to attract an increasing amount of global climate finance towards mitigation and adaptation activities.
MS: What kind of mergers and acquisitions should India eye at or propel as a govt to give a boost to its economic momentum?
GB: India should consider restructuring power distribution companies to improve the quality of supply, reduce the cost of electricity and accelerate decentralized renewable power solutions. While attempts to privatize distribution have led to mixed results, a more nuanced approach based on the local context may be better. Such an approach can include multiple smaller steps and involve diverse stakeholders. Local ownership by customers and local businesses will be consistent with India’s drive towards enabling and encouraging micro and small businesses.
International experience suggests that the size of distribution companies (Discoms) in India is larger than ideal. For example, there are over 3000 distribution utilities in the United States. The smaller ones serve 2,000 customers and the larger one (investor-owned) serve about 400,000 customers each. On the other hand, India, with a population 4 times larger, has fewer than 100 distribution companies. Their large size, customer base, and heterogeneity of terrain lead to inefficiencies, slow decision-making, and poor customer service. It is hardly surprising that employees disengage, and customers have low willingness to pay.
Research and anecdotal evidence suggest that the optimum size for a distribution company in India may be much smaller. i.e., about 1.0-3.0 million customers. This corresponds to the population of an average district or a mid-size city, suggesting a strong case for resizing distribution in a manner that brings decision-making closer to customers. Smaller DISCOMs will also facilitate competition and provide more granular data for regulators to benchmark performance. Such companies will likely have a more heterogeneous customer base and will bring engagement, localization, and continuity to management. Most importantly, they will be easily approachable and more accountable to their customers.
Creation of smaller companies will enable their ownership and management by local businesses or city authorities, or citizen-owned co-operatives.
MS: Investment Analysis and Infrastructure Financing - What's your take on the Indian situation as to what are its strengths? And in which sectors does it need more work vis-a-vis public-private partnerships?
GB: Infrastructure financing has picked up due to increased allocation by the central government. Some recent initiatives include the National Infrastructure Pipeline to create a portfolio of projects and Gati Shakti to identify connectivity and cross-sectoral aspects to ensure required interlinkages.
State funding, however, remains constrained, particularly for urban infrastructure. Total investment needs in urban infrastructure exceeds $1 trillion over the next two decades. A key reason for low investments is that the finances of most Urban Local Bodies (ULBs) are weak, and their institutional structures need to be strengthened to enable viable PPP business models. Further, empowerment by delegating fiscal, administrative, and political autonomy will enable them to realize their potential. Large pools of capital are available, particularly for climate mitigation and adaptation. Many urban infrastructure projects such as public transport, decentralized energy, green homes, waste management etc. meet the sustainability criteria and are therefore eligible to access global climate funds.
India has achieved initial success in climate finance in green bonds but a lot more is possible, especially if ULBs and DISCOMs are operated as efficient and autonomous entities. Large investments in urban infrastructure will be a game changer for India’s development. PPPs are possible in all infrastructure urban projects. However, care must be taken to ensure a well-designed regulatory framework and implementation of the contract in letter and spirit. can be win-win-win for all stakeholders.
MS: Your comprehensive take on this news and how will India benefit from this in the longer run: "The central government will use the geographic information system to grant faster environmental clearances for infrastructure projects through the recently launched Parivesh portal, the environment ministry has informed the Rajya Sabha. The use of technology will reduce the time taken to approve proposals by as much as 30%."
GB: There are three advantages from the proposed move. First, avoidable cost escalation of infrastructure projects caused due to delayed approvals will hopefully become history. Second, digitization will likely reduce the governance challenges often encountered in approval processes. Last but not the least, it is expected to improve transparency and therefore enable better access to information to all stakeholders.
MS: In the current global economic situation how will developing nations like India decide between a higher GDP or better environmental measures? What's your take as well as the advice on the same?
GB: Development and the environment are not necessarily at odds. Green growth or sustainable development is the way forward. Innovative technologies and new business approaches are enabling infrastructure projects to be developed with minimal damage.
Consider Multi Utility Tunnels as an example. These are developed deep underground ranging 25-50 meters below the surface. A key advantage of underground utility tunnels is to reduce the need for precious urban land. Cities such as Helsinki and Singapore have successfully deployed these and reaped significant economic and environmental benefits such as increased life of infrastructure, avoiding pollution, conserving forests, or releasing land for public purposes such as parks or cycle tracks, etc.
Adopting sustainable public procurement as a policy can enable a green transformation while continuing economic development. Sustainable procurement considers the lifecycle cost of assets and internalizes environmental costs and benefits.
Further, we need to start prioritizing programs and projects to enhance climate resilience. Forestry and wetland conservation and rejuvenation offer economic and environmental co-benefits. They also generate local livelihoods for communities. Likewise, sustainable agriculture, i.e., optimizing use of water and fertilizers is good for the economy, consumers, and environment.
MS: What kind of international energy agreements must India look at to ensure a better inland climatic situation, waste management energy efficiency? (Hint: Please discuss the names of nations India must engage with and why?)
GB: It is in India's interest to collaborate actively with all countries that are willing to share technology and bring long term capital. We need to work collaboratively to form joint ventures or other similar arrangements. India's historic contribution to climate change is low and we have demonstrated leadership by adopting ambitious NDC targets. However, at the current level of development and per capita income, it is unfair to expect Indian citizens to pay for the cost of development elsewhere. India is also extremely vulnerable to damage from extreme events such as floods, droughts, and cyclones. Therefore, it is critical to access climate finance for climate resilience and adaptation.
Many countries are interested in investing given our market potential, democratic institutions and improving ease of doing business. India must use the opportunity to develop win-win relationships with the West as well as the East. It is important that India strengthen capabilities for foreign trade and commercial negotiating to ensure that we get a fair bargain in international treaties.
Further, we should also prioritize countries that are willing to invest for the long term in priority sectors such as infrastructure, education, and health.
MS: India had localized climate disasters nearly every day in 2022: CSE Report. What is the right path ahead for the nation - please break this down for your audience?
GB: Climate adaptation needs to be prioritized given the increasing frequency of extreme events. This involves developing projects focused on resilience, strengthening institutional capacity to deal with disasters, and educating citizens on safety procedures.
We need structures and networks with significantly higher strength to minimize damage. This will require improved planning and enhanced standards to be prescribed and implemented at a national level.
Even more important is to improve the national, state, and local capacity to deal with extreme weather events. While NDMA has shaped up well, SDMAs and DDMAs need to be strengthened considerably to provide rapid response. Simultaneously, vulnerable populations need to be made aware of the risks and youth should be provided mandatory training to provide first aid to save life.
Last but not the least, focus on climate finance through expanded and new insurance products for vulnerable sectors such as agriculture and broader disaster insurance for residential and commercial sectors.
MS: How can India move steadily and faster towards better energy efficiency mechanisms across micro, small, and medium-sized enterprises in India, towards better climate control? What kind of considerations will be needed?
GB: Energy Efficiency (EE) in the MSME sector has a significant potential given the large number (over 25 million) of units and because of relatively old technology, lack of awareness, etc.
BEE has been working in this sector for several years and implementing activities such as demonstration projects, capacity development and strengthening of policy frameworks. In addition to these efforts, enabling the private sector through ESCOs will be critical for successfully scaling EE in the MSME sector. ESCOs can be encouraged through the PLI kind of scheme which provides incentives for every kWh saved.
Two additional considerations will matter. First availability of finance for those willing to invest and upgrade. Second, strengthening governance and MRV protocols to ensure that metering and billing faithfully capture the baseline and gains.
MS: You have always emphasized 'Climate financing will be key to accelerated mitigation and adaptation of green policies into the systems.' How is this achievable in a vast nation like India, which is still struggling at the grassroots?
GB: India needs access to low-cost, long-term international climate funds to finance mitigation and adaptation projects. While some options such as GCF are available, more funds need to flow from developed economies to accelerate and scale climate-friendly projects. Creation of the “Loss and Damage” fund during COP 27 was a milestone in this direction. It will particularly support vulnerable countries in Asia, Africa, and Small Island Developing States.
India should continue articulating for increasing international climate funds but simultaneously take steps to prepare for attracting and fully utilizing the available level of funding. Preparing a pipeline of shovel-ready projects, improving capacity to implement projects such as updating procurement policies and procedures, enhancing project management capabilities, etc. will enhance our ability to deal with climate challenges.
We also need to sensitize individuals, families, and communities about the risks and steps required to deal with the risks. Further, it is relevant to raise awareness about the cost of the climate projects and that everyone will have to contribute. Since the cost of no action is extremely high, we need a political and societal consensus towards cost sharing on a transparent and fair basis.
MS: What could be a long-term, practical solution to the pollution woes of Delhi NCR and nearby states during the Rabi Crop sowing season, when the previous crops' stubble burning takes place and adds to the existing pollution?
GB: Stubble burning is not the primary cause of poor air quality in Delhi NCR. Road dust, construction, power plants, vehicular exhaust etc. all contribute to the problem. Cities themselves are the major source of pollution and therefore they need to look in and evolve solutions. Technologies and evidence from other cities are available. Incentives and financing need to be provided to enable a transition to cleaner options. The following five should be prioritized by cities to obtain the highest bang for buck in terms of pollution reduction:
Stubble burning is a complex challenge arising from two fundamental realities. First, the commercial motive or survival necessity to sow the rabi crop soon after the paddy is harvested. Second, un-availability of reasonably priced alternatives. Therefore, unless these are addressed, stubble burning is unlikely to reduce on its own.
MS: What kind of changes are required in the National Education Policy to ensure that the importance of a clean ecosystem, sustainability, upcycling and more are inculcated
GB: The focus should be on educating children about practical and real-life opportunities to imbibe sustainability in their everyday routines. Children learn a lot at their homes and communities they grow-up in. Therefore, more than the policies or regulation or even what is taught in the school, it is how we as parents, friends, and communities live, behave and communicate that matters more.
MS: What's your take on a career in Energy & Environment Management in India? And what are its global prospects? And how does ESG hold good job prospects in India and abroad?
GB: The energy and environment sectors offer multiple career opportunities. Given the focus of the Government and robust private sector participation, youth have the possibility to work in either based on their personal motivation. Given the scale of new investments required for the clean energy transition, there is a growing need for talent across engineering, technology, analytics, finance, law and marketing functions in the energy and environment sectors. Focus on continued learning, upgrading skills and networking are keys to success.
Global prospects in these sectors are exciting as climate change is a global challenge. While some countries are ahead of India and therefore offer cutting edge opportunities, many countries are yet to take substantive steps in clean energy and climate finance and related areas. Further, we have the advantage of strong analytical skills, and fluency in English. Indian talent and experience are thus highly valued in international organizations and private entities.
ESG is an emerging area with a lot of potential as companies embark on sustainability goals and expand their CSR programs. There are limited specializations currently in this space, but we expect that it will grow rapidly. ESG encompasses several areas and therefore offers career options to students from various streams including engineering, sciences, finance, social sciences, etc.
About Dr. Gaurav Bhatiani
Dr. Gaurav Bhatiani is Director – Energy and Environment, at the RTI International–India. He has over 25 years of specialized experience in the energy, climate change, and infrastructure sectors. He has provided leadership and advised governments, public utilities, private-sector companies, and regulatory bodies on sector reform, policy formulation, regulatory design, developed new projects and businesses in several sectors including power, clean energy, electric mobility, infrastructure finance, urbanization, climate change and related sectors.
Dr. Bhatiani is a Member of CII’s Renewable Energy Council and National Power Committee. He is also Visiting Faculty at leading business schools including the Indian School of Business (ISB).
Dr. Bhatiani holds a Ph.D., in Energy Economics from University of Delhi. He graduated with a bachelor’s degree in Electrical Engineering, from the Indian Institute of Technology, Roorkee.
About the Interviewer
Mahima Sharma is a Senior Journalist based in Delhi NCR. She has been in the field of TV, Print & Online Journalism since 2005 and previously an additional three years in the allied media. In her span of work she has been associated with CNN-News18, ANI - Asian News International (A collaboration with Reuters), Voice of India, Hindustan Times and various other top media brands of their times. In recent times, she has diversified her work as a Digital Media Marketing Consultant & Content Strategist as well. Since March 2022, she is also an Entrepreneurship Education Mentor at Women Will - An Entrepreneurship Program by Google in Collaboration with SHEROES. Mahima can be reached at media@indiastat.com
Disclaimer : The opinions expressed within this interview are the personal opinions of the interviewed protagonist. The facts & statistics, the work profile details of the protagonist and the opinions appearing in the answers do not reflect the views of Indiastat or the Journalist. Indiastat or the Journalist do not hold any responsibility or liability for the same.
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