‘One Sun One World One Grid’ is a mistake

On October 2, 2018 at the Vigyan Bhawan auditorium^[1] in New Delhi, Prime Minister Narendra Modi, said, “We have a dream:^[2] One World One Sun One Grid. We generate round the clock electricity from the Sun as it sets in one part of the world but rises in another part. Sun never sets for the entire earth.” He was speaking at the inaugural function for the 2nd Global RE-Invest^[3] meeting of Indian Ocean Rim Association and the first assembly of the International Solar Alliance^[4].

I was in the audience and was taken aback upon hearing of the OSOWOG (One Sun One World One Grid) idea. As a student of the emerging energy industry structure, I wondered why, in an age of advancing battery technologies, do we need to follow the sun to get continuous power supply. Why not generate electricity at any location, store it at the same location, and use it as needed, at day or night?

PM Modi’s statement sounded visionary, and his delivery was compelling, but the idea did not sound plausible. When we stepped out of the auditorium, I asked my colleague, an expert in batteries, what he thought. He shook his head, “A bad idea.”

Visionary? Maybe – But out of sync with industry forces

I thought the idea died a natural death until I read^[5]  this week that the Ministry of New and Renewable Energy (MNRE) has put out a Request for Proposal soliciting input from consulting companies to execute on this idea. The International Solar Alliance, which has over 80 signatory countries,^[6] is also involved, as well as The World Bank, which provided a $625 million (~₹47.13 billion) concessional loan to the State Bank of India (SBI) to debt finance grid-connected rooftop solar PV projects.

Solar electricity, it seems to me, is inherently local, especially when paired with batteries and with other renewable energy technologies. Whereas network externalities and increasing returns to scale exist in telecommunications, the benefits of electricity networks have no comparable returns or benefits from reach and scale.

For example, each additional user on the telecom network enhances the welfare of all existing users. Additional electricity users confer no such benefits upon existing electricity users. Universal access to reliable electricity is obviously necessary for human well-being and economic development, but local networks are all that are needed. The macrogrid as we have it is increasingly obsolete. And yet, OSOWOG upholds this diminishing artifact of history.

The OWOSOG initiative ignores:

• Battery technology developments – if you have batteries, you do not need to follow the sun along any latitude, nor worry about day and night.
• Reduced “barriers to entry” in electricity solutions – large capital expenditures are no longer necessary; anyone who can install rooftop solar or set up a microgrid (“distributed generation”) can be in the electricity business. 
• Death of “economies of scale” and rise of “economics of large numbers.”
• Entrepreneurial drivers of energy evolution. “Local generation, local consumption, and local autonomy” in the future electricity systems is in the public interest; entrepreneurs ought to be encouraged.^[7] OSOWOG ignores them.
• Grid vulnerability to accidents, weather, and cyber-attacks will persist or increase.
• Transmission losses – solar generation is at < 20% efficiency, plus we get transmission losses; why should we design inefficiencies in a new system?

Giant global grid:  Better than a federation of microgrids?

The presumption that one megagrid is superior to a constellation or a “federation of microgrids” of say, 0.5 MW to 5+ MW capacity, appears flawed. Given trends, microgrids economics will surpass grid economics, even with the cost of batteries included. I wish that public policy attention was devoted to developing battery technologies at scale for local applications. Policymakers may also prioritize designing urban and rural microgrids, with sophisticated controls and demand side management baked in, and studying the issues surrounding their ownership, technical feasibility, and deployment. They would achieve the access, resilience, and reliability the world needs. Cooperation among microgrids in the “federation of microgrids” – within and across state and national borders – will occur organically based on ground level economics.

Yes, India has plenty of sunlight. Does that make it the Saudi Arabia or Russia of solar? Can India export its solar riches to other nations, not only in the neighborhood, but also to Europe and the rest of the world through the equivalent of oil or gas pipelines? Solar complements wind energy, batteries, other renewables and even fossil fuels when needed; the diversity and distribution of energy sources makes concentration and national dominance through solar unlikely.

LiveMint positions the initiative in “the backdrop of the US withdrawal from the Paris climate deal and China’s attempts to co-opt countries into its ambitious One Belt One Road (OBOR) initiative: A program to invest billions of dollars in infrastructure projects, including railways, ports and power grids, across Asia, Africa and Europe.” Is such competitive positioning worthwhile and feasible?

Prime Minister Modi has been a policy pioneer in the renewable energy space. He set ambitious targets for renewable generation for India. He also encouraged the ONGC (Oil and Natural Gas Commission)^[8] to come up with solar-powered cooking solutions. He boldly provided free LPG connections for the poor, even though India imports the bulk of its LPG. In one stroke, he curtailed biomass burning, gave a death blow to the smoke and air pollution that harms poor women and children in ill-ventilated kitchens and diminished the labors associated with firewood collection.

India, with its plentiful sunshine, ought to pioneer the use of solar. Yet this project runs contrary to the implacable grammar that are the macroeconomic, technical, structural, topological and centrifugal forces transforming the energy industry; no novel may be written against the grain of these laws.