Demand Side Management

The Energy Conservation Act 2001, passed by the government of India is finally getting into mainstream implementation. Looks like it takes a decade for the implications of the act to sink in and funds to get allocated for the same. The government has however woken up. It is clear (as a former top technocrat once confessed to me) that the government can never put up enough infrastructure to meet the projected demand. Forget meeting the demand, even a fraction of the demand cannot be met. The alarming growth in Consumer power demand had also put an end to the cross subsidy route that has worked well till now. Basically any serious industry comes up with captive power or tries to enter a serviced zone where adequate power and backup is available.
Hence the current focus on demand side management. As the name implies the policy planners are trying to reduce the energy consumed for a given task to reduce the demand projection for a given growth rate of GDP. This is indeed laudable as a law. Further the Act has teeth. The nodal body heading this initiative in each state has funds to offer as carrots and penalties for non-compliance to wave as a stick. They have also identified the top energy consumers by industry and are using the new Energy Auditor function to track the actual implementation on the ground.
What does this imply for Industry ?

A huge socially important initiative is underway and offers Indian consumers an opportunity to upgrade their infrastructure to optimally use what is fast becoming a scarce resource, power. It opens up the floodgates of innovation and provides space for innovative companies to build great products and services around this demand. In a way this is a decisive move against the L1 culture that characterizes indian procurement, private or public. Specs are diluted, standards stretched in getting the cheapest product for a given job. Obviously energy efficiency is not key when lowest unit cost is the main criterion for selection. The move of the government in creating the BEE and imposing minimum standards for key products is laudable and will work wonders for raising the energy efficiency of Indian operations. Currently our energy efficiency of manufacture in most areas is probably the lowest in the world. The absence of capital for technology up-gradation is the main culprit.

This is a very interesting phase for innovative indian startup's in the energy efficiency space as the scale of the indian market allows them to become global very fast if they know their game. The beauty of local consumption driven growth is that it is relatively immune to global trends. Watch this space for action.
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