Energy Efficiency – an Attractive Business Opportunity
You would heard of the story of Levi Strauss. When thousands of folks were running with their pickaxes and spades to dig for gold during the California Gold Rush (and only a few actually found any gold), Levi Strauss set up a business that provided thick canvas cloth that was required for the miners’ tents and their clothing. That is, whether or not a miner hit gold, Levi Strauss always hit business with that miner.
I think these are the types of support/concentric opportunities that small businesses that wish to profit from the renewable energy movement in India should be looking at. When every large business is running to set up solar and wind power plants (going by the simple logic that the market for energy in India will be for all practical purpose limitless for the foreseeable future), small businesses ought to realize that the power plant business is essentially a capital investment business with (almost) fixed returns, thus making them most attractive to businesses that have excellent access to cheap capital. Not for businesses that wish to innovate. On the other hand, concentric businesses such as energy management and energy efficiency might have relatively smaller markets (though not small in an absolute sense), but will be far more attractive and well-aligned with the nimble and creative DNA of small businesses.
Here’s a news item on one such company in the energy management business ( ConnectM taps energy conservation market – http://bit.ly/cLawrp). The news item says “A study by the firm found that 600 of the largest companies alone spend in excess of $25 billion on energy. Of these, IT services, banking, hospitality and media spend the most on IT infrastructure, building assets and field equipment. The company said that energy management can help reduce these spends by at least $2.5-$3 billion for the enterprise. At two times that sum, the energy management market in India can easily be pegged at upwards of $5 billion.”
Tata Power Running at High Speed
In a newsletter a couple of months back, I suggested how Tata Power could be having an installed capacity of over 10,000 MW by 2015. My colleague at EAI did not believe me. At about 2500 MW, they said it could much longer for the Tatas to get past 10,000 MW, they said. I did share a bit of their scepticism at that time. But now it appears that my doubts were misplaced. Read this news item ( Tata Power to add 750 MW capacity in 2010-11 – http://bit.ly/ckhria ). The company will be adding 750 MW in 2010-11. That will get them to about 3500 MW. More important to note is the rate of growth of installed power – from 192 MW added in 2009-10, it has grown to a possible 750 MW in 2010-11. Even maintaining the same rate of addition over the next four years will get them to close to 7000 MW by 2015. My bet is, they will add even more in the next four years, so 10000 MW does not any more look like a number plucked out of thin air, does it?
Currently, Tata Power has about 1.5% of the total installed capacity in India. By 2015, if my prediction proves right, they will be having close to 5% of the total installed capacity (with India’s installed capacity likely to be in the region of about 225 GW by then). Not bad to have one single private company powering 5% of India. Now, add to it recent developments ( http://bit.ly/b0KTMj )that will make Reliance Industries (RIL) to invest heavily in power.
While on the topic of private power companies, it is interesting to know that about 30000 MW out of 160,000 MW of total installed capacity is already from private companies, or at least that is what the government says ( http://bit.ly/EBvil ). Now, that’s something intriguing, because the total renewable energy installed capacity is about 15000 MW, and if you add Tata Power’s capacity of 2500 MW to it (even assuming the Tata Power capacity has little renewable power in it), we still are left with 12500 MW . I’m curious to know which other companies share the 12500 MW (of primarily fossil fuel based power), given that the largest private company in India has only 2500 MW under its belt!
Indian Industry is More Energy Efficient that We Think
It was about a month ago that my team was doing research on the CO2 emissions from the Indian cement industry. We were pleasantly surprised to find that the large Indian cement companies such as Ambuja Cements actually emit much less (660 Kg of CO2 per T of cement produced) as against the global average (about 850 Kg of CO2 per T of cement produced). That’s almost 25% less than the global average. I was reminded about this when I read the news item “India tops energy-efficient cement production” ( http://bit.ly/d3xzln ). It is interesting to note that not only are the cement companies emitting much less CO2, they appear to be very proactive when it comes to exploring other green energy options and optimally utilizing the waste generated.
It is not every day when I feel proud about Indian corporates, but today is certainly one such day.
The Best Way to Make People More Sustainable? – Make Them Pay
At EAI, we have regularly had brainstorming sessions on how to make all of us (oh yes, that pretty much includes us) more sustainable. And we had come to the not-so-surprising conclusion that unless we are made to pay a price for being unsustainable, it’s unlikely we will stop being so.
I was reminded of those deliberations when I read about a news report that folks are keen on energy efficiency bikes with the increase in fuel price ( “Energy-efficient bikes may zoom on fuel price hike” – http://bit.ly/bcKTGF ). The government’s move to free energy prices, which may raise fuel rates in the country, is expected to push the demand for small-capacity, fuel-efficient bikes. No one likes to pay more, but sometimes a penalty is indeed a good idea, wouldn’t you agree?
That kind of reminds me about the fact that the price we pay for petrol might be a lot lower than the “actual” price of oil. I’m talking about the BP oil spill. Where’s the environmental costs of such spills factored in? Where’s the cost of the wars for oil (oh yeah, US went to war with Iraq to dispose a dictator, not for oil) factored in? And where’s the cost to countries of the political kowtowing (if not for oil, why would countries like India so keen on maintaining great relations with Middle East countries which treat Indians like second class citizens?) built in? If you start building these costs into the costs of oil, I tell you, you might not want to know the price of oil.
Corporate India has started going green in more ways than you think. Here’s an interesting news item ( http://bit.ly/94t3iC ) on how companies (OK, at least some companies) have started tying senior manager remuneration with going green, maintaining energy-saving standards, for instance. PepsiCo, paints major Akzo Nobel, Dutch drugmaker DSM and logistics giant TNT are among the firms that have made “green buildings”, carbon emission standards and renewable sources of energy top drivers for their executives. I say, not bad!
See also: an interesting emerging cleantech segment – Building Energy Analytics