The rise of the renewable energy is unstoppable: Aditya Gandhi, Director, Sapient Global Markets
The recent reduction in solar power prices is well supported by policy interventions and the global rise of the renewable energy is unstoppable, Aditya Gandhi, Director at Sapient Global Markets tells ETEnergyWorld in an interview. Edited excerpts..
What is your view on the current state of energy markets in India and globally? The sector is going through a major churning at the structural level.
Power has lot more local factors impacting it whereas oil & gas is largely globally connected. In the oil and gas space, shale was a big disruption that happened a few years back but the next wave of disruption is going to be in the form of electric vehicles. Though the scale of electric vehicles production and usage is very small right now, the expectation is that the S-curve for EVs will be evident in the next 5-10 years. This will lead to a point where they will have a big impact on demand for diesel and petrol vehicles and therefore demand for crude oil. Some predict that by 2025 upwards of 25% car sales will be electric vehicles. We are at a point when a significant investment is happening in the battery technology which is bulk of the cost of an EV. Just like what has been happening with Solar over last 10 years, as economies of scale kick in through projects like the Gigafactory, cost of batteries should reduce significantly making EVs cost competitive. The price of batteries has already dropped by 70 per cent since the start of the decade and the downward trend is expected to continue. On the power front, renewables seem to be unstoppable. Solar prices through reverse auction have gone down significantly. Some of it is supported by expectations of continuing reduction in solar module prices and some by government easing all the hurdles like PPAs, land acquisition etc. and by aggressive bidding by players in the market.
In the oil and gas sector, India is working on an ambitious target to cut oil imports by 10 per cent by 2022. What are the key steps or interventions that we need to take?
Fresh investments in shale technology can help. One other wild card that can help transform the scenario is ‘Methyl Hydrates’. There are crystalline formations of methyl hydrates which captures a lot of hydrocarbons and can be extracted for energy. India has a huge reserve of methyl hydrates in the Andaman coastline as well as the Krishna Godavari basin. There are various programmes and expeditions being run by the government currently in order to locate and harvest this. It is difficult to extract and the technology is not efficient enough to harvest and make it economically useable yet. As this matures, there is a possibility of this helping reduce our dependence. Countries like Japan and Argentina have fairly big reserve of Methyl Hydrates as well. In the longer run a combination of Solar and EVs will also help reduce our dependence on oil and gas.
What should be done to improve and modernize the level of mining technology being deployed in India, both for coal and oil and gas exploration?
The solution is getting the right talent and the right ecosystem for us to succeed. It is also about partnering with the organisations who have mastered the art of drilling for shale at a very low price point. The move from NELP (New Exploration Licensing Policy) to HELP (Hydrocarbon Exploration Licensing Policy) is a reform that will reduce the barriers in mining and exploration. It provides incentive by allowing explorers to look at a combined play of oil and gas rather than just one asset class. Moving from cost recovery to a revenue-sharing model will remove some of the hurdles. However, with the crude price drop, oil companies across the world have been cutting a lot of their capital spending.
Talking about technology, in what way can Internet of Things (IoT) applications be used for efficient energy delivery?
Smart meters are a great example to understand IoT and its relevance to the energy markets. These devices have a continuous flow of information like data on electricity consumed, peak demand hours, usage patterns etc. In US, Europe and Australia, there is already over 95% smart meter penetration in a number of regions. A smart meter can detect how much energy is being consumed by your household appliance and on the basis of that data, it can figure out if the AC or the Fridge is consuming more power than your neighbours. It can indicate a potential problem and replacement, if need be. Through the concepts such as IoT and Artificial Intelligence, the data from these smart meters can even detect whether an appliance is closer to its breakdown. This, in turn, would also reduce costs as one would have an insight into the energy being consumed, the right time to consume energy, using a different appliance to save energy etc.
Which are the other examples of use of IOT in the energy and the larger economic sphere?
Even in the agriculture space, there are a lot of experiments happening with IoT. These include ways of increasing productivity of farms by reducing pesticide use, harvesting at the right time, watering at the right time, using drones to do surveillance and to deliver the right amount of pesticides etc. In the US, some of it has become commercial, but in India too, some of the experiments have started to shape up. There are a lot of start-ups operating in places like Bangalore or Hyderabad who are using IoT and Artificial Intelligence (AI), taking data through drones to examine the soil, inspecting plant infections, sensing weather to predict rain etc. Similarly, for oil and gas companies, maintenance, especially of rigs, pipelines etc. is very critical. We are involved in experiments on how drones can be used to detect pipeline leaks or transmission line problems. With IoT and AI, it becomes easier and cheaper to inspect thousands of kilometres of assets reliably.