Time for changeIt may not appear obvious, but Nepal and New York State share common problems and opportunities in our power sectors.
It may not appear obvious, but Nepal and New York State share common problems and opportunities in our power sectors. We both have large hydropower generation located far from where most people live, grapple with the challenges of building transmission lines, and need to mobilise private sector capital to build a 21st century power grid. Like Nepal, New York State has challenges attracting investment because it has a reputation for being overly bureaucratic. And both Nepal and New York have high power costs in comparison to nearby economies, which creates both competitive disadvantage and challenges for citizens. Even in a place as rich as New York, more than one million people have difficulty paying their power bills.
Most importantly, New York and Nepal can’t keep doing things the same way in the energy sector. Technology is moving rapidly; solar, battery and wind costs are declining; and more individuals, companies, and communities are seeking control over their power reliability and quality. We can see that electric vehicles are the clean transport of the future—not just science fiction. To support this transportation revolution as well as power the homes and businesses in our communities, we need a power grid that can not only deliver more power, but one that is also flexible and intelligent, allowing consumers access to power when they want it—not just when the sun is shining or the water is flowing. We don’t have that grid today—the grids that exist in Nepal and New York retain the same basic architecture from the 19th century. They are capital and energy inefficient. Let’s face it—electricity pioneers and innovators Thomas Edison and Nikolai Tesla would recognise our current grid architecture.
To meet the energy needs of today and tomorrow, it’s time for a change. Nepal and New York have the opportunity to build a new grid that is efficient, flexible, and intelligent. We need to create next-generation energy systems.
One way to achieve this is through robust and transparent markets. It will be hard for independent power producers to develop hydro and other generation projects—and to trade with export partners—without a market to price and trade electricity. Transparency will reduce risks and increase competition, which will lower costs.
After all, electricity is a commodity, much like other commodities which already trade in Nepal. In addition, markets will bring badly needed innovation to customers. There is a growing array of technology solutions—including solar,
batteries, fuel cells, and building control systems—that can lower costs, improve resiliency for customers—and set the stage for electric vehicles.
We also require a regulatory system that is forward, not backward-looking. In the United States as well as in Nepal, electricity regulation historically has been slow and discouraged innovation. We need regulators that can move at the speed of business and that are aware of changes in technology. Without creating the foundation for a smart, flexible system, we will keep building and rebuilding an old, expensive system.
There is a need for a smarter, more flexible grid that is no longer only focused on peak demand times. Building for peak means that there is idle generation, transmission, and distribution capacity at other times. All this excess capital costs money. Deploying distributed energy in bottlenecks of the grid, using storage and load management devices, and price signals to customers can create a much more affordable system.
Another thing that can help to create these new energy systems are processes that are more open. The utility industry around the world has been protected by geography and government regulations from market forces that have significantly improved the cost and quality in product and service in other capital-intensive industries. Our challenge and opportunity is to open up the industry to the same forces of innovation that have improved other industries while offering reliable and safe power. That means getting the investment climate right for innovators across the economy, including the energy sector.
Thomas Edison started the first grid in New York over 100 years ago. Nepal’s first hydroelectric facility followed not long afterwards. But it is time to change. In Nepal, with a new Constitution, a new regulatory framework, and an increase in capital flowing into generation and transmission, it is time to change here.
Let’s find ways to learn from each other.
Kauffman leads New York State’s Reforming the Energy Vision (REV) initiative and manages New York State’s energy portfolio as chairman of energy and finance in the office of Governor Andrew M Cuomo