The Indian electricity system is in dire need of ‘fixing’ – or, perhaps, of fundamental, paradigmatic reconfiguration? But how can complex systems be changed? This blog piece is based on a very interesting conversation with my friend and a systems aficionado, Anna da Costa, her blog piece and reading suggestion.

• In changing systems, too much time is spent on ‘fixing’ and too little on re-imagining
• In electricity, India should embrace distributed models rather than the traditional, centralized one of large power plants and transmission grids
• This would make the electricity system less political, less corrupt, greener and allow the local population to become value creators in addition to consumers

Did you ever get stuck in a traffic jam in an Indian city and look at the tight mosaic of cars, buses, motorbikes, cycles, pedestrians filling every inch of space, optimistically trying to head into entirely different directions, horns blowing? Add monsoon floods to take it up a notch. And did your eyes then, perhaps, wander to a nearby half-rotten concrete mast, cuddled in a wild knot of power lines? Did that make you think about the fuse in your house that was gone again?

What could this be, you might wonder? An extraterrestrial form of swarm intelligence? A mysterious super-organism? Or just a hopeless mess that will never change? Being German, I might have a genetically limited bandwidth for dealing with exasperatingly uncategorizable complexity. I just yearn to know: are things getting better or are they getting worse? Unable to give an answer, my mind usually wanders off, with a lingering sense of frustration.

But for a systems theorist, this is where the real thinking (perhaps even fun) begins. India must be the ultimate challenge for this rare breed of researchers. Donella H. Meadows in her 1999 article ‘Leverage Points: Places to Intervene in a System’ (refer) argues that we have an intuition where the key leverage points to change a system (a society, an economy, a city, an infrastructure, whatever) might be. We might be already thinking about them. But, we usually want to push them in the wrong direction. Systems are often just too complex for us to understand. Also, we focus 99% of our efforts on fixes within the system, which is not nearly as powerful as changing the system and its purpose itself. Anna da Costa has provided a very useful clustering of Donella’s leverage points (refer), classifying them and adding a layer of human capacity.

Let us take a specific system. At BRIDGE TO INDIA, we work in the power sector in India. This is a notoriously dysfunctional system: there is not enough power, it is not delivered well, the costs are rising, the utilities are in perpetual financial survival mode and hundreds of millions of people do not get power at all. The most powerful points to change a system, according to Donella Meadows, are not the nuts and bolts of the system (“constants, parameters, numbers such as subsidies, taxes, standards”). The best way to change a system is the “power to transcend paradigms”.

The discussion in the Indian ‘electricity system’ is indeed hovering mostly on the level of ‘constants, parameters and numbers’, focusing on transmission and distribution losses (far too high), coal availability (difficult), power prices (too low for the utility, rising too fast for the consumer and voter). From there, it moves up the ladder to matters of investment risks and returns (risks have been considered too high, reducing the level of investment), then to public vs. private players (who better supplies sufficient, reliable power at acceptable tariffs?), to governance of the power market (avoiding massive grid failure, financing repairs and improvements) and then perhaps to the political system of federalism itself (who is actually in charge?). Yet, the system has not been made to work. It just limps along. It changes a little, but usually not enough.

The discussions is limited by the paradigms that fossil fuels are indispensable, that electricity comes from large plants and is transmitted through a grid, that more electricity means more growth and more development, and that electricity is a product that is produced by some and sold to others. This is the way industrialized countries have thought about electricity since the days of Tesla and Edison: In an era of cheap fossil fuels, no climate concerns, and a state-run infrastructure economy. This led to the growth of large power plants and a grid that has become more and more integrated until it covered the entire region, state and increasingly integrates countries, even continents.

Utilities and the companies servicing them became ever larger. They have invested heavily into a specific approach to providing energy: costly and risky exploration of fossil fuels, investment into complex technology such as nuclear power, building of vast infrastructure such as pipelines or transmission grids. In such a system, whenever a decision is made, it has an impact for decades and is very difficult to reverse. In the process companies, regulators and politicians, have become heavily ‘path dependent’: mentally and structurally averse to change. External shocks such as the oil price rise in the 1970′s or the climate debate in the 1990′s are outliers to be made to fit into the system in a procrustean manner.

Thomas Kuhn, a philosopher of science, tried to understand how scientific systems have changed. In his view, they do not follow a process of continuous evolution or progress. Rather, the old system is hollowed out by new ideas until it collapses. There is always a dominant world view (e.g. the earth is the center of the universe) and scientists try to fit all observations into it. Some observations will, however, not really fit (e.g. the observed path of objects in space), causing an irritation. They are at first ignored by the mainstream, but the irritations are bound to become more, because the system is flawed (the earth is not the center of the universe). At some point, they become so powerful that the old orthodoxy is overthrown in favor of a new one (the sun is the center of the universe). And so on.

We are living in an old energy system. We know it is flawed and it is dawning upon us that it might be broken beyond repair. It fails us on at least two accounts: it does not bring enough energy to vast groups of poor people and it does not keep carbon emissions below acceptable limits. In India, the energy system is not only structurally flawed, but also badly executed.

This is an opportunity. Because India is not yet as heavily invested into a centralised electricity system (as, for example, China has become over the last twenty years) the ‘path dependency’ and the sunk costs are less. Ironically, the practical failures of those who should take care of power supply and are thinking along the old model – the large industrial houses, the utilities and the political and regulatory decision-makers – make room for new types of actors, entrepreneurs (‘green’, ‘social’ or ‘just normal’), cooperatives, and individuals working out solutions for themselves. Much like in mobile telephony, where Africa and South Asia have a higher mobile internet penetration than Europe because for many that is the only way to get into the internet, in power, too we will see more and more distributed solutions.

To return do Donella Meadows: what can we do to fix India’s electricity system? We need to think about the provisioning of power differently. In a country like India – dynamic, anarchic, vast – centralised actors might not be able to provide the solution. They might be were IBM was in the 1980′s: on the wrong side of change. The solution might be elsewhere, in decentral solutions – the power station in every home, based on renewables (especially solar), storage, diesel, perhaps in some places gas, driven by local entrepreneurs building up new micro – and meso-grids, perhaps even ‘smart’ grids, connecting a number of generator and consumers. The best the government can do to facilitate this is to allow this market to flourish through easy access to distribution licenses, through realistic power pricing, perhaps through tax incentives. India should become the global leader in this new, powerful, distributed, matrix system of power supply. There are some technical challenges – but they can be solved. Research and finance should look in this direction. Entirely new business models will emerge. Power will be cleaner, and less stifled by the politics of infrastructure. Local jobs and local wealth will be created. It could become a mysterious super-organism. A functioning one.

Since I have referred to many other people’s thoughts in this blog post, let me make one last reference. In the ‘Art of War’, Sun Szu writes that “victorious warriors win first and then go to war, whereas defeated warriors first go to war and then seek to win.” Having to fight a war is already and admission of strategy failure. India should forget about the wars it fights over fixing the current electricity system and instead embrace a winning strategy.

Tobias likes to write about solar business models, solar and energy policy and wider issues of sustainability, development and growth.