Ladies and gentlemen, the President of the United States. Thank you. Thank you very much. Oh, please, be seated. Thank you, and welcome to the Casablanca. And welcome to a new member of our team here, Rudy Becerra. I appreciate all of you coming today to help commemorate Hispanic Heritage Week. This is a special event for me because as a Californian, I'm keenly aware of the enormous contributions that America's Hispanic community have made to our way of life. When I arrived in California, fresh from the Midwest, I must admit that my understanding of this was much more limited. But part of becoming a California, part of the process, is developing a love and appreciation for that part of America that is uniquely Hispanic. In California, that includes architecture, music, and cultural values that reflect some of the noblest yearnings of mankind. In 1883, one of our greatest poets, Walt Whitman, an intellectual, an individual of deep insight, said it all about Hispanic traits and the American identity. He said, No stock shows a grander historic retrospect, grander in religiousness and loyalty, or for patriotism, courage, decorum, gravity, and honor. But Whitman, a man who looked deeply into the meaning of things, penned those words long before so many Americans of Hispanic descent with courage above and beyond the call of duty, distinguished themselves in battle defending our liberty. He penned those words when there was considerable discrimination against Hispanics, and yet he saw what I consider one of the most admirable of all Hispanic traits, the resolve to maintain dignity even in times of great adversity. Never was that brought home to me more, more clearly than when I was governor of California, and I visited the site of a tragic mudslide. You know in California if the ground isn't shaking you and rain isn't flooding you or drought isn't drying everything up, why you'll find that the hillsides can under a rain start coming down. And this had happened. It was near Santa Barbara. And I went and equipped with knee boots because we were out deep in the mud that had come down into a very nice and lovely little settlement of homes there close to the highway. And one elderly gentleman invited me in to his house and we went in standing knee deep in that sloppy mud and it was apparent that he had evidently just newly furnished this house. The furniture there it was standing or sitting in all of that mud. And as we stood there in the living room he said to me, mi casa es su casa with all the dignity as if there was no mud and he had invited me in for just a friendly visit. I've never forgotten him. One of the major goals of our administration has been to expand opportunity to all Americans and if I read the Hispanic community right that's all that's expected. I've always found it strange that the idea that people should work hard to support their families and improve their well-being is labeled the Protestant work ethic. From everything I know it could be called the Hispanic work ethic. One need only look to an individual with us today to understand what I mean. I'm referring to Hector Beretto, a man who early in his life picked potatoes for a living with freedom and opportunity available to him with hard work and a commitment to excellence. He is today a successful businessman and president of the United States Hispanic Chamber of Commerce. Hector, I understand that the Hispanic Chamber's convention will open tomorrow in Denver. Well, I hope you'll convey my best wishes. Americans of Hispanic descent are working their way up and reaching for the stars. I think it's fitting that a poster put out by the Congressional Hispanic Caucus Institute features a young Hispanic child wearing an astronaut's helmet and the words, El derecho al fortiro, paturo, the right to the future. If our children are to have the freedom and opportunity we want them to have, it'll require us to act today. And that's one of the reasons during this last campaign I pushed so hard for tax reform. It took a while for the idea to catch on. The critics claimed it was a nothing issue, but we kept pushing. Only six months ago, the naysayer said it was dead. We didn't give up. And let me assure all of you, when I sign tax reform into law, which I expect to do shortly, I'm going to remind every young person in the country not to give up just because someone tells them something can't be done. I know before I became governor there was a great deal of criticism about the fact that I'd had no previous experience in that job.  It's wonderful sometimes to not know the things you can't do. And then you find out you can do them. Well, our tax program will be a major boon to working people. It simplifies the system, reducing the number of tax brackets from 14 to 2, 15 percent and 28 percent. And I should say there will be three brackets because many lower income people, six million we estimate, will be taken off the rolls altogether. Their bracket will be zero. So that's a third bracket, zero, 15 and 28. This bill, which we fought so hard to get through the system, makes our code more fair and represents a tax reduction for most Americans. It will increase the incentive to work, strengthen our economy, and streamline the system. It means more jobs and more opportunity for everyone. There's been some talk that once our tax reform is in place, the rates will be raised to pay for more spending. That would be an intolerable breach of faith with the American people. We didn't achieve this historic tax reform to have it undermined by the big taxers. I pledge today to oppose any effort to raise the tax rates and negate the hard-fought progress that we've made. In addition, I call on all members of Congress to take the same pledge, ask them to take my pledge on tax rates 15, 28, and for corporations 34. We're a richly diverse nation, and it's our dream of opportunity and freedom that unites all Americans of every descent. Today, it's my pleasure to join my fellow Americans in honoring our friends, neighbors, and colleagues who are of Hispanic descent. So I thank all of you for being here today. God bless you all. Thank you. José Javier Acosta, first prize in the fifth grade in his painting. Well, that's wonderful. Congratulations. Monica Morales, first prize in the first grade. And those are for me. And they're for me. My gifts. Thank you all very much. Thank you both. That's wonderful. Thank you very much. Thank you all once again.


Hello and welcome to episode 4.3 of the Law, Economics and Policy Conference, LEPC. LEPC is a project of the Institute for New Economic Thinking, INET. Sunanda Nair is the leading energy that makes all this happen along with a bunch of collaborators here in India, who are Som Shaker, Sundaresan, K.P. Krishnan, Ila Patnaik and myself. We are all happy to have you here for this session today. The question we are looking at today is the problem of decarbonisation. Climate change is one of those grand questions faced by the world and we have a complex problem in India about how to reduce the amount of carbon that is being emitted in the country and the commensurate modifications that have to take place in the electricity sector. For many years in India there was an emphasis on climate justice, that it is not fair that the atmosphere has been polluted by many other countries and there is a lack of room for India to emit carbon dioxide. That is an important and a fair perspective but it is also time for all of us in India to start figuring out how we will decarbonise, how we will come to the end of the age of carbon and that is going to require fundamental rethinking of the nature of the electricity sector and the role of state intervention to address the market failure, the externality of emitting carbon dioxide. We have two main talks today, a paper that is presented by Akshay Jaitley and we have a talk by Michael Grubb. Jessica Seddon is the chairman of this session and we have Rajani Ranjan Rashmi as the discussant. I thank you all for being here today and we look forward to further engagement with all of you on building LEPC and making it a better platform for discussions. Thank you. Thank you very much for the opportunity to share this session. It is actually really exciting for me. I am deep in the air quality world now but 20 years ago my first introduction to India and policy making in India was actually working on parts of what would become the electricity act of 2003. I think that was one of the early efforts to try to shift to a more market driven ecosystem for the Indian power sector. It is 2021 now and much has been spilled on how well that worked, how it has and has not actually shifted incentives in what is an incredibly important part of India's development as well as now today an incredibly important area of transition for global and Indian decarbonization. I think one of the things that I particularly appreciate about this session and about the paper that we are about to discuss is that it really steps back from much of the ink and much of the writing on the political economy saga of power sector reforms over the last let's say two, three decades to look at what has changed, what is new, what are some of the new opportunities we have to do things differently. It starts to step back and look at new opportunities, the how to of an energy transition, a power sector transition that's important for India and incredibly important for the world. I think we also have an incredible group of discussants as well as authors. Ajay has already welcomed you all and had said hello and I won't take up any further time from the panelists except to just introduce who we'll be hearing from tonight and also to give a little bit of a background. So we have Akshay Jaitley who is a strategy and policy advisor as well as the founder of Try Legal who will be presenting the main findings of the paper. He'll be followed by Professor Michael Grubb who's professor of energy and climate change at University College London Institute of Sustainable Resources. I'm hoping we'll hear from Professor Michael about some of the intricacies of electricity market design and the follow through of shifting the incentives around power sector reform. We'll be followed by remarks from Sri Ranjan Rashmi who is an distinguished fellow at the Energy and Resources Institute as well as a former special secretary at the Ministry of Environment, Forest and Climate Change. He's been deeply involved in India's climate diplomacy as well as policymaking and I'm hoping that he can say a few words about both the changed context, the incentives and opportunities it creates and what next. We'll be followed in the end by a time for Q&A so all of you keep your questions ready and looking forward to the discussion. So without further ado I'd like to turn it over to Mr Akshay Jaitley to present the main findings of the paper. Thank you. Thanks a lot Jessica that was a very good introduction there. Just to place the paper in context what we're trying to do in the paper is to provide a very broad architecture for what a reformed power sector might look like and provide some pathways about how we would get from here to there. So you know there are many many details that will need to be addressed and questions that the paper will no doubt provoke and what our intention is over the next few weeks and months is to develop a research agenda for ourselves and anyone else who wants to sort of be part of that to tease some of those issues out in greater detail but for the moment very happy to be here and very happy to have a chance to present the paper. Next slide please. Just to place where we are in context at the moment India accounts for just under 7% of the world's emissions which is roughly the same as Europe. We are in the midst of a continuing and very legitimate debate about climate justice. This dates all the way from pre-reo to now and many people here will be familiar with the discussions on climate finance and that remains very legitimate. But in any event wherever that discussion goes it's very clear that India will need to pull back from the current CO2 emissions path that we have. The long-term trend growth rate of the economy was 5% in recent years partly due to COVID and partly due to a slowdown that predated COVID. It's been at 2.5% because of weak GDP growth but we expect this to we all hope at least that this will come back to faster growth rates soon enough as a consequence of which we can expect emissions to grow as well. Next slide please. So what's the problem with the Indian decarbonisation? Where are the roadblocks? Now the decarbonisation in India will involve in addition to the power sector will involve switching some energy applications like cooking and mobility in particular from fossil fuels both which are formally and informally used to electricity so it's inevitable that electricity generation will go up not just as a consequence of GDP growth but also as a consequence of some of these switches and we believe that within the electricity sector we are going to reshape into renewables plus potentially and we think that might still be a role for nuclear and renewables plus nuclear world. That's on the supply side, on the demand side we think that there are very large range of adjustments that are potentially are possible which at the moment the system is not designed to bring into place or incentivise. In a rational world for instance when the sun is shining we should be more inclined to turn on the air conditioning on the basis that the electricity is likely to be cheaper. That isn't the case at the moment. The reason we focused on the power sector or the electricity sector more than anything else it is that it is the most important sub-component of the carbon transition in India. It accounts for between 25 and 30 percent of emissions and it is the most formally organised which lends itself to a formal reform programme much more easily than some other sectors and we feel that the best way in which to do this is for millions of decisions being taken by buyers and sellers of electricity all over India in the process of this decarbonisation where individual components of the economy are taking decisions based on electricity pricing and the power sector in order to move the climate transition along and the problem over here is that there are serious problems in the Indian electricity sector. Next slide please. So what are the problems now for anyone who has had anything to do with the power sector the electricity sector in the last 20 years? This is old news but it's worth going through it again. Most discoms are chronically impoverished. At last count we are currently at the highest level of discom debt which is at about 1.15 trillion rupees. This is clearly a problem not just on the government side where there's a requirement to bail the discoms out in one form or another every three to five years it would seem now but it also makes them very sort of unreliable contracting counterparties and we'll come back to that in a bit. Discoms all over India run cross subsidy systems where the most paying customers are overcharged that's particularly the commercial and industrial consumers and discoms are loads to lose these consumers to renewables who might not want to buy it to renewables which might come from sources other than the discoms. So through the use of state power these customers are held within the system. In most parts of India the grid produces expensive power it's unreliable and it's carbon intensive that balance is of course switching and we've hit 40% renewables but the bulk of the electricity is still highly carbon intensive. The private sector participation in this in which is primarily in generation and increasingly now in transmission and a little bit in distribution faces concerns of the credit worthy of the discoms which are the only people you can really sell to. At the moment the credit worthiness as I mentioned is as a function of the fact that there are huge debts the credit rating of all the discoms is very low and as a consequence the contracting framework around the power purchase arrangements are also weak because they reflect this credit worthiness both in terms of the manner in which the contractual provisions are drafted but also in the manner in which contracts are actually enforced and ordered. In most parts of the country electricity prices are regulated and it is not the price system that determines them although there is some amount of competitive bidding all of those tariffs need to be approved by regulators and there are complete lack of incentives on the supply and demand side. The people who run this system the people within the discoms within the state regulators within the state electricity departments lack the incentive to change it and in fact going further there is an incentive to use the system to fulfill welfare and redistribution objectives a very recent example only for last month from last month illustrates a number of these problems in a sort of microcosm. The Punjab government drafted a bill which has now been passed unanimously by the Punjab legislature the legislative assembly which effectively renegotiates or has sent all the tariff provisions within all the PPAs in the state to the regulator for the redetermination of tariff. Now not only is this a violation of contract but it's also potentially against the constitution and various other problems and the various other sort of legal problems with this whole arrangement but it's very clear that this is aimed towards the elections that are coming up next year and also the fact that the ownership by the government of the distribution companies allows them to take this step which probably will be pushed back by the courts but nonetheless will lead to an enormous lack of confidence in not just the electricity sector of the state but of the country as a whole because the worst case scenario is that other states take a queue from this and try and do the same thing hopefully this will be pushed back in the courts. We feel that in this centrally planned paradigm if we attempt a serious decarbonization here this will provide this will impose much higher costs on society than what a self-organizing market-based system can discover. We feel that this will not be the welfare maximizing path even though we might end up with a more with a decarbonized electricity sector it's likely to take longer and it's likely to be more costly. Next slide please. These problems we feel will deepen as mentioned the CO2 emissions are likely to rise and there are now serious global concerns about Indian emissions. The 7% that the Indian emissions constitute makes us the third highest emitter in the world potentially well if you take the EU as a block number four but there are concerns both within the private sector as well as within governments with Indian emissions. We're also now in an environment where Indian firms no longer can function within the boundaries of the Indian economy itself. Indian firms respond to international asset pricing and this happens in a number of different ways. This happens in the sense that there are investments that are planned by a global ESG based funds and other carbon carbon based funds which are premised on Indian firms adopting a certain path of carbon emissions as well as within supply chains for instance if you want to be a vendor to Coca-Cola you need to now sign up to a sustainability pledge which goes into quite a lot of detail about where you're sourcing your electricity from. Google for instance to quote another example has sort of decided to go completely renewable and data centers can consume a large amount of energy. The ability of Google in India to be able to fulfill that global requirement will depend a lot on what it's permitted to do and what kind of power it's permitted to purchase without impediments within the Indian electricity sector. There's a potential that export competitiveness will be affected. Europe has already announced that it is likely to put into place the carbon border adjustment mechanism a sort of carbon border tax which will potentially become effective from the 1st of January 2026. This would impose as currently drafted a 25% tax on imports coming in from countries which or from firms that produce their goods based on fossil fuels.  It's quite possible that the US might go in this direction particularly if the Democrats remain in power there's already a bill that is being proposed by a couple of Democratic senators along the same lines and even China has suggested that this is something that it might want to put into place. We feel that the stress in the electricity sector in India will become worse. The legacy system makes expensive and unreliable power which isn't clean. Renewables are often cheaper but it's hard for the best customers to try and exit the system. They are kept in place by either by legal or at times illegal mechanisms the denial of open access for instance and because of the fact that renewables are cheaper and because of the fact that they are ESG pressures the best customers are continuing to try and exit and there are large amounts of investment required for the renewable revolution. There is already a green transmission corridor being built but the irony over here is that the renewables that we are putting into the system in order to solve the climate transition are creating problems for the climate transition itself because they are putting pressure on the grid and these are the kinds of problems that do not we believe lend themselves to command and control solutions. Next slide please. Why do we think that fundamental reform is now necessary? We started off with a small electricity sector in a small economy at the time of independence. As Jessica mentioned the electricity act in the year 2003 attempted to make a significant set of reforms in the electricity sector but what effectively it did was it took this small public sector and bolted private generation onto it with some amount of unbundling but otherwise the operation of the market system was not as deep as it could be and it was possibly the right step to take at the time but 20 years on we feel that just as with liberalization more generally within the economy that that has run out of some steam we feel that even the reforms that we put into place in 2003 with the electricity act have also now reached the limits of their effectiveness. The reforms that have been made since and there have been a number of them we feel they're all quite easily classifiable as incremental and they all work within the central planning framework and they haven't worked as well as as well as we would like them to have. We've seen that as far as the on the distribution side the the DISCOM deaths have only mounted. We've had a fair amount of investment both on the conventional side as well as in renewables but if I were to place this in context India received about 6 billion out of the 300 billion that was invested worldwide in renewables in the year 2020 compare that with over 80 billion for both China and the EU so there's a lot to be made up over there. So we now praise in the context of this ill functioning legacy electricity sector we are now placing much greater stress from renewables and the stress of the climate transition more broadly and it's not well placed to respond and we feel that this is now the time for strategic thinking strategic in scope and strategic also in terms of the temporal aspect of it looking not just at fixing things for this year or the next but looking at 5-10 years down the road. So how do we look to find these solutions? How do we try and get policy coherence over time and search for optimal answers by the many many participants in the in the in the economy in the power sector. Next slide please. We feel that there are two principles that that should be employed for the desirable steady state. The first is that the the sector needs to move to a much more market-based system through the price system. Let's supply and demand make the price and the only role for the state that remains is is to correct for market failure the primary of which the primary tool of which will be through regulation and in order to do this we feel that will be most effectively done through the privatization of all state assets in the sector. This obviously would this could run on the basis of a priority with distribution to start followed by transmission and generation. Now there are some excellent and well functioning companies in both the transmission and distribution and generation sector which are in the public which are under public ownership but we feel that their size and scope make them sort of very heavy very large participants in the market and have the potential to distort the functioning of the market in the future. So over a period of time we feel that the likes of power grid and the likes of NTPC should also be divested using different mechanisms to do so. Next slide please. And then what we feel is that what should be done is that we introduce a carbon tax establish risk or a list of carbon tax rates for the next 20 years with the possibility of reviewing these carbon taxes every five years based on both the amount of CO2 actually abated, India's commitments on the international climate change agreements and then to change the carbon tax rate over the next 20 years from that point in time. And we feel the private sector will figure out most of the adjustments on supply and demand that will be required within the system and that this is going to be a far more efficient way to achieve the climate transition then to do this through FIAT or to do this through specific regulatory interventions in different parts of the power sector. The intention would be for the carbon tax to be revenue neutral and for there to be a set off against GST so that there isn't a greater burden on the consumer but that the incentives are placed at the right points in the economy. Next slide please. So this sounds very good, it sounds a bit too idealistic perhaps but we feel that it's actually there are aspects of this that are now capable of being done. It's true that within 30 for the last 30 years excellent policymakers have attempted a number of things but they've all been within the centrally planned paradigm and why do we feel that now is the right time to be able to put into place a set of reforms which are grand in scope and which are long term in their conception. This has been done as we know for mutual funds, it's been done for telecoms and most recently we've sold Air India finally. Why do we feel that this is now possible for the power sector? Next slide please. Well we feel that there are a number of reasons for this. First we have the beginnings of a much much better understanding of the political economy of the power sector in India and the principle that we feel should be used with respect to the political economy is that all losers within this climate transition whether those losers are enjoying benefits today legally or illegally must be compensated. The analogy we use here is of the Bombay slums where various attempts to sort of remove slum dwellers from slums failed until such time that they were provided accommodation within the slum redevelopment itself on the basis that their entire lives were organized around that area and if nobody at that point everybody came to the realization that you know after a while that irrespective of the fact that these people were essentially squatters the only sensible political economy solution was to provide accommodation. We feel that we need to follow a similar kind of approach within the power sector. This for instance would involve dealing with people who currently are stealing electricity, bringing them within the system through electricity connections and perhaps a few hundred free units of electricity a month as is currently done in places like Delhi. We feel that these kinds of solutions that there are series of these kinds of bargains that with close attention to detail can be designed within each state. There's a much better understanding also of how to design the regulation. I think the failures that currently exist within the regulators in each states are now well understood and there is now a big literature on how modern regulators can be built within India. I feel that this can be called upon to reconstruct the manner in which regulation is done state by state and this idea of state by state is actually key to what we propose. We do not think that this can be done through a central government role although the role of the central government will be critical. We feel that both the political economy and the structure of the sector in each state, the extent to which they're exposed to international asset pricing through ESG investment, the extent to which they are exporting states very significantly across the country and different reform packages will need to be designed for each state. There are also increasing pressures from international relations which are a problem and one of the things that leads to the need for this reform but it also provides opportunities and within India as well the whole debate on privatization itself has shifted significantly. We have a national asset monetization pipeline which relates to all assets within various infrastructure sectors and as I said we finally managed to sell Air India and people have seen that the years of reform of attempting to turn Air India around did not work and finally the future of the company and it was also in the government's benefit to actually privatize it and finally we've done that. It's now possible to find the money to do this. If any of you have been following what's happened with respect to South Africa there is now a program in place, an MOU that's been signed between South Africa, the EU, the US, France, Germany and a couple of other countries which provides $8.5 billion to South Africa to reform its power sector from moving from 80% reliance on coal to reliance primarily on renewables. The MOU is going to lead to a formal plan within a couple of years and that will then be executed. So there are ways to find that money catalyzing and improving the investability of the power sector will also lead to greater private investment as I mentioned India only receives currently a drop in the bucket as far as foreign investment or general investment in Indian as well as foreign investment is concerned. So it is possible to find the money and as we mentioned the electricity sector is facing a greater amount of stress. Next slide please. So finally if we care about India's decarbonization we have to focus on the electricity sector it is the most important locus of India's carbon transition and the critical element is to move from central planning to the price system. This could potentially be done in phases but we feel that whatever reform is done should be done with a clear final objective in mind so that there aren't sort of contradictory steps that are taken by different parts of the system. We're not denying that this is hard and that sort of explains the title of the paper the lowest hanging fruit on the coconut tree so all the fruit are very high up but this is just slightly lower. You think that everything else is harder because it will impose greater costs and take more time and this you know my co-author Ajay Shah this is one of his favorite quotes from Churchill which is that men in nations will do the right thing after trying every reasonable alternative we feel that the reasonable alternatives have been tried and that we need to now think quite differently in order to solve this problem. There's a lot as I mentioned in the beginning there is a lot of research and problem solving required in translating these sort of grand plans into more tangible strategies but I hope that we've shown that there is a path to do this and this is the right way in which to think about the future of the Indian past sector. Thank you very much. Thank you. Thank you Ajay. I think that that the discussion was very clear on the political and financial window on some of the new constituencies and pressures for a swift response. Also you know very simple two principles my big question and I think no one is more qualified to answer this than our next panelist is really is this optimism on what we know about regulatory design and really well founded? Have all of the reasonable alternatives been tried? Do we know what to do particularly in light of global experience but in the in light of the special circumstances of India which is actually a growing demand side and a rapidly expanding desire and need for electricity that's tied in with other aspects of decarbonization. So with that small questions for Professor Michael Grubb to comment on the paper and I hope particularly on that note of optimism. What are we not thinking of? Over to you Michael. Okay well thank you very much indeed Jessica and Ashkay for that great presentation. Yeah modest little questions and challenges. Just to start out by stressing that the huge amount there that I agree with centrality of the electricity sector in any nation's decarbonization strategy and it's been central in the UK where I live and have had much of my career in this space and second on the principle of the use of markets but there's quite a lot that I would love to comment on but I really feel I should resist commenting directly on the Indian electricity sector I know just about enough to be dangerous and naive given its sheer complexity. I thought what where I would should we say have greater legitimacy and knowledge is to offer some thoughts from the UK experience which has been a very interesting one with some major experiments along the way. It does I think underline how complex some of this challenge is but if we have what I'll do actually just run through a few critical points on the UK electricity journey. A brief conceptual detour where I wanted to set the underlying framing in a slightly wider context and then finally some thoughts about what I now call harnessing the paradox of decarbonization. So if we move to the next slide the UK has been on and can we have the next slide please. The UK and this goes back 50 years to when the UK was sometimes called an island of coal and a sea of oil and gas an unlikely candidate for deep decarbonization. We had 80 percent of our electricity came from coal which is the big black area and that stayed right through the next two decades and a little bit more. I incidentally did my PhD in the 1980s and I do certainly sympathize with the challenges of struggling with state-run systems. We had our central electricity generating board. Why did that change? Well partly because of a major political struggle provoked by a minor strike where it was realized that just because we had UK coal did not mean it was secure but political fallout from that left the government determined to undergo radical reform of the electricity sector which would break the stranglehold of the coal industry over our electricity system and it did so privatizing the system in 1990. That was done in a way that created a few separate generating companies and a national electricity transmission company and in a way that was deliberately designed to enable other players including the distribution companies to generate electricity and the yellow coming in there was what we call the dash for gas. There were other factors in that. That initial privatization had been based on the model of what's called a central dispatch pool so people would bid into the pool and that would set an overall price by balancing the collective supply and demand. There was a feeling that that wasn't actually radical enough why have a central pool and in 2000 we moved to what was called the new electricity market arrangements which basically did away with any sort of centrally managed electricity trade platform in favor of bilateral contracts between generators and suppliers. I'm not going to go into much detail. Sounded lovely particularly for those wanting to pursue liberalization philosophy to its limit. The result however was the balance of risks in the system basically meant the big generators brought up the supplier companies so that they were selling to themselves and hedged against the huge risks from fossil fuel price volatility and also any means of paying directly for or recouping capital investment costs really largely disappeared and I'll come on to that with the next couple of slides are those later steps because the key thing then was having apparently achieved a wonderfully competitive market. Can we have the next slide please? There was actually a significant concern that grew about whether it actually did of what we needed particularly in terms of capital investment needed both for security or for decarbonization so by 2010 we had governments that were very concerned about climate change pleased with the initial phases of electricity decarbonization of electricity reform declining prices but then the system had become very dependent upon gas prices which were going through the roof electricity prices started rising sharply again there was general unhappiness and also concern the market was being manipulated by the big vertically integrated companies. So there was then a big intellectual struggle between the sort of idealized theory versus emerging evidence. Two key things the climate change committee said given the capital intensive nature of low carbon investments whether it's nuclear or renewables there is no way that will happen in the current electricity market because the incentives are all broadly for gas investment if anything and the regulator often that I worked with at the time or shortly after rather was also concerned that actually the incentives for any capital investment were so limited compared with the incentives for cost cutting that there was a real danger of blackouts that there would simply be not enough investment to keep the lights on so that led to a major round of electricity market reform our second big reform with those multiple lanes that you see now what then happened with the next slide please um the um again this shows the trend from 2005 onwards where we came in with the electricity market reform one factor you'll notice in this is that we have an annual system obviously peaking every winter that that's the spikes um the way that that the electricity demand developed was influenced by fairly strong european policies on the electricity efficiency product standards and the light so that rather unexpectedly electricity demand started going down which obviously helps to keep the lights on during the period of transition and we never did have power cuts at all and then following the market reform you see this very rapid collapse of the cold generation at the top and at the bottom in the shades of green and the bottom blue you see a rather rapid rise of renewable energy generation nuclear is a main pretty pretty constant we've had one major nuclear contract which has been highly controversial for reasons i could say if people are so next click on this again because we'll then see what drove that that with the next click on this slide was electricity market reform which was actually multiple instruments it included a carbon price in the form of a carbon floor price because we were already in the european emissions trading system but it was deemed inadequate to give any security for on future prices um a key instrument was contracts for difference which is essentially long term fixed price contracts for renewable energy you will note this is still a basically privatized system but with a more active government role in shaping what markets meant so we've got a spot market its price is influenced by a carbon floor price and we have a long-term contract system which became auction so it was effectively a quasi certainly competitive structure for bidding for long-term contract fixed price contracts there were a couple of other elements i won't go into but the two i've mentioned were key to the changes that you see on this graph now i'll just show one other slide about the the recent impacts of the system on the next slide please um which does underline several points about this the here well again you see the annual variation this time of coal generation and you can see in more detail the collapse of coal in the last few years britney is kind of proud and to say what this has done to our co2 emissions they've halved since 1990 in the power sector uh overall uk uh co2 emissions are lower than a century ago which i guess there's something about our level a century ago um the the green is the european carbon price the red is the uk floor price and i just wanted to flag um quite interesting we did have some periods of moderately significant carbon price which only had a marginal impact on uh coal use that was whereas more recent increase has had a massive impact that is basically because the other things going on in the system the reduced electricity demand from improved efficiency combined with the growth of renewables through the contracts effectively meant that when we had a carbon price sufficient to switch the running order of gas and coal there was nowhere left for the coal to go it was simply no longer needed but that was a precondition of having the generation investment structure that enabled that to happen and i think the key key lesson here really is what in this liberalized electricity system what the carbon price does very effectively is influence operational decision through you know basically profit maximizing of the of all of the industries less direct impact on investment or on efficiency but that combination has really been key now why why is that why do i stress that if we could click on i think the next couple of slides please um because here's why i come to my conceptual detail next slide please um i think we need to be clear that electricity is a rather unusual commodity if you think about the demand side characteristics there's no product differentiation all electrons are the same the consumers generally don't don't express any interest other than have they got their electricity it's incidental not deliberative nobody has to go out and buy their electricity in fact most people most of the time are completely unaware of what they're really consuming except every now and again a bill arrives that may upset them it's continuous you can't force people to take decisions by threatening to cut them off if they don't make better choices and it's an essential service which also means it is politically very sensitive and it took a long time for us to get to the point of being able to have the kind of carbon prices we've seen they would have been politically completely untenable even just a decade ago and if one has a coal intensive system the price that gets fed through will limit the carbon carbon prices it's possible to have until you've got a more diverse generating system then also on the supply side if you click again there are other characteristics here these are mostly substantial long-lived capital intensive assets infrastructure for example in the world bank terminology the energy market only structure however is one that really is trying to run the system based upon the shortest possible marginal cost pricing from pretty much hour to hour it's great for operational efficiency but it's very hard to recoup capital investment you don't know really what the risk of all those future price fluctuations are and base load and low carbon plants are inframarginal so they're price takers the price is set by the fossil fuel plants operating at the margin so the irony is the fossil fuel plants can basically pass the carbon price on into the power price if you do have if you have liberalized the power price it's the low carbon generators that take all the risk of what may happen to the future carbon and fossil fuel prices because they don't have any influence on the price of the product if all they're doing is selling into the spot market and also the system is still dependent upon regulated networks so high risk high return is not really an effective option if you talk to oil companies they basically say we don't do electricity because we're not electricity companies we do high risk high return we're not interested in the sector which could be high risk low return because it's regulated at least through the networks and you have all of the additional uncertainties of externalities so I stress though is because we need to be a bit careful about thinking that just if we could introduce competition and the right carbon price all these problems would be solved no you would have created the conditions for solving the problems next slide please um and and I think this is my uh oh sorry so yeah this net you can skip over this it just stresses what I've said there's a big difference between operational efficiency and capital efficiency so my final conceptual point is to stress the way that I now think about this is there's a whole domain in here which is really reflecting the classical optimizing behavior of big agents who are calculating cost and benefits that's fine we all know that world it involves incumbents incumbents who like to try and control the system markets potentially put them under pressure with new entrants fine at the the higher level that took the first level here you do however have big satisfying behavior and the consumer's ends all the things the behavior of economics literature talks about habits biopia inertia and so forth and at the bottom level then you have what we call the transforming domain where you're really talking about much more major and deeper changes in technologies in structures in institutions lots of scope for innovation but again a lot of that does not happen purely because of private private markets and price signals or at least not ones designed on short run spot markets which is why in effect the transformations we've seen have involved major institutional changes and long-term contracts for the low carbon sources that basically are all capital where you what you want to do is minimize the cost of capital through certainty and revenues so that's if you like a conceptual way and this is drawn from a book that I wrote after I took time out from my career to think about what does this mean why is it so hard so we talk about these three domains and the corresponding policy so the final part and I'll be briefer in this third segment carry on please to the next two slides so just the paradox of electricity decarbonization you click again what actually I mean by that is that on the left is the characteristics of a normal system where you tend to assume you have established plant which is the cheapest and the issue is investing in new stuff which is going to cost a bit more first because you've got to pay for the capital on click again actually we are now in a very strange world thank you keep clicking on that short run marginal costs in our system at least are increasingly volatile they're fluctuating for many many reasons huge variation in gas price which drives it to an important degree but then lots of fluctuations in renewables because of the winds in carbon pricing which has been unstable markets etc so that's amplifying unpredictability at the same time the new sources are actually cheaper the incumbents and this is increasingly clear had a meeting with a cement company complaining that they were paying 135 pounds mega watt hour blaming it on renewables and said what do you mean renewables cost 40 pounds of a megawatt hour the real the challenge is why can the big why is it so hard for big consumers to access the new very cheap renewable energy sources that is a fundamental structure where certainly privatization helps but is not the only aspect unless it solves these other problems finally and very last slide where this line of thinking has actually led led me is to first of all recognize all these systems and that's fine that's fine um clearly and I was talking with China they're not going to make a leap through all of these stages at once at least getting strong third-party access for independent generators to contract with large consumers through the networks you know that's vital to starting to open up these systems but I think once one has got a basic structure of competitive incentives in the system it is well worth thinking about what kind of markets suit something which produces the same ultimate product of electrons but in almost every other way is completely different from conventional generation renewables are completely different their capital intensive zero marginal cost they fluctuate they require balancing they require roofs of networks and all of those things we are looking at a system which really tries to create a market in long-term contracts which would be zero carbon and therefore also not carry through all of the carbon price which would then start to squeeze down the old system which you still need for balancing purposes but increasingly that should become its only main function so on that note with a bunch of potentially fairly radical thoughts to throw into the mix I'm conscious I said nothing explicit about the Indian situation but maybe we can pick up some thoughts to the presentation itself in discussion I'll finish there thank you very much thank you Michael I all of them I think there went the simplicity I think you're the presentation I think highlighted many of the complicated points that are alluded to in the paper as to be determined a significant research agenda and my intergame theorist and political economy person really was quite pleased to see your discussion on what's different about electricity and then also the details of some of the instruments I'd like to come back to that in Q&A but just note one point that moving from the elegant simplicity of two principles into the details of how it gets done also raises the important point that the headwinds or that the tailwinds for this the pressures that your paper alluded to had better be strong and sustained and I think our next speaker is particularly well suited to discuss how has how does the current context of climate diplomacy climate change mitigation pressures the need for decarbonization the economic and financial integration that is relatively new to India or at least since the early 2000s how does that change the environment for reform so over to you sir Shri Arar Rashmi thank you thank you Jessica thank you very much and at the outset let me compliment both Akshay and Ajay for an extremely important and topical paper they have looked at some of the critical you know issues in the evolution of the power sector and they have given a roadmap for the kind of reforms that should take place in the Indian power sector in the context of climate change you know because they have linked it to the climate transition so so I will try and speak from that perspective whether the kind of recommendations which they have made how do they sit in the context of the climate policies which India has been following and the things that have happened in the power sector in India so so allow me to first highlight some of the you know current developments in the power sector and the the announcements made by the prime minister of India at Glasgow now as far as you know if you recall the 2015 NDC which was put out by India it had one of the it had three quantifiable codes and one of them was energy transition in the power sector it had a goal of setting up energy generation capacity electricity generation capacity to the extent of 40 percent of its total energy generation by 2030 later on 20 by after 2015 later on in the course of next two to three years they actually came up with a different quantified goal which was that of 275 gigawatts of actual electricity generation capacity from renewables alone now this was not there mentioned there in the you know the NDC is mentioned and they put out under Paris agreement and now you have heard India's prime minister at Glasgow he has raised it further to 500 gigawatts now so obviously there is some kind of a momentum happening in the power sector because of the political intervention it's not coming because of the market so there is certainly a possibility as Akshay points out in his paper that liberalization of the market may be able to you know steer the the distribution companies the generation companies and the transmission companies in a particular direction but will that be enough i'm not very sure so having said that let me also tell you what has actually happened in terms of the progress on the NDCs in relation to these energy transition goals now as on date this is the year 2020 the 21 the first year of the commencement of the Paris agreement as on date India has already achieved 38.2 percent of its electricity generation capacity compared with with its goal of 40 percent i'm sure the paper writers are aware of this now and obviously this 38.2 percent will be surpassed and they will go further and the 500 gigawatts energy generation capacity electricity generation capacity which has now been announced if that is taken into account i think the the total achievement may well be over 65 percent but that is entirely in terms of capacity not in terms of generation where actually the show pinches because the energy transition or the energy reforms in India have so far only addressed the supply aspect they haven't seriously looked at the demand aspects there have been some efforts and some very laudable and successful efforts for example some of you may have heard of something called a perform achieve and trade scheme under the you know energy efficiency act of the government of India and this is an act which lays down specific energy consumption standards for almost 1200 major units industrial units in India and they have all achieved this to a very large extent and they have achieved very substantial energy emission reductions because of this scheme so on the demand side also a number of good things have happened but obviously we need to do much more and how do we do that will that happen entirely because of liberalization i have a slightly different take on that why i say this is the sense that we have got and not only in India but i think this is true for environmental policies all over the world that it is the government regulation it is the primarily the statutory regulation which has actually initiated reforms in a particular sector if you want to achieve environmental gains and that is clearly visible in India power sector is a good example of that had the government not come up with this quantifiable target of 275 gigawatts of electricity generation capacity by 2030 in the year 2015 and well before that they had a goal of 20000 you know mega watts in their national action plan on climate change in 2008 if these goals had not been set by the government which were political goals i don't think the market would have moved to that extent and the second point that because of these specific quantifiable goals set by the government in the interest of a climate transition the the the actual prices of the the variable cost of the solar energy generation in India has fallen it has fallen below the cold prices and again this is something which is publicly known this has fallen but is that the final solution obviously not we certainly need much more and many more reforms but again i feel that liberalization alone will not be able to address this question because apart from the question of commercial cost addressing the issue of economical and commercial aspects of electricity generation we have now hit the wall in terms of grid integration costs and the the financial stress cost of the distribution companies which Aksha has talked about at length in his paper and these call for structural reforms not simply i mean reforms of led by the market these structural reforms will also come in contact with the political economy to which you have referred to Jessica these are political questions and they will need to be dealt with in that framework how do we do that i don't have obviously a solution at the moment but all i can say is that as far as the grid integration costs the issues are concerned they will need a quite a substantial element of a technological innovation we will need to introduce energy storage systems to be able to address the supply issues and meet the demand when the demand is at its peak fortunately because of the you know the the electricity generation from renewables and the the reduction in the at the transmission losses we have now a situation where the demand and supply is more or less equal so that's why you see even in the rural areas of India now 22 hours or 24 hours supply despite the fact that there are serious issues of energy access everybody doesn't have the similar or on the same level of access to energy but the energy which is available in the grid has gone substantially high and then the reliability has improved so that is the the real question as far as the future of the power sector development in India is concerned we will need to ensure that the the renewables are integrated with the grid and they call for technology energy storage maybe we will have to leapfrog to hydrogen at some point of time with the help of unfortunately i think we might have lost Shri Reshmi briefly and just in the middle of i think when he was bringing up an extremely important point about the continued role of government in shaping some of the development of renewables i want to pick up on that thread we do have a few minutes for discussion i know we're running slightly over time but if we could bring all the panelists together and then when Shri Reshmi is able to come back hopefully he'll be able to join us for those of you who are participating online you can ask questions in the q&a tab and i'll make sure that they that we take as many as possible to bring to the whole set of panelists so while i have you Akshay and Michael together on the panel i wanted to pick up on on two points that were in your presentations this point about the demand side so obviously the demand side is a critical source of force source of pressure for change source of pricing source of you know that that's the dynamic in the system but Michael you raise this point that electricity is different and so we're not necessarily going to see the illustration of this demand being shifted into renewable versus other forms of electricity but second when you were discussing the way that the incentives did work out to create a shift from coal oil and gas into renewables you also mentioned decreasing amounts of electricity demand the coal had nowhere to go which is quite different than i think the scenario that we're looking at in india so i wanted to ask you actually i do you have thoughts on how you know given some of these complexities and maybe this is the next version of the paper on how that demand side pressure for renewables specifically might be articulated or on the other side particular stumbling blocks or hard things that you you'd like to elaborate you and ajay would like to elaborate in in future work let me let me sort of just give you an example of the kinds of things that could happen on the demand side which currently can't and we feel that you know there is a whole universe of potential opportunity there that there is no incentive for anyone to try and optimize because of the way that the sector is structured i don't know if you've heard of this concept of flexibility aggregation so flexibility aggregation at the moment is a service that could be sold by third party providers to discons so what happens there is a disc this flexibility provider would go and install iot devices on on the machines in the part of an industrial process in various people say you know large companies can do this themselves but this could be done by a provider installing these devices at various points of an industrial process which use electricity in small and medium enterprises say in an industrial park the savings so it can turn on and off parts of the process depending on when the price of electricity is cheaper or more expensive uh at the moment uh discoms don't do this discoms are the buyers of the power they're the ones who would benefit from these iot systems being put in place there's no current provision for this to happen at all discoms are not able to share the upside so flexibility guy would come in and say we'll give you 20 percent we'll keep 20 percent we'll give you 80 percent of the saving allow us to deliver the service to you that just can't happen today so the the kinds of interventions that are possible on the demand side we don't even understand the universe of that in india at the moment so the the what we are saying is that the path of least resistance to unleashing these demand side interventions potentially is to allow discom to profit maximize where they will be then bound by either the legacy systems and a lack of incentive to actually do something plus they'll be positively you know bound by the profit model um you can't do for example you can't do virtual ppas in india at the moment so talking about contract for differences uh those are currently regulated by sebi now there've been some recent changes which will make it a bit easier but these are this we're talking about solving individual problems through regulation as and when they come up as opposed to leaving the the terrain open for participants to contract with each other to to to sort of come up with transactions and business models that are going to maximize profit for both for people on both sides of the equation so you know the the the difference between where we are in the u k and where we are in india so far that the the engineering of a specific process to get from where we are to where an ideal market might be would be so complicated to do that we do much better than let it let it for this to be opened up quite dramatically and for the for the role of the government to comment and control for market failure wherever it sees sees it as opposed to saying okay we understand this word completely and now let us build the solution and i think that i mean i think that that goes back to michael's point also that that what this does or what the shift into a more market driven ecosystem would do is create new opportunities necessary but not sufficient what opportunities will be seized and why would they michael do you have do you have thoughts on how thoughts or advice on which opportunities and which risks should be considered as we enter into this new opportunity space particularly in the context of what should be growing demand for electricity rather than the energy efficiency that was characterizing the environment in the u k yes let me just stress i i don't think there is any any uniquely right and perfect way that is then stable for regulating an electricity system i think what i sketched was an evolutionary process we solved one massive problem of you know much too much centralization and state control having solved that problem it created other problems that we then had to try and fix uh then new issue came on to the agenda notably decarbonization and it was clear that the structure we had wasn't well suited for that so um i certainly welcomed aches remarks and and emphasis i think upon state level programs you have to seize windows of opportunity and you have to learn from what they then show and you know the the the opportunity space they they may help to open up and be more specifically just a remark on the two other things one is i think uh raja and ragan rani's um comment i i never see the market system as an end i some people do and i think that's a real mistake markets are tools to achieve public policy goals uh very often they are the best tools though not always but if you don't have goals then and you don't know where you're trying to go you you probably won't get there um and i think the uk context you know bits of the infrastructure that i missed out were the legally binding climate change act that set concrete constraints on uh future emissions with the electricity system at the core and the pressure on the regulator which initially resisted a lot of this and said oh this might drive up costs for present consumers the the solution was to give the regulator an explicit legal responsibility for the welfare of future consumers including climate change achieving the the nationally mandated climate change goals um so you know that that that you've got to tell a privatized system where it needs to go and the role of market mechanisms within that um just on the demand side the other thing since you asked this is a just a fascinating area um it's very double edged um my initial forays in this area were very much around how come consumers waste so much electricity when they could save money and emissions by being more efficient uh and and that is still a big issue that's been substantially addressed through standards and that the indian performative trade uh i think has been a great a great example along with some of the other programs um but the positive side is around flexible and innovative consumers and commercial consumers looking to provide aggregation services flexibility procure low carbon electricity and that potentially is a good motivator as well so and none of that will happen unless you can open up the system and i think we have a number we have a couple of questions um that i'll come back to from the from the audience um about market system design that are that are for you michael but i just wanted to welcome uh should rush me back and see if you had any um you got cut off before you could conclude but i think in addition to the concluding words that you had one one question following up on michael's is where you know what do you see as the as the the critical steering points that we should still remain still keep a policy focus over to you absolutely thank you jessica and my apologies for losing the link certainly again this was something to do with the technological glitch here uh no the two other points which i was going to make one was on the issue of the you know prices you know reforms through a entirely based on a pricing system and the other and the the last point was on the resourcing the transition you know the financing the transition i'll make my points briefly and then respond to professor grau you know i do see that pricing is an extremely important instrument i mean it's a market instrument but i don't see this as an end in itself or the only possible way in which we can reform the markets in the private sector or the private sector reforms can be done through many other ways the reason why i say this is that the recommendation which the paper makes about carbon tax you know carbon taxes is an efficient instrument but it is not an equitable instrument when you look at the entire economy and different sectors of economy have different pace of development different resource requirements and particularly in a country like india where the energy needs are still rising you know it's not a economy which has a plateaued like those in europe or the world it's not an industrialized country as yet so its energy needs are growing the second thing is that the the other distinguishing factor which distinguishes it is that india lacks access to alternative energy sources unlike other countries which have plenty of natural gas or maybe other advanced technologies so indias currently is at a point of development where it suffers from you know the constraints of growing energy needs it has to meet and then it has no flexibility in terms of utilizing any other source so given this situation i think the use of carbon tax may penalize the economy much more raise the costs and make it costlier rather than making it least cost transition which i think the authors are referring to so we are not attempting a least cost transition if we impose a carbon tax we are perhaps going to mess with the system at the moment i would advocate a different kind of a model where we look at each sectoral demand and in each supply supply and demand constraints in that particular sector differently and india is already doing that actually you know there is a almost like there is a cess on code almost of six to seven dollars a ton there are one of the highest fuel taxes anywhere in the world is happening in india there is so there are all kinds of implicit tax sessions taking place is only that india has not combined this into a uniform single carbon tax but i think that's rational because the demands of different sectors are different the second point which i wanted to make was about financing again the the reference made to international asset pricing being the background or the context in which the power sector reforms should be carried out i think it's a little far-fetched because the problem with the power sector reforms or in the context of climate transition are different you know the all the energy transition needs in the context of climate in india have been met entirely with domestic finance at the moment and of course the 500 gigawatts goal is a stupendous goal it's almost like a five times jump in the current energy electricity generation capacity from renewables currently we are at a level of around 105 gigawatts it has to go up to 500 gigawatts in a matter of 10 years and beyond that if we have to reach net zero by 2070 of course the story will have to be totally different we had done some kind of a modeling in terry and we found that the capacity that has to be put in place for renewables will have to be in the range of five to six thousand gigawatts because the you know the the capacity the the actual effectiveness of renewable energy compared to coal and other electricity sources is much lower so the supply will have to be at a much larger scale so financing requirements will be extremely huge it's not simply a question of accessing the international market based on environmental norms the question is of the cost of the capital the cost at which the capital is coming is extremely there is an asymmetry here so that is why there is so much of you know discontent in the climate change negotiations process is not because the capital there is a lack of capital the capital is available but at what at what cost is the issue so climate transition in the power sector particularly will take place only if you are able to bring down the cost of capital so and then a country like India for example if it has to access the international markets it has to hedge the costs and there is a hedging fund has to be created either at the domestic level or at global level there are other global financing models which will have to be created I think the green climate fund is not working again that is something which the paper has referred to I mean India is not looking at 100 billion dollars for financing its power sector reforms it has to come primarily from domestic sources and the international capital markets but at a cost which it can afford so the affordability of the cost and accessibility to the capital is a real issue here and I so we will have to address that also the last point which I wanted to make in response to Professor Grubb is that I think the way forward is to to incentivize the corporates to adopt more ambitious climate goals at their own level and there is a way of doing that it's not necessary to have a legislation or a climate change law in the country maybe some countries which are at a particular level of development can afford to do that but in a large federal country like India where the levels of development and the levels of climate vulnerabilities are different I think it will be difficult to go down that route we will need to create a sense of responsibility in the corporates and there is a business responsibility framework which is already in place I think we can perhaps legislate that with certain degree of flexibility and freedom to the corporates to design their own sustainability norms within a framework and then that's a way forward a lot of the corporates which are engaged with the international trade they are already exposed to these norms so I think they can take it fairly well and then the question of border adjustment of carbon taxes or such carbon taxes which some countries are considering I think those are questions can be addressed as we move along but putting them right at the beginning of the reform process I think will be slightly difficult politically I will try and address this political economy question maybe later depending on how you feel with your time constraints Jessica. So I think we're running actually already over time so I do want to close fairly soon but I just want to quickly summarize some of the things so that last point in the paper about the many details to be determined is definitely coming back out and I think we could spend at least several more hours and multiple papers on the research agenda for this but one thing is clear there are deep questions of institutional and financial design that are embedded in this two things are clear the world is changing the world is happening and we are evolving so we're trying to build this new regime even as it is necessary and needs to be implemented and in doing so we need to make sure that we build in mechanisms for the evolution for the flexibility that you mentioned Michael we have two questions from the audience that I think are starting to get at specific ways to build in that evolutionary capacity that I want to close with and just ask you to be brief one of them regards the insolvencies of energy suppliers so off-gym tries and gets a supplier of last resort to take over the role of the insolvence supplier so that we can actually have reasonable turnover could you throw light on how this system has played out and whether you think it might be applicable in the Indian context second is the separation between spot markets for operational time scales and a longer term regulated green power pool as a mechanism for in an evolving way incentivizing the right mix of investments now I know these are probably just two of the ways in which this evolutionary capacity is built in but if you could comment on those and any other key lessons or advice you have on building in the evolutionary adaptive capacity to experiment in the new policy space that seems to have opened up we'll leave you with the last word but also ask you to be brief because we are over time thank you sorry Jessica was that a question to me that was for you sorry about that I mentioned Michael very early on in the in the last speaker because you know the Indian context is so different as speakers have stressed but the first of those was was well I guess they were at least the first a very UK specific thing for those not familiar I mean to some extent the UK story has been a lesson in you know be careful what you ask for you might get it and discover it has things you didn't think of so in terms of that question about insolvency of energy suppliers for those not not familiar we had a metric about the number of new entrants into the system and you know the rate of switching of customers saying oh I don't like this supplier I'll contract with another supplier and and it kind of worked we got lots and lots of new companies coming in at the supply end of the system dozens of new companies entered that would sell you electricity and many of them actually could undercut the incumbent players that were big vertically integrated companies etc and the rules were changed to enable this rush of new entrants great for competition great for churn what actually happened over the last year was gas prices have gone through the roof I mean really very high that of course is a phenomenon that's a global phenomenon not just UK but for some reasons the UK was perhaps more exposed now electricity system was very exposed and basically all of these small suppliers were locked into at least year-long or other contracts with their customers and they went bankrupt simple as that the last three months in the UK have just been every day a new company has gone bankrupt because it was a kind of we'd lowered the entry barrier so much that anyone could come in without any resilience against the kind of fluctuations that you get in the energy world the the the safeguards so to speak well obviously people had to still be supplied the safeguard was kind of ironically the hope that the big integrated companies would take up those customers and for a while they did we also had a price cap because of political concern and accusations about the big players manipulating prices and poor customers particularly being the least inclined to engage competitively so we basically established a price cap on standard tariffs and that of course exacerbated the fact that a lot of companies just went bankrupt because they couldn't cover their costs so now the regulator is having to rapidly raise the price cap in order to make it even conceivable for any player to pick up these stranded customers so it's been quite a mess on the other thing the green power pool I think that's a topic for another day it's not something implemented it's one of our research proposals but it is grounded in the in this increasing sense that we're talking about two different electricity systems here renewables are just so different from a fossil fuel powered system the same market rules are just going to be inefficient if you try and apply exactly the same rules to both in in in my view that was the conclusion I reached but I'll say no more about that because I don't know how much of that is relevant to the Indian context but do experiment the capacity to evolve have a flexible independent regulator but give them the legal tools to go beyond just short-term cost minimization because that's been part of our problem is that obsession with short-run costs in what is a long-run system so I think those are those are good parting words thank you professor grub but the authors of the paper always get to close so actually now that the next five years of your research agenda have been laid out in in some form um over to you for for any conclusions or reflections but you know there's there's one of the great things about a session like this is it's a fact finding and a and a sort of topic listing session for for us there's no question that there are a very large number of issues of detail and as I said in the beginning what we're trying to do is is provide an envelope within which we look at some of these things which is significantly different from where we are today and I think that you know the solutions that a lot of the solutions that that that have been spoken of are to our mind tinkering with the system and making it slightly better here or there rather than changing the incentives quite significantly within the system as a whole and I think a lot of these issues if you were to think of it to a market lens and there's no question that one of the things to do is to look at what happened in the UK and to learn from the mistakes and to design some of these issues that came up in the evolution into the system but issues like cost of capital for example I mean there is no question that cost of capital will come down in a system where your off takers is the salt where your contracts are banned and those will be the case if you have you know private to private transactions there's also you know also the issue of price as long as you have cross subsidies to the extent that we do we can reduce the price of scola as much as we want but the commercial customer is still doing the same not because they're the cash cow in the system so I think that the point that we're trying to make is that we need to shift the lens we need to shift the lens at looking at a state driven solution to looking at a more market driven solution clearly with the involvement of this of the state to correct for the various kinds of market failures that that will come up that will arise and it is exactly sessions like these that will help us understand what the scope of those are and and put them onto our list of future things to look at but you know I've been really really grateful for the remarks and the comments it's been enlightening and I really hope to be able to continue this discussion with each of you in different projects thank you very much well now since we're exactly half an hour half an hour past time I think what we need to do is have an entire day devoted to different pieces of this and I would encourage also looking at lessons from Latin America from points east and west as well I think that you know the demand side signal for more details particularly for for all of the participants who stayed on over time the demand side signal for more details on how to seize this opportunity that's important for India and also incredibly important for the world and I do want to stress that is very clear I wish that I could invite everyone out into the lobby to have coffee and continue to argue with each other one of the nice things it's a very global panel very global audience one of the downsides is when we close the meeting the meeting is closed but to be continued and I am looking forward to hearing more of these ideas fleshed out and I'm very happy to have had the opportunity to guide this you know beginning conversation which raised so many questions and to be taken you know back 20 years into the early days of my introduction to the complexities of federal policy making in India thank you so much thank you thank you thank you so much jessica thanks thank you thank you