Guest: Ann Josey, Fellow at Prayas, and Rohit Chandra, Assistant Professor at IIT Delhi
Host: Shreya Jai
Producer: Tejas Dayananda Sagar
[Podcast intro]
Welcome to Season 3 of The India Energy Hour podcast! The India Energy Hour podcast explores the most pressing hurdles and promising opportunities of India's energy transition through an in-depth discussion on policies, financial markets, social movements and science. The podcast is hosted by energy transition researcher and author Dr. Sandeep Pai and senior energy and climate journalist Shreya Jai. The show is produced by multimedia journalist Tejas Dayananda Sagar and is presented by 101Reporters, a pan-India network of grassroots reporters that produces original stories from Rural India.
[end]
[Guest intro]
India's energy transition currently comprises a set of ambitious targets, the pathway for which is yet to be designed.
While at the Central level, there are a variety of policies, the real challenge lies in their execution. And at the execution level there are at least 28 different clogs to be taken care of.
States will need to play a larger role if India has to effectively meet its energy transition goals while being in sync with economic growth. Coal rich states face the challenge of transitioning away from an existing socio-economic framework built over fossil fuels. Non coal ones need to plan for a greener future. And both sets need to have an economic adaptation plan in place for future climate risks.
To unfold this complexity of India's energy transition, we talked with Ann Josey, Fellow at Prayas, and Rohit Chandra, Assistant Professor at IIT Delhi.
Both Ann and Rohit study different aspects of Indian policymaking with focus on the energy sector and government institutions - both at the Central and State level.
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[Podcast interview]
Shreya Jai: Hello, everyone. Thank you for joining the India Energy Hour. Thank you, Ann. Thank you, Rohit. We are about to record a very exciting and interesting episode on a topic that has not got its due attention, if I may say like that. So very excited to have you both here. And thank you again for joining us. And for the first time, Rohit, thank you again for gracing us here. We had a very great episode, one of the first episodes that we recorded with you, Rohit. So thank you again for coming here. And thank you, both of you, for giving us your time.
So before we delve into the topic, I'll just start with the both of you. Our audience loves to know our guests and what their journey has been, what has been their subject expertise. So I'll start with Ann, because we are hosting you for the first time.
Can you tell the listeners about yourself? Where are you from? What did you study? What is the kind of work that you do at Prayas? And what was the life before Prayas? Ann, over to you.
Ann Josey: Right. Thanks, Shreya, for inviting me. I'm glad to be here. So I trained as an economist, but I often say I'm a lapsed economist. I work more as a power sector policy researcher now. And most of my work has been with Prayas. And I've been here for about 13 years now. I spend a lot of my time focusing on looking at the changing role of electricity distribution companies, especially with the energy transitions, looking at, you know, electricity market developments in India. looking at tariff design, subsidy design, and many of the regulatory developments in the electricity sector. And I think this is also Prayas' first time on this podcast, so I would also like to talk a little bit about Prayas.
So we are currently a group of about, I would say, 30 extremely patient and persistent people who are passionate about all things energy and revel in the nitty-gritty details of policymaking. Prayas itself has been around for about 30 years conducting energy sector policy research. So, it kind of sort of grew up with the sector in a sense, looking at reform alert developments, legacy challenges, and also many of the opportunities for the current energy transition. A lot of our work and research in the electricity sector, energy sector, policy and regulatory issues is actually from a development and public interest lens and that's sort of in our DNA. And we've been looking a lot at central and state sector issues. And unlike many other organizations in this space, we are actually based in Pune and not Delhi. So that's also quite unique about us. Thanks.
Shreya Jai: And that's why it's very hard to meet you. So you should have been in Delhi. But yes, love the work that Prayas does. I always look forward to the analysis that Priyaz has to offer in this electricity sector. Anything exciting that you're working on? And right now, something that you would like to share?
Ann Josey: So I think one very important thing, and probably there's some alignment with what Rohit is also looking at, is this whole idea of the role of electricity distribution companies. They are the largest electricity service providers in the country. Many of them, most of them actually are publicly owned entities.
So, the kind of challenges that they face, especially with low cost renewable energy being available. The possibility that many other consumers can actually migrate to a real low-cost options, the kind of role changes that they need to see in terms of going from, you know, these entities that would provide service to most of the consumers in the states to being more of, you know, evolving to being more of a network manager and a wire service provider is a major transition. So, looking at some of the developments from the policy and regulatory side, from the tariff side towards this transition, very exciting time that we're going to see in the next 7 to 10 years is what I'm focusing on right now.
Shreya Jai: That's wonderful. And it also sets the tone for something that we would discuss.
But before we do that, Rohit, since the last time we had you, it was the second episode of TIEH Podcast. And you were kind enough to come here and share so much about the coal sector, about the work that you have done there. But since then, there have been a lot of changes at your own end. You've started a whole new department in IT Delhi. What has been the journey since then? What all you're doing right now? What does this particular department do? Please do tell us.
Rohit Chandra: Thank you, Shreya. It's a pleasure to be here.
And before I talk about myself, I do have to make one plug for Prayas, which is that even my understanding of the electricity sector started with these primers that Prayas used to publish way back like 15 years ago about the electricity sector. So if anyone wants to have a first understanding of the power sector, read these Prayas primers. They're fantastic.
On my end, yeah, so I think last time I had just joined IIT Delhi and we I had just become a new faculty member at a fairly new entity called the School of Public Policy within IIT Delhi. The entity has grown a lot. I was faculty number 5, now we're at 15, and we have at least six, seven faculty members who focus on various parts of energy and environmental policy. And we graduated our first batch of MPP students. I also have a group of four or five PhD students who all work on the energy transition, particularly from the lens of what different PSUs around India are doing.
And yeah, so we have a fairly strong core working on various parts of energy and environment. And in fact, the paper we'll mention later in this podcast was co-authored with one of my senior colleagues who's retired from the Government of India. So yeah, it's a good place where practice and policy research meet. And we hope to kind of make contributions to this energy policy space in the future.
Shreya Jai: That's great and our best wishes with you always.
Thank you both of you for touching upon the topic that we are about to discuss. For the sake of our listeners, The India Energy Hour podcast keeps discussing the different facets of the energy transition of this country. What we all seem to miss, including us, guilty as charged, is how this particular transition or a phase of it is happening at the end of these states. And this is not only just an opportunity, but a challenge as well.
Because India's energy transition is the most complex among, I would say, leading developing countries. And one reason is the federal structure. Centre has its focus on its own grand ambitions from green energy to life mission and et cetera. But the states have their own needs and whether those needs are tailored into their energy transition policies or not, and what will it take to design that is what we'll try to understand from both of you.
I'll start with you, Ann. How do you think this dual legislative structure, how do you think it is a boon, it is a bane, is it an opportunity for India's energy transition pathways?
Ann Josey: That's a very pertinent question. And I think the tussles and the tensions that we see with concurrent jurisdiction, they're perhaps just a manifestation of what you said, the complex transition that is there in India. I mean, if you have to manage a clean energy transition while looking at many of these entrenched legacy issues that the state sectors face, and the goal that they have of meeting developmental requirements and aspirations is really tough. And we actually need both center and state to work together towards this. So I would actually, you know, instead of characterizing it as a boon or a bane, I'd just like to reflect a little bit on the important, unique, and complementary roles that central and state power sectors have to play and have played in the past as well.
So I mean, obviously, electricity is a network industry. So grid operations, market development, how do you look at interstate power procurement, especially when there's skewed resource availability across states and diverse demand patterns, they all require significant role from the center sector, at least for coordination and planning. Looking at transmission network development, all that can only happen with a central sector kind of being actively involved.
Other states, I mean, they have the biggest responsibility of ensuring operations of these electricity distribution companies. Any question around tariff design or tariff increase, you know, it's the state sectors that are held responsible. And therefore, you know, consequently, subsidies also comes within the state's domain. You know, the responsibility for ensuring reliable supply, quality of supply also comes with the state.
But I think what's very important is to see what kind of roles can be played. So ideally, we would see that the central sector, you know, coming out with many frameworks can actually help scale many good practices and accelerate necessary changes.
And I just wanted to talk about a couple of examples in this light. One is, you know, for decades we've been talking about integrated resource planning in India. And this is right from the time of the reform era. But what we see is that actually it's in the state level, in regulatory practice, There aren't many states which actually do 10-year demand supply projections and use sophisticated tools for planning. It's a much more thumb rule approach. So a national framework for resource adequacy is a good opportunity to sort of accelerate these processes in states.
Another example is, you know, you're looking at time of day tariffs. So recently, there was a national kind of announcement on a design for time of day tariffs, which can provide incentives for daytime rebates. Right. And so therefore, when low cost solar is available, consumers can get a rebate. Therefore, you incentivize consumers to consume electricity when there is no cost power available, which would also help in integrating renewables into the grid because consumption happens when it's available and therefore the stress on when renewables is not available comes down in terms of demand.
But Bihar was the only state that even attempted this before the national framework was rolled out, right? And it rolled it back in a couple of months citing implementation challenges. And this kind of forces states to evolve methods, trying to make these kind of innovative changes happen.
Another good example is, you know, before the National Renewable Energy Trajectory was rolled out for 2030, no state had long-term renewable energy trajectories. So this kind of pushes states to sort of think about accelerating many of the changes, which is not possible when states are dealing with day-to-day operational challenges.
But at the same time, I'd like to say that each state in India is like a country. And with its unique power sector, there are many good practices that are born out of state innovation as well. So even national frameworks can be used to scale up any of these state innovations and states should be given the room and the flexibility to innovate.
So two such examples I can talk about. One is this program for agricultural solarization. 25% of India's demand is agriculture. And actually getting agriculture to use low-cost solar would help with grid integration, but also give farmers supply during daytime, which is actually good for the agricultural sector as well. And now that's a major program under the Kusum scheme and a pilot in Maharashtra where it was done at a much larger scale using dedicated infrastructure for agriculture to have megawatt scale solutions rather than much smaller kilowatt scale solutions which are harder to manage has become mainstay of that national program based on that.
The other example is we've all talked about India's great success in accelerating rural electrification in the past decade and Swabhagya scheme, which dealt with the last leg of this, especially for consumers who did not have below poverty line cards, getting concessional connections. That actually came out of a state scheme in Bihar, which was dealing with a lot of issues with rural electrification and providing last mile connectivity.
So it's very important that such programs are also scaled up and we learn lessons from them and states are allowed to innovate.
And going forward from a transition pathway perspective, I think that, you know, we really need to think about central governments and state governments working in a complementary aligned and coordinated fashion. So I talked a lot about, you know, centers, frameworks, and these frameworks necessarily have to be guiding and provide directional certainty. And they should be able to foster you know, innovation and cross learning instincts. That's really important, because without that, what might happen is that many changes that we see as very crucial for the transition might remain stuck, might remain unresolved, and worse, might actually just become highly litigated. And we are going to lose precious time in this manner. So one or two examples of that also I can talk a little bit about.
One is, of course, you know, we've all been hearing a lot about green open access. And there's a national framework for that. Essentially, the idea is to provide choice to a large number of consumers by giving them the option of direct contracting of power from generators. So actually contracting power or getting supply from sources other than the distribution company. And this approach actually is quite positive and forward-looking.
But before this framework was launched, I mean, in Maharashtra, it's called the Goa framework, very funnily. Before this green open access framework was launched, consumers only had the option, you know, if they were very large, they were one megawatt and above. But now even consumers with loads as low as 100 kilowatt or even below can actually avail this option. But the framework itself in its current form It does not recognize the fact that many costs are being incurred by the distribution company to provide these services, you know, in terms of banking or reliability services, standby power, et cetera. And these actually come at the cost of the service that it provides to its regular consumers who don't avail these options.
Metering infrastructure in states may not be suitable at the moment to accelerate this. today in some of the states. So, you know, unless these kinds of challenges are addressed, it may not, the rollout may not be successful in many states.
Another example is, you know, there's been a lot talked about payment discipline for generators, and there's this late payment surcharge rules that the central government has come out with. Now, this is definitely a forward-looking provision to help clear many of the pending dues that generating companies have from distribution companies. we really need to think about payment discipline across the value chain. Because unless there are similar measures to ensure that distribution companies are actually paid on time from state governments and from their consumers, what would end up happening is that the borrowing of many of these companies would increase.
So that could again stall progress in ensuring a viable sector. So the whole point is that we need center and state to work together so that we don't lose precious time in this transition.
Shreya Jai: You've given me so many threads to expand and talk about. Thanks for mentioning it with so many examples.
And yes, I agree that these two entities need to work together, the center and the states. And you're absolutely right, so that we don't waste much time. I'll come back to some of the schemes and threads that you mentioned.
But before that, I'll ask Rohit to come in. And, you know, explain it from the lens of CTSUs or state-level institutions which are involved in, you know, some of the schemes that I mentioned, taking forward those examples, or some of the flagship government schemes on energy access, energy security, energy transition. And how does this particular structure, the central state divide, impacts it, impacts the delivery of these schemes, and also the effectiveness of the institutions in this space?
Rohit Chandra: Thank you, Shreya. Yeah, so I look at a lot of PSUs across the spectrum. And look, I don't think it's particularly new to say that PSUs have been kind of in the middle of this federal tussle over the power sector. Right.
So just to give you a few examples. Right. I mean, Coal India primarily operates in eastern and central states, but it's a central PSU. And so because it's situated between center and state politics, it obviously needs to kind of pay royalties to state governments to keep them happy because it is basically mining on state government land. But all of the profits generally accrue to the central government, and so there's a tussle there in that sense.
If we look at a company like NTPC, I think it has similar issues in the sense that it has to manage relationships with state discoms, which are its primary consumers. And NTPC produces almost a fourth of all of India's power. So it can't just send them to the few private discoms to sell them to everyone across the country. And so getting those state governments to sign new contracts is difficult, but then the central government has certain clauses which allows NTPC to get paid before everyone else. And so that causes certain kinds of tensions.
If you look at, for example, some of the big state lending agencies for power, like REC and BFC, these have constantly been used as part of India's broader fiscal federalism, right, to devolve money to the states, to lend money to DISCOMs. And I think they have been tightening a lot of their rules recently, which, I mean, from a fiscal discipline and a payment discipline perspective makes sense. But also depriving large parts of power to the general Indian populace is a politically sensitive issue. And so I think the way different states make claim on RECPFC and where they lend, I mean, there's a lot of interesting federal tussles there.
But I think the most important institutions, which I think and also Ann Josey briefly mentioned earlier, are actually the state discoms, gencos and transcos. And in particular, I think that the transcos are one area, you know, a lot of private generation has come up in the last 20 years. Right. So other than two or three really big state gencos, a lot of state gencos are not really as active as they used to be. I mean, private generation is or almost a third of the Indian power system at this point, and central generating entities are almost another third, right? So stage ENCOs are somewhat on the decline in the aggregate, but the transcos are going to be there for a long period of time, and interstate transmission, which is primarily managed by power grid and maybe some private entities which are entering the space now, you know, kind of stop off at a certain kilowatt threshold or kilowatt threshold, right? I think it's 220 kV or something like that, and correct me if I'm wrong.
But the point is that the rest of the evacuation to the consumer and the distribution has to happen through state transfers. And right now, a lot of effort on the energy transmission front investments are being done at this high interstate level. And then state, because state financial systems in power tend to be fairly cash constrained, in-state transmission is not being invested in as much. And I don't think those kinds of resources are necessarily being provided for state governments absorb all of this new renewable energy to deal with prediction problems, all of the things Andrew mentioned about banking, reliability, backup, you know, metering, all of these kinds of things.
Some schemes have come out, but I think much, much more needs to be done for that last mile. You can't just kind of evacuate the power from renewable energy producing areas to other parts of the country and then hope that states figure it out. You have to provide incentives and financial mechanisms because we know that the finances of a lot of these state power systems have been very tenuous for the last, for many decades.
This is not a new thing. Finally, I think I'd say that there are some interesting new institutions emerging. I think perhaps you've interviewed someone before, I think, who ran one of these institutes, for example, the Jharkhand Just Transition Task Force, right?
So I think a lot of states are taking this energy transition proactively, right? They're not just demanding resources from the center, but they're trying to come up with their new ideas, trying to pitch ideas. And I think much more of that needs to happen. And if it's okay with you, I can talk a little bit about the paper I wrote, which kind of divides things into coal rich and coal poor states and looking at the impact of them differentially.
Shreya Jai: We would have anyway split the issue into these two parts.
So, let's start with the first, with the coal-rich states. How would they look at, need to look at their energy transition?
Rohit Chandra: Thanks. So, you know, I think I briefly mentioned this before, but my colleague Sanjay Mitra and I recently came up with a working paper through NIPFP's working paper series, which looks at the fiscal impact of two main mechanisms which are likely to play out in the next decade.
One is the decline of coal royalties vis-a-vis state budgets, because sometime in the next decade, decade and a half, coal production is going to plateau and slow down. And as state GSTP grows, I think the amount of coal royalties tend to be a fairly big part of state budgets.
So if you look at states like Chhattisgarh and all right now, 15% of state revenues come from things like coal royalties and other kinds of mining royalties. We know that coal has to decline as part of the energy system in some foreseeable future. We can debate that timeline. But I think what is happening with a lot of coal rich states is they're getting this double hit of kind of in the next 10 years, if we're thinking about fiscal planning, about the decline of coal royalties, which is one major source of revenue for a lot of coal states.
And then, the other hit is that if they procure a lot of money from outside of the state, they're actually sending a lot of money to other states, which a lot of state governments are very protective about, right? I think a lot of state, as Ann Josey said, a lot of state governments tend to kind of run their own systems and would like for that money to remain within the state system if they can.
The dynamic of the energy transition, the economic geography of it is such that The coal rich states are not the places where you see massive amounts of renewable energy investment coming up. 95 percent of grid based renewable energy generation comes from six states, which are primarily in western and southern India, and almost none of them are coal bearing states. So there's a spatial inequity which is going to be exacerbated by kind of a large scale adoption of renewable energy.
And so Sanjay and I were just looking at some of these fiscal consequences. what can these states do in response to this emerging difference? And one of our headline results is that by 2030, budget deficits in coal-bearing PID poor states will be about 8%, which is well beyond any kind of FRBM or fiscal deficit norms, which have been legislated by the Government of India. And so this is a kind of, How do you make states whole so that they can keep running their state ecosystems and finance not only the energy transition, but all of the other developmental activities they do? That's important.
So then if we look at gold rich states, I think part of it is that you have to try to find other sources of revenue, which often means how do you encourage other forms of economic activity? Right. And I think this is where, you know, if you have to plan for a relative decline in coal royalties, And I think a lot of it is about pitching new projects and trying to attract investment.
And I think you've seen this in a lot of states with new kind of investor summits happening. Everyone is messaging on green energy at this point. I think there's an understanding that there is probably going to be a large amount of money coming into these spaces. But how do you do land pooling policies? How do you make it so that new RE plants that come up can connect to your state level transmission ecosystem easily? Can you encourage state entrepreneurs who have been working in other sectors to consider the sector seriously and diversify a little bit?
I think these are these are all things which require some active kind of deal making and creating an environment where people want to do other things than business as usual.
The other thing is, I think, being creative about fundraising. I think one of the big differences between some of the more developed kind of Western and Southern states and some of these coal rich states is that the banking system does not lend large amounts of money into a lot of coal-rich states, right? I mean, it does, but not nearly as much.
And so, you know, Bihar and West Bengal are not necessarily considered as bankable as states as, for example, Maharashtra and Gujarat. I mean, part of that is changing the investment environment. But I think part of it is also having some kind of active concessional policies to promote infant industries in areas which have not emerged organically. Right. I mean, if you don't want to kind of exacerbate this rift even more, then part of it has to be that there has to be some initial pools of concessional finance, probably from central government entities, but also the World Bank, other international financial institutions to invest in these states, to actually get these things going. And some of that is happening, but it's not happening at a scale where I think these states are kind of able to deal with the energy transition as competently as they should.
And as for non-coal rich states, right, I think a lot of this is already happening in some senses. You know, I think if you look at the comparative capability of, for example, a state like Maharashtra, which has very little coal, right, a little bit in kind of that Vidarbha region, kind of near Chandrapur and everything. But what Maharashtra is fantastic and financial, a large chunk of the financial system in it, is that they're constantly coming up with new projects and ideas in these directions. Right.
And I think that kind of attitude that even your state entities have to now become dealmakers, they need to come up with a stream of projects, they need to be constantly pitching to banks and international financial institutions and NBFCs and, you know, private equity firms, whoever is willing to listen. I think that kind of dynamic is yet to emerge in a lot of these eastern states, which have run off the back of public investment for a long time.
And I think clearly the world is changing and those kinds of things have been done in some of these coal kind of really rich states, but not so much in really poor states.
Yeah, I think I can say much more, but I'll stop there and we can.
Ann Josey: Yeah, I'd like to add a couple of points to what Rohit was also saying. I agree with most of it. I mean, just in terms of being innovative and in terms of pitching different kinds of projects, one definite area is transmission itself.
I mean, Rohit was talking about, you know, the fact that state transmission entities may not necessarily have the finances in order to look at the kind of transmission build out that we need. But, you know, there's also the possibility of competitive bidding within the transmission sector itself.
In fact, and it does not mean that this is only about private investment. I mean, Power Grid has also been participating in many of these bids and winning it. And this also means a 40% reduction in costs, because the kind of investment outlay that is needed with competitive bidding leads to better price discovery. So, along with many of these things, as Rohit said, it's not just about ensuring that more private participation could also mean a lot more investment within the state, and also focusing much more on competition across the value chain could make a big difference. So I just wanted to speak to that.
And in terms of investments, I think while concessions are very critical and important, they should be such that they don't provide distortionary price signals and actually have multiplier effects within the state and are self-sustaining. And I think one example that I could speak to is we all know about the fact that concessional treatment was given for those investing in power plants to cater to their own requirements via captive. And this has been enshrined in the Electricity Act itself. And it came from a time when, you know, most of these captive plants, you know, were investments which required long gestation periods because they were mostly coal and had required a lot of significant investments.
But now most of the captive plants are renewables. They're modular, they're scalable, they're low cost. since the structure of the captive industry itself has changed from a transition to cold renewables, one could really question whether such concessional treatment needs to continue or not. But it's very difficult to even ask that question because it's so deeply codified in the structure of the industry itself.
So, you know, one should really look at what the nature of the concession itself, whether it actually fosters innovation, fosters competition, provides new technologies, the right kind of incentive, because we also see similar issues with green hydrogen. I mean, the kind of concessional banking service, essentially using the grid as a battery when renewable energy is not available and to draw power from there would actually increase the power procurement, that distribution companies have to do in order to cater to these green hydrogen companies.
But I mean, you know, since it's concessional, it actually means a huge cross subsidy burden that consumers of the discoms have to pay. And that could create a very distortionary kind of price signals going forward, because it would mean that investments in storage and other necessary technologies which these industries need to do it might get delayed. So that's something also that we need to be careful of in coal rich and non-coal rich states.
Shreya Jai: Yeah, thank you for addressing that, Ann Josy, and very important points by both of you.
Let's start with you, Rohit. I want you to talk about your latest working paper. which talks about a very important point of energy transition in the state, which is the fiscal impact.
So if you can elaborate what kind of GSDP variations we are looking at in these states, and also if you can cite some examples to give us a better idea.
Rohit Chandra: Thanks, Shreya. So yeah, I had mentioned this briefly earlier, but in this paper that Sanjay and I had come out with through the NIPFP working paper series, We had extensive conversations with people in state bureaucracies and coal-ridged states.
I'm lucky enough that I'm collaborating with someone who, you know, was a senior IAS officer in West Bengal and was both chief secretary and ran a DISCOM in the state. And so a lot of what we were trying to understand was kind of the anxieties of the state bureaucracy and how they may kind of have larger fiscal consequences. And I think between this dynamic of kind of the fall off in coal royalties as a percentage of state revenue, and this kind of out-of-state payments, which basically means that the money does not stay within your state financial ecosystem, we found that there were significant concerns with people who are managing the power systems and financial systems along a lot of these corollary states.
I think one of the important documents that's come out in the last few years is that the Central Electricity Authority has come out with this projection of what India's optimal generation mix should look like in 2030, right? And these are often technical projections, but also somewhat aspirational. But if we take those projections seriously, then you have to look at the kinds of fiscal consequences that may have on states, which is exactly what we've done, right? How much does gold decrease? How much does ARI increase? And how much does interstate transfer of power increase as a percentage of the overall power that any state consumes?
I think GSDP is not as important as the actual impact on budgets, right? Because most of the power systems are still run by government-owned entities. And what we found was that budget deficits go up 8% on average between all of these coal-rich, VRE-poor states. And it's as bad as 17% in states like Chhattisgarh, 6.5% in Bihar, 13% in Punjab, 9% in Haryana, right? So these aren't even just coal states. but many, many states who have not seen kind of the RE generation boom that especially, Western and Southern India have seen will basically be sending a lot more money outside of states. And that's going to impact the ability of the state government to provide other kinds of services.
This is not just power anymore, but also if you're, you know, doing agricultural procurement, if you're providing welfare services, all, all kinds of things. Right. And so,, Yeah, the basic conclusion is that I think this, I mean, it goes back to Ann's point about kind of integrated resource planning, that in some senses we need to have a better sense of the regional impacts of these energy transitions. There's a whole bunch of solutions to something like this. I think I mentioned some of them before, but one of them is also that the Finance Commission can actively kind of consider this as one of the issues for central evolution of resources, right? That there is going to be this transfer of resources from coal-rich to coal-poor states.
And actually, my colleague Sanjay has a very nice term for this, which he calls it ‘reverse trade equalization’, kind of talking about what happened historically with freight equalization in coal-rich states. So yeah, I think that's roughly the dynamic we were talking about in our paper.
Shreya Jai: Very interesting term, reverse trade equalization. Can you elaborate a bit on that?
Rohit Chandra: So in the 70s and 80s, there was a kind of a government policy called freight equalization, which basically said that, look, coal is an important resource for power generation across the country, but moving coal long distances is expensive. So we are going to put a standard rate for moving a ton of coal from the coal belt to anywhere in India, like a postal rate. So I don't know what the rate was, but let's say 100 tons per coal, regardless if you're moving from Bihar to Madhya Pradesh or Bihar to Tamil Nadu.
And so the consequence of this was that there was a lot of power generation capacity, which is built outside of coal belt states because that kind of the tyranny of distance and the cost of distance was nullified by this Government of India policy.
Obviously, you know, this is massively distortionary in all kinds of ways, but in some ways, you know, initially the coal was taken out and not as much coal based power generation was built in coal rich states. And now basically the money is flowing out of these states and not as much RE generation capacity is being built in the states. That's the historical parallel that we were drawing.
Ann Josey: I think just going by what Rohit said, I would also like to dwell on why it's important that investments also speak to procurement requirements.
And maybe for transmission, the distinction between investment and procurement is not that significant, but for power or generation, it becomes very, very important. And in most states, if you look at industrial policies or any of these, policies for investments, it's mostly based on the economic outlook and the resource endowments of the state. And the idea is that if there is anything excess, then that can be exported elsewhere. Whereas a procurement also, which has consumer tariff impact and fiscal impact, and procurers are the final off takers for anything. Ideally, it should depend on what the demand profile of the state is, what are the cost considerations. But more often than not, it also depends, and very importantly, so the developmental political imperative for reliability.
And even with RE, what we are seeing is the kind of scale of renewables we need across states. Maybe one potential barrier is that the fact that the distribution company's confidence to ensure reliable procurement through RE or high RE is not as high. And that's why there is also this, from a procurement perspective, all of the above approach to procurement. Let's do everything. And that also gets reflected in many of the investment decisions that are there in states.
So the risk of shortages, interruptions is definitely profoundly there on distribution companies' minds. And as Rohit said, we really need to look at IRP, low-cost storage alternatives, early investments in demand-side management, and many other things in order to sort of address this reliability question with a lot of confidence. And I guess this is relevant for coal rich states and non-coal rich states.
Shreya Jai: Yeah, I agree on all the points.
Rohit, just to poke you further, you talked about the whole reverse trade equalization and IFP and everything.
There is a very basic question that I have. These estates, especially the coal-rich estates, would have to re-imagine their whole budgets, won't they?
Just a very basic question out there. because that is where the change or the first step toward energy transition would begin.
Do we have enough such examples? Has any state shown the way around it where, you know, they're planning 15 years in advance or something like that?
Rohit Chandra: I think as far as I know, yeah, I, so far I don't think state governments are, you know, because their fiscal myopia is so strong, I don't think this planning has begun actually, right?
I think this is a underlying anxiety, but because of the nature of electoral cycles and bureaucratic postings and all of these kinds of things, I don't think anyone sees beyond a three to five year timeline at the moment. So I don't think anyone has proactively started taking decisions in this direction because it seems like it's still 5-10 years away. I imagine a small proportion of the more forward-looking people are actually thinking about this.
But I do think that this is something which in the next 5 years is going to become very relevant. I do think the Jharkhand Just Transition Task Force is a good example of a place which is at least an institution which has come up with ideas about what next, right? Or where do we come up with the next set of revenue? How do we encourage all kinds of new green industries to come up in Jharkhand? I mean, at least that ideating is happening with the help of a range of research organizations. This is not just bureaucrats in the government of Jharkhand sitting and doing this, but there's an extensive consultation both within and outside government.
I think every state is doing some version of this in their own ways, but it has to be more inclusive in the sense that I think a lot more private sector players, a lot more bottom-up consultation, all of these things need to happen.
I think that's part of what the mobilization, I think, of state governments in the next five, 10 years around these ideas has to be, right? That how do we get new ideas into these ecosystems, even in the DISCOM ecosystems, where it has been particularly difficult.
Shreya Jai: Great. And fiscal myopia is something that I will come back to because that's a word that has stayed with me.
And I would like to talk something that you're working on, the Energy Transition Preparedness Initiative. So can you tell us what it is exactly and what has been your assessment? The lessons that emerge for others.
Ann Josey: Right. So the Energy Transition Preparedness Initiative I think it speaks to a little bit about what both of you were saying, and as people who have been working in the sector for so long, you would agree that a lot of transition-related developments are only from, you know, most of the assessments happen from more of a techno-economic perspective.
But what the Energy Transition Preparedness Initiative tries to do is also to look at some of the developments in states, understand them better from also a development and institutional preparedness lens, because Each state is unique, there are legacy challenges, there are developmental aspirations, and all of these need to be accounted for rather than just looking at, okay, how much renewable investment has happened, or, you know, what is the status with coal flexibility, et cetera.
So, this is a joint initiative of Prayas Energy Group, World Resources Institute, and the Center for Policy Research. And right now we are focusing on electricity as well as the allied sectors of transport and buildings from a transition perspective.
So what we try to do is look at many themes in state level sectors. And see how progress is being made despite legacy challenges and identify areas across states where cross learning is possible, scaling is possible, etc., from the electricity sector perspective. And one example is, as I said, we're not just looking at RE procurement or, you know, what kind of measures are there for operational efficiency of coal thermal. We're also looking at, you know, how do regulatory institutions function in the state? What is the preparedness of the existing transmission and distribution networks in order to look at decentralized generation? What are planning practices in states? Whether they speak to many of the transition-related developments.
One big fallout of many transition-related developments is, as I said, reliability. And that concern is definitely there. So how do states really look at the issue of affordability and reliability of supply and service quality?
So just to give you a scale of the exercise itself, for the electricity sector alone, we've been looking at 11 of these theme-based indicators, and they cover about 237 different parameters across 10 states. So for each year, we're talking about 2,370 data points to basically understand state-level developments. And the framework, the study for the 10 states based on the framework. And the framework itself, it took a couple of years to develop. And all the sources, all the data sources that we've looked at and the data that's been captured, they're all available on the website etpi.in. So please do take a look at it and give us your feedback.
In terms of lessons, I think given the scale of the exercise, there are a large number of things that we have learned. But I would just like to focus on three or four interesting trends that we observed, and it also speaks to the point that Rohit was making earlier. So, as Rohit was saying, this is myopia, which is there, and that is clearly seen in states as well, because most states are clearly on a transition path, and you see developments, especially related to renewable energy promotion.
However, the transition itself, is not really clearly articulated or defined by states, and there is no comprehensive long-term vision for the sector transition. I mean, definitely, even in terms of coordinating actions, prioritizing investments, such, you know, an articulation is required, but we don't really see a lot of that. Rajasthan's long-term vision document in terms of energy policy is a good example of such an effort, which has happened in the recent years. Jharkhand, as Rohit talked about, but many states do not have this.
And for coal-rich states, as Rohit said, this is very, very critical and important, especially if we really need to talk about the fallout of the transition and the kind of support that is needed for timely action to take place.
Now, the other important learning that we realized is that While transition actions are taking place in states, and there are frameworks in terms of policies, actually a lot of decisions are being taken at the level of the regulatory commissions. But the mandate of these institutions need to be strengthened in order for these frameworks to be developed in an agile manner and respond to changes that are taking place in the sector. Otherwise, what happens is many of these decisions actually get taken through litigation.
So a good example of this is a framework for reducing RE curtailment. or the mandate that regulatory commissions have for setting thresholds for where and when competitive bidding can happen in the transmission sector. All of this actually came out through litigations, which took a long time. So I think strengthening these institutions is very, very critical. We also realized that while the transition is seen from the lens of decarbonization, moving more towards RE, a lot more actions are needed in crucial areas in the coming years. And many of these areas have been defined as priorities by the state or by the regulatory commission for a very long time. But the action on ground is limited and a lot more needs to take place.
So one clear example is energy efficiency. or looking at demand-side management. I mean, we've had so many pilots and so many experiments in states, but it really hasn't scaled up at the state level in most states. Improving flexibility and dispatch of thermal capacity, grid code at the national level has amended to reflect this in 2017 itself. But since then, very few states have actually included many of these provisions in their own regulation.
Integrated resource planning, I already spoke about that. Looking at compliance for renewable energy purchase. So it's not just enough to set targets, but actually whether regulatory commissions are monitoring compliance to many of the targets that are being assigned to distribution companies, that's really not happening in most states, and many states are not even compliant, their accountability is quite low. So really looking at some of these areas in terms of how to stand in action, regulatory mandate and accountability is very critical.
Another interesting finding we found is that states which have really been able to innovate and scale up efforts in many, many aspects have actually been able to build on past investments. And therefore, they were able to come up with future-looking frameworks. So one clear example is a state like Maharashtra, because there was early investments in segregating agricultural feeders and giving dedicated infrastructure for agricultural consumers in terms of network. One could really capitalize on that, let's say, for innovations such as looking at megawatt scale solarization of those feeders, or innovations such as piloting group metering for agriculture, or even states which earlier had a concessional framework were able to quickly switch to it the moment they realized that the renewable energy in their state would stand on its own economic proposition.
So these are the kind of things that we realize that, you know, early actions are important, but it's not important just to stop at a particular investment, but to build on that and scale up and innovate. So I'd stop with that.
Shreya Jai: Great, thanks and you have also given me one thread out of it and that is litigation and Rohit mentioned about fiscal myopia. Let me expand on these two points.
Several studies and research that are happening in this space including both of yours seems to suggest that there cannot be a national plan or one-size-fits-all approach that would work for states but there are two challenges.
One is that the states are financially hamstrung, Second is that the federal system itself is under threat. One reason, obviously, that is there, that the center is towing the line on a lot of revenue streams. We have seen this happening in GST, in petroleum sector, and specifically the taxes done there. And then there is legislature. You're seeing a lot of that happening in the electricity sector, where the center is trying to have this overarching role in how it decides how the state's power distribution or, say, transmission system, et cetera, functions.
That doesn't leave enough room for planning for energy transition. I will start with you Rohit first. Then in this particular scenario where you have to wriggle for revenue, you have to fight over policies that are center devices. How will a state then plan for its energy transition?
Rohit Chandra: Wow, that's a big question. No, I think one of the things to add to what you were saying, Shreya, which I think we've seen is that there's a lot more kind of central policy aligned capex happening these days compared to the past.
Right. So I think that in the past, especially when you had more coalition governments, there was more of a sense of devolution, that money would be devolved to states and they could do more experimentalism. And that's where some of the policies that Ann Josey mentioned, whether it's, you know, Saubhagya or PM Kusum, like the state equivalents emerged from those things.
I think now, unfortunately, a lot of resource allocation, especially in infrastructure industries, is being very prescriptive, right, about exactly what you have to do with the money. And I don't think that's particularly useful, right, because what happens in the Northeast versus what happens in Kerala versus what happens in Bihar, I mean, as I said, they're very different power systems, very different load profiles, very different consumption patterns. So you need some flexibility with those funds.
And so I think the first thing would be like, look, even if the center is going to play a bigger role, there should be pools of projects which states can pitch into state central ecosystems to get those kinds of allocations. Right. And I think that kind of flexibility does not seem to exist right now. If we just assume that state finances are going to be a problem for a while and that the center is going to finance more things, the center should be more flexible about how money is used and there should be some kind of collaborative mechanism about finding what are good projects which also help push the energy system in the right direction.
And this can happen through a lot of different ways, right? Whether it's more devolution to the state renewable energy development agencies, whether you devolve money to state finance corporations and have them develop these kinds of mechanisms. Honestly, if you nudge the kind of state controlled banking system to lend to these kinds of areas with certain kinds of caveats and all, I think these are all ways in which this can happen. But I do largely agree with you that I mean, even when our conversations with people in state governments, there is a sense that the amount of room they have to make decisions, both financially and operationally is shrinking a little bit.
And so I think that does cause a certain amount of concern to people who are running state governments about like, do we just have to do this on a central blueprint? Or do we have some space to innovate on the margins?
Shreya Jai: Thanks. Ann Josey, would you like to comment with your ideas on this?
Ann Josey: Yeah, I think one is the characterization of center versus state in terms of financial devolution. But I think what is also very, very critical is that the state financial health itself is pretty much interlinked with the financial health of the electricity distribution companies in many states. And I think that's going to make a big difference in the transition. So I just like to speak to a couple of points there just to articulate why this is quite so significant.
One is with respect to state subsidies. I mean you've written about this before as well, but you know many DISCOMs depend extensively on state revenue subsidies to manage their operational requirements. So on an average, about 15% of the revenue required by DISCOMs is actually from state government subsidies. This is quite similar to what Rohit was saying about state governments depending on coal royalties. I mean, 15% is the average amount in India. And in states like Karnataka and Madhya Pradesh, you're talking about half the revenue requirement of DISCOMs coming from state subsidies. I mean, that's clearly not sustainable.
And the financial health of the DISCOM and by extension, the financial viability of the entire power sector in these states actually rests heavily on the continued state support.
The other aspect is ongoing losses. So, you know, many of these distribution companies heavily depend on working capital and short-term borrowing and function from crisis to crisis. And many of them are lost mainly because obviously the costs which they are incurring are much higher than the revenues that they are charging from consumers. So as part of the FRBM commitment, many of these states have actually committed to taking their future annual losses. And this is supposed to be in perpetuity. So this also will continue to contribute to the state fiscal pressures going forward.
And then we also have the issue of past losses. So many DISCOMs are under serious financial stress. So if you look at the accumulated losses itself, I mean, at the national level, they are north of 5.73 lakh crores. I mean, that's comparable to the GDP of Slovenia. We're talking about that level of losses which have been there despite multiple bailouts that have been issued in the past 10 years.
So, obviously, some kind of restructuring where state governments play a major role would be necessary going forward to ease the pressure on the financial health of state DISCOMs and to ensure their continued operation.
And then there's also the issue of pending dues. So many state departments and public bodies have, as consumers of electricity, have dues with a DISCOMs. And in many states, that's very, very significant. Like in Uttar Pradesh, it's about half of the pending dues are actually from state government departments. That number is also quite significant in many states. And there are write-offs by the state government And, you know, state governments have to pay this eventually. So therefore, this will also increase the state government liabilities.
So I think it's very, very imperative from a distribution company health, but also from state financial perspective to prevent the buildup of losses and liabilities of DISCOMs.
And maybe, you know, state government should seriously consider looking at many of the opportunities that are there from a transition perspective in order to address this crisis. So I'm going to talk more from the expense side rather than from the revenue side, like what Rohit did. So one obvious example is looking at pricing of DISCOM services. I mean, he had mentioned this briefly when I had talked about Marine Open Access. But there are many services that are being provided by distribution companies that are concessional, that are not priced at cost. And actually, ensuring that these services are priced at cost would diversify the revenue sources of the DISCOMs and reduce their dependence on subsidies in the long run.
The second is, of course, reducing costs. So RE procurement, especially for agriculture, so solarization of agriculture reduces the cost of supply by a third for the distribution companies. And this is 25% of demand across the country. So it definitely lowers the subsidy requirement for many states and should be accelerated from a fiscal prudence point of view.
Another example is trying to limit the amount of future liabilities or future receivable dues from public bodies. Because if you have options like virtual net metering, essentially it can serve as a long-term option to prevent these kind of buildups. So essentially what happens is state government puts up a renewable energy plant and the energy generated from that particular plant is offset with the bills of the public bodies in that area. So the actual bills itself reduces and therefore the potential for dues comes down, easing the financial stress on distribution companies.
Another example is really accelerating RE and storage, not from an investment perspective, but ideally, if we accelerate that, it will also serve as a low-cost option for providing reliable supply in many states. And modeling exercises and IRP exercises have shown that. in many states. And in many states, it might also result that the least cost option is actually exceeding the national targets. So from a fiscal point of view, that also needs to be tried out by many states.
And it's easy for me to say many of these things. Obviously, such options and having these pilots are challenging and require concerted efforts.
But I think the crisis is right at our doorstep. So such efforts need to be accelerated.
Rohit Chandra: Shreya, can I talk about one pilot which Ann Josey mentioned, which I think is particularly promising in this space.
Shreya Jai: Yeah, absolutely. Please.
Rohit Chandra: So I think one of the pilots which has emerged in Delhi very recently is that basically a group of philanthropic lenders, I think, led by the Global Energy Alliance for People and Planet (GEAPP), which is, you know, whose vice president Saurabh Kumar you had as a guest earlier on, basically just commissioned a large battery energy storage system project in Delhi, which was recently won by IndiGrid. This was literally one month ago. And I think this is exactly the kind of project which has a lot of this promise because, I mean, first of all, a bunch of philanthropic organizations came together to give concessional finance to help kind of the BSES Rajdhani put together a tender for something like this. I think they worked with the Delhi Electricity Regulatory Commission to approve this project.
And then now I think they bid out the project, Integrid won the project and it's actually going to be built now. And I think part of what they're trying to do with this project is also build a model for what is the tendering ecosystem look like? How do you convince regulators to put out BESS project guidelines? All of these kinds of things.
And so, you know, when Ann Josey talks about cross-state learning from these kinds of pilots. I think these are exactly, we need tens of such pilots happening across the country. This is just one good example.
Shreya Jai: Thank you for mentioning that and great point and I really like the part that you talked about how, you know, the electricity sector itself, fixing that itself would solve a lot of problems at the end of the states. I completely agree on that and I don't think that seems to be the focus, you know, Some states are, as Rohit mentioned, fiscally myopic and some states, as you mentioned, are not fixing their own problems at their backyards, which could, you know, help them understand their own issues and, you know, devise a way forward.
Before we close this very, very interesting discussion, which I hate to close, because there's so many things to talk about, but just as summary, and just to have a fun end to this conversation, I've never done this before, but I'd like to, is that I would like you both to choose a state of your liking, and you know, suggest how their transition plan should focus on.
I think that would give an idea to our audiences that when we talk about the transition plan of states, how are they supposed to look like, you know, in a utopian world or whatever. But, you know, as someone, as you both are working in this space, just give us a hypothetical plan for any state of your choice. I'll start with you, Ann Josey.
Ann Josey: Okay. I think in my line of work, we've been looking at multiple states. So, and I'm a very nitty-gritty, detailed, nuts and bolts kind of person. So, I'll just speak to broader principles of what a state plan should focus on. Otherwise, we'll go on for hours and hours on this podcast.
So, I think, see, any plan, any transition plan in a state should really focus on accelerating low-cost investment to meet requirements. And in today's age, that low-cost power is going to come from renewable and storage investments. Modeling studies have shown that. So really accelerating that to prevent resource lock-ins and standard assets from the future. So having a vision plan which looks at 10-15 years ahead, focusing on renewable and storage investment or whatever it is needed to look at consumer-centric reliable power from a low-cost perspective.
The other is to look at many of these transition investments and align it with the development goals of the states. I think that's something that a vision document should definitely do. Renewable energy should not only, or storage should not only be for that sake, but it should actually address many of the developmental goals in that state.
Third is what Rohit also was talking about, identifying many of the winners and losers in the transition, and determining ways and means in which support and compensation can be provided to the winners and losers of the transition. Looking at a balanced framework. We talked about litigation and decision-making through litigation. So looking at a balanced framework which provides clarity and certainty to attract serious long-term investments in the sector. That's also something that should be there in a transmission plan.
And very, very importantly, investment not just in technology, but also in institutions. so that we can really think about agile actions, evidence-based planning going forward. And these institutions obviously should not just be the existing institutions, especially the regulatory commissions, but also new institutions from the viewpoint of promoting innovation and looking at any of the pressing challenges in the state.
So if I have to really talk about specific states, I'd like to talk about some practices in state which kind of embody these principles. I think Maharashtra, I'm really, you know, impressed with Maharashtra. You know, it's a state with the largest in terms of GDP in the country, SDP. Electricity demand is also the highest. And it also has significant agricultural consumption. And it has gone with a plan to provide daytime low-cost power to 30% of its agricultural consumption, or save, using 7,000 megawatts of RE.
So that's such a win-win-win kind of model, because it reduces its subsidies. It ensures that a developmental goal of providing daytime power to farmers is met using existing investments. And at the same time, it definitely provides some relief to the consumers who are providing significant cross-subsidy in the state.
So I think this kind of measure is innovative and can be scaled up, and it's the largest kind of target that the state has announced. I would really like to mention that particular effort.
The other state which I find very, very interesting is Bihar, because it has significant rural poor, many, many newly electrified consumers. In fact, 10% of its consumer base is actually below poverty line, newly electrified consumers. But it has managed to have financial losses that are manageable. It's less than 10% of its revenue requirement. And the dues from the state government departments are also limited. So that really needs to be studied because as compared to many, many other states which have larger power sectors and a different consumer base, Bihar has managed to do that.
And interestingly, a state like Bihar also has very clear regulatory frameworks. So when we're talking about integrated resource planning, I mean, one should really look at Bihar regulations. They're so detailed. And this was even before the National Resource Adequacy Guidelines were issued. And also with respect to energy accounting, I mean, as a state which as compared to many other states, still has limited agricultural consumers. It has a great plan for looking at how unmetered agricultural consumption should be accounted for in the state based on existing infrastructure at the feeder level using scientific methodology. So these frameworks exist. It would be better if they're implemented. But I'm glad they exist. And Bihar is a good case for that.
I'd also like to celebrate states like Karnataka, Gujarat, Maharashtra, which have moved away from providing significant concessions for renewable energy investments in their state, recognizing the fact that RE can stand on its own economic proposition and move to a regime which more or less goes towards cost compensation in many fronts.
And, you know, this culture of pilots that is there in some states in India, that's also very, very important. Rohit spoke about battery-based storage. There are many states looking at storage procurement for different applications, looking at innovations such as group metering, which I talked about earlier, virtual net metering in some states.
So I think this fact that states are able to still do pilots on many fronts and push the boundaries is also something that is very important, unique, and worthy of recognition.
Rohit Chandra: I'll talk about the state I know best, and I have studied for the last decade, Jharkhand.
So I think, I mean, we've talked about the Jharkhand Just Transition Task Force, which I think is coming up with lots of ideas. But you know, Jharkhand is also a state which depends enormously on coal, but also has an interesting history with what Ann Josey was talking about Bihar. So when Bihar and Jharkhand were split in 2001, most of the coal and power generation capacity went to Jharkhand. And Bihar was left with very little generation capacity, which is why I think some of these more forward looking policy regulations may have come up.
I think one of the things that Jharkhand really struggles with right now is how to deal with its land policy. Right. So there's a lot of scheduled areas which are owned by tribal communities. And I think finding a relationship between the state and tribal communities so that you can proactively acquire land, which may also be forested for other kinds of purposes, has been quite difficult.
And I think states which have managed to figure out their renewable energy scene have also figured out land parceling and other kinds of things. And so I think one of the really basic things that needs to happen, not just for renewable energy, but also broader industrial growth, is figuring out how to make land transactions easier, not at the cost of local communities or development, but also acknowledging that land is necessary for this kind of economic expansion in various ways. And so that's very fundamental factors, the production kind of thing, right?
I mean, if you can make land transactions easier, if you can make the cost of electricity lower, you know, if you can make sure that your commercial law ecosystem can resolve things relatively quickly, I think that would go a long way, not just for the energy transition, but also kind of economic growth more broadly.
I also think that, you know, figuring out ways for new generators to connect to your transmission ecosystem has always been a big gripe. And so, you know, whether it's at the power grid level or whether it's at the state level, I think these are things which are inherently very difficult. And so making that process easier can go pretty far into encouraging people to at least consider experimenting in the state a little bit.
And then, you know, and then I think, you know, Jharkhand has had an interesting political history where in the first 10-15 years, you know, the average tenure of a chief minister was something like 1½ - 2 years, right? And so, unfortunately, I think legal and commercial predictability was highly correlated with political alignment, right? And I think nationally and at the state level, it cannot be that, you know, the moment the chief minister changes, then like your entire project makes changes. And I think you're finally starting to see some of that stability emerging in the last 5-10 years.
And so, I mean, some of that is political, not necessarily policy, but I think things are moving in the right direction.
The one thing I would really like to see Jharkhand do is invest more in a generation of climate dealmakers, which are embedded in its bureaucratic ecosystem. And I don't mean like consultants who come in for 3 months and then leave or PM you. I'm talking about a generation of people who Some are skilled in finance. Some are skilled in understanding energy technologies. Some are skilled in understanding how the bureaucracy works and are embedded in this ecosystem and can actually be the dealmakers who can work with private sector companies, who can work within government to try to push ideas and make sure that projects happen.
A lot of private companies just don't have the patience to run around endlessly in bureaucracies and get permissions anymore. Right. And if you're an investor in renewable energy and you have to pick investing in Gujarat versus investing in Jharkhand. Almost everyone would pick to invest in Gujarat, not just because the wind density or the insulation is better, because the processes in bureaucratic processes are more predictable. Right.
And so I think that's one of those things where if you have agents within the government ecosystem who can help smooth these deals, then you will have more deals. And it is not just a Jharkhand thing. I think this applies throughout.
But yeah, investing in a generation of young people who can enable this kind of dealmaking is in the interest of most state governments in the future.
And this is what I tell my students all the time as well, that you guys should become the next generation of climate dealmakers.
Shreya Jai: I like the last part a lot. Thank you so much, both of you, for sharing the ideas. Thanks a lot.
We'll now conclude our discussion. Thanks to both of you again. It was such an interesting and enlightening discussion. We had so many ideas to share, and I really wish we could continue this much further, but the time is limited.
So thanks again to both of you for coming on this episode. Thanks a lot, Rohit. Thanks a lot, Ann Josey.
Rohit Chandra: Thank you, Shreya!
Ann Josey: Thank you so much for having us!
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