ARTICLE IN PRESS

Energy Policy 38 (2010) 1537–1547

Contents lists available at ScienceDirect

Energy Policy
journal homepage: www.elsevier.com/locate/enpol

The market for wireless electricity: The case of India

Ashish Kumar a,n, Ravi Shankar b, Kiran Momaya b, Sandeep Gupte c
a
Nokia Siemens Networks, 438 B Alexandra Road, Alexandra Technopark Block B, Singapore 119968, Singapore
b
Department of Management Studies, IIT Delhi, New Delhi 110016, India
c
Indus Towers, Building No. 10, Tower A, 4th floor, DLF Cyber City, Gurgaon 122002, India

a r t i c l e in fo abstract

Article history: A wireless revolution has transformed telecoms in India and in other emerging markets. The electricity
Received 31 March 2009 market, on the other hand, remains underdeveloped. We define Wireless Electricity as renewable
Accepted 11 November 2009 energy produced within a few hundred meters of the point of consumption. A wireless revolution in
Available online 9 December 2009
electricity would solve the problem of electricity deficit, empower people at the bottom of the pyramid
Keywords: and mitigate the environmental impact of bringing hundreds of millions out of poverty as the Indian
Mobile communications economy grows. Renewables are technically proven and economically viable in certain situations, but
Decentralized electricity their use remains peripheral. The stark difference in the diffusion patterns in telecoms and electricity
Renewables has been ignored by leaders in government, business and academics. We present common frameworks
to explain the different directions of reform in telecoms and electricity. We explain some of the
dynamics which prevent the diffusion of Wireless Electricity. We use a causal loop diagram to explain
the status quo in the off-grid electricity market and propose changes which will lead to the formation of
a market for Wireless Electricity. India has the entrepreneurial talent to develop this market—and the
largest number of potential customers. The world will benefit as a result.
& 2009 Elsevier Ltd. All rights reserved.

1. Introduction However, leaders in government, business and academics have

A paradox is unfolding before us. Wireless communication is
connecting billions of marginalized people to the rest of the
world. But they remain deprived of other basic needs such as
reliable electricity.
The One Laptop Per Child initiative was launched with the
laudable objective of creating educational opportunities for the
world’s poorest children. Similar initiatives followed, including
one sponsored by the Government of India.1 We are gripped by
the possibility that digital technology will help us to ‘‘leapfrog’’
deficiencies in basic services. This leads us to be inspired by goals
such as giving each child a hand-cranked laptop for $20, when
what might be more helpful is a hand-cranked light for $2.
With more than four billion mobile subscribers worldwide, the
mobile phone is the most successful electronic gadget of all time.
An ecosystem of telecom regulators, operators and vendors has
pulled off a feat which was unimaginable even two decades ago.
n
Corresponding author: Tel.:+ 65 90732051.
E-mail addresses: ashish.kumar@nsn.com (A. Kumar), ravi1@dms.iitd.ac.in
(R. Shankar), momaya@dms.iitd.ac.in (K. Momaya), Sandeep.gupte@industowers.com
(S. Gupte).
1
See http://laptop.org/en/vision/index.shtml for information on the One
Laptop Per Child project (accessed 9 November 2009). Also see http://www.ft.
com/cms/s/0/ecf1eae2-f092-11dd-972c-0000779fd2ac.htmlFinancial Times web-
site accessed 9 November 2009, ‘‘India to Follow $2000 car with $20 laptop’’.
not applied the lessons from this diffusion to other areas. They
seem to miss the most important lessons from the success of
wireless communication. The water divide, sewage divide,
schooling divide or the electricity divide have not captured the
imagination as much as the Digital Divide.
We believe that the primary divide which needs to be bridged
is that of energy. No research is needed to prove this. As
Schumacher (1973) commented, ‘‘it is impossible to get away
from [the energy problem]. It is impossible to overemphasize its
centrality. It might be said that energy is for the mechanical world
what consciousness is for the human world. If energy fails,
everything else fails. As long as there is primary energy—at
tolerable prices—there is no reason to believe that bottlenecks in
any other primary materials cannot be either broken or
circumvented.’’
In this paper, we have attempted to examine the possibilities
from applying wireless models to the electricity market in India.
We define Wireless Electricity as electricity produced within a few
hundred meters of the point of consumption, through renewable
means including solar power, wind power and fuel cells. We suggest
the use of the phrase Wireless Electricity to emphasize that the
disruptive and beneficial wireless models of the telecoms market
can be applied very well to electricity market.
Especially in the current crisis when governments are
competing to implement stimulus plans, we believe that small
stimuli (see Section 8) to create a wireless electricity market can

0301-4215/$ - see front matter & 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.enpol.2009.11.037
 ARTICLE IN PRESS
1538 A. Kumar et al. / Energy Policy 38 (2010) 1537–1547
open up completely new vistas for economic growth. India has the
entrepreneurial talent to develop this market—and the largest
number of potential customers. The world will benefit as a
result.
2. The Telecoms and electricity markets in India: A study in
contrasts
2.1. Underperformance in the electricity market
The Indian Ministry of Power has a goal of ‘‘Power for All by 2012’’.
According to the Ministry’s website, a blueprint has been drawn up
and strategies of power generation, transmission, distribution,
regulation, financing, conservation and communication are in place.2
According to the country’s Central Electricity Authority (2007), there
was a programmed set of activities for ‘‘accelerated development’’ of
the power sector. Many government statements and publications
promise light at the end of the tunnel.
On the other hand, the National Sample Survey Organization
(NSSO (2007) and NSSO(2003)) found that only 55% of rural
households used electricity as the primary source of lighting. 92%
of urban households had this privilege.
Kalam and Rajan (1998) observed that ‘‘all the (enabling
infrastructures) depend crucially on energyyWhen we look at the
power situation in India, ‘depressing’ and ‘gloomy’ appear to be mild
words to describe it.’’ Kalam later served as President of India.
Gupta et al. (2005) of McKinsey pointed out that ‘‘electricity is
such a chronic problem [in India] that manufacturers endure an
average of seventeen major power disruptions every month, accord-
ing to the World BankyIndia’s greatest energy challenge is meeting
the demand for electricity. Given the current pace of economic
growth, the country must add about 90 gigawatts of power
generation capacity by 2012—nearly doubling today’s capacity of
115–120 gigawatts. That’s the equivalent of duplicating the United
Kingdom’s entire generating capacity in just seven years.’’
Bhattacharya and Srivastava (2009) have described some of
the challenges facing the Indian government’s rural electrification
program.
When telecom networks are designed, it is common to provide a
2% ‘‘grade of service’’. This means that in the ‘‘busy hour’’, up to 2% of
the customers who try to make calls will not get access to the
network on the first attempt. Though electricity is a more mature
industry, no such criteria seem to be applied when, for example, a
ministry talks about ‘‘power for all’’. There is only one wire taking
electricity into most homes and establishments, that wire is owned
by a monopoly with a poor customer service record.
India had 35% of the world’s population which did not have access
to electricity in 2002 (Modi (2005)). The per capita electricity
consumption in India in 2007 was 480 KWh per year—less than the
average for Africa, about one fourth of China’s figure of 1820 and less
than one- fifth of the world average of 2597) (IEA (2007)).
There is a clear and present need to use disruptive business
models to deliver electricity to millions of people who have been
kept in the dark.
2.2. Growth of the telecom market
The operator Bharti Airtel, with a mobile subscriber market
share of 23.5%, has a market capitalization of $25 Billion.3 This
2
http://powermin.nic.in/indian_electricity_scenario/power_for_all_target.
htm, website of the Indian Ministry of Power, last accessed 9 November 2009.
3
http://www.airtel.in/wps/wcm/connect/about +bharti + airtel/Bharti+ Airtel/
Investor + Relations/ Bharti Airtel Investor Relations web page, last accessed 9
November 2009.
capitalization has resulted from both mobile and landline
operations, but in the Indian financial year 2008–2009 mobile
operations contributed 81% of consolidated revenue, and grew
faster than the latter. In May 2007, Vodafone invested about US$
10.9 Billion to buy a 52% stake of Hutchison’s (mobile only) India
operations, at a time when Hutchison had an approximately 18%
share of the Indian mobile market.4 Such large market values have
been created from zero in 1995.
Clearly, a lot has changed in the Indian telecom market since
1990s, when having a phone at home was a mark of privilege.
Competition and mobile communication have driven this change.
An eco-system of consumers, operators, phone and equipment
vendors, system integrators, retailers, advertisers and others has
benefited immensely from it. As in other countries, mobile phones
have also made a huge impact on the social fabric.
The mobile communications market in India has grown at a
scorching pace since 2003, after about eight years of slow growth
plagued by regulatory disputes. Many observers (including
Prahalad (2004)) trace the inflexion point to the operator
Reliance’s attractively priced Monsoon Hungama offer in 2003.
The incumbent operators met the challenge and by 2007 India
was adding about 8 million subscribers per month, which was
more than the ‘‘net adds’’ in the China market in some months.
Indian mobile operators thrive in a poverty-stricken environment
in which their Average Revenue Per User per month (commonly
called ARPU) figures are among the lowest in the world. The Telecom
Regulatory Authority of India (TRAI (2009)) estimated ARPU levels in
April–June 2009 to be 185 Indian rupees (less than 4 US dollars) for
operators using one type of technology, and 92 Indian rupees (less
than 2 US dollars) for those using another type.
Apart from economies of scale and the inherent advantages of a
wireless model, innovations like prepaid charging, low-denomination
electronic top-ups and site sharing have helped operators set up a
virtuous reinforcing cycle of decreasing costs and increasing penetra-
tion. Voice call rates which started at about 44 US dollar cents in 1995
had reached levels of 1 US dollar cent for on-net calls in 2008 and
they continue to erode sharply in 2009.
The number of mobile subscribers was about 465 million at the
end of September 2009.5 Subscriber figures do not account for the
impact of multiple and inactive SIM-cards. However, given the extent
of poverty (see Section 4.1), it is very clear that wireless communica-
tions is the one innovation which is penetrating into the true Bottom of
the Pyramid (BOP). This is a rare spectacle unfolding before us and a
rare opportunity to derive important business lessons.
Other wireless services have shown promise. Federation of
Indian Chambers of Commerce and Industry (FICCI) and Price
Waterhouse Coopers (2008) have reported on the extremely rapid
growth of two other wireless services in India: Direct To Home
(DTH) Television and FM Radio. The E- Choupal system of the
Indian company ITC, empowers farmers by giving them demand-
side information (Vachani and Smith (2008)). What makes
E-Choupal workable is the use of satellite communication.
3. Utility reform: Different strokes in telecom and electricity
The need for reform in the electricity market has been felt and
large scale reforms are under way in India (Dubash and Singh
4
http://www.vodafone.com/start/media_relations/news/group_press_releases/
2007/vodafone_announces2.html Vodafone website, last accessed 9 November
2009.
5
Mobile subscriber data is available from the Association of Unified Telecom
Service Providers of India (http://www.auspi.in/search-subscriber.asp, AUSPI
website accessed 28 October 2009) and the Cellular Operators Association of
India (http://www.coai.in/statistics.php COAI website accessed 28 October 2009).
 ARTICLE IN PRESS
A. Kumar et al. / Energy Policy 38 (2010) 1537–1547 1539

(2005)). However, telecom and electricity reforms have followed nodes which generate the properties which meet the needs of
very divergent paths with very different results. consumers, coverage nodes which take the network within
As shown in Fig. 1a, a service network can be viewed as a reach of consumers and it has to have transport elements which
collection of capacity, transport and coverage elements. A connect capacity and coverage nodes to each other. Figs. 1b and c
telecommunication network handles voice and data traffic, an show how telecom and electricity networks were structured pre-
electricity network handles voltage and current, a bank ATM reform in India. Interestingly telecom networks are ‘‘duplex’’
network handles data and paper transactions and a water supply (two-way) networks, while electricity networks are mostly
network handles flows of water. The network has to have capacity ‘‘simplex’’ (one-way).

State Market State Market

Service Entity State Telecom Department

International Long Distance carriage

National Long Distance and
Takes the service to the point

junction nodes at which the last

Short and Medium Range –

Generates ability to service

coverage and capacity nodes

customer’s phone, including

Ability to handle traffic (voice

mile connections converge
of service consumption.

Carriage of traffic between

and data) in the network

Last Mile Access to the

Transport:
Customers

Customers
to other networks
within the network

Long Range –
Coverage:

Transport:

Coverage:

Capacity:
Transport:

Transport:
Capacity:

customers

State Market State Market

Consumers Choose Type of Acces, and Operator

Fixed Operator 1
NLD and
State Electricity Board Coverage Transport Capacity ILD
Operator 1

Mobile Operator 2
Carriage of from capacity node

Ability to meet electricity load

nodes at while the Last Mile

to customer coverage nodes

Customers
customer’s load, including

requirements of customers

Coverage Transport Capacity

Last Mile Access to the

connections converge.

Transport:
Customers

National grid
Coverage:

Capacity:
Transport:

NLD and
ILD
Mobile Operator n Operator m
Coverage Transport Capacity

State Market
Distribution Trans GenCo
Co Co1 1
Capacity

Capacity

Transport:
National grid
Customers

Coverage

Trans GenCo
Con m
Capacity

Capacity

Reform Focuses on Supply Efficiencies;

Consumer Does Not Choose “Operator”

Fig. 1. Different Strokes in Utility Network Reform in Telecom and Electricity. (A): Building Blocks of a Service Network, (B): The Pre-Reform Telecom Network, (C): the Pre-
Reform Electricity Network, (D): the Post-Reform Telecom Network and (E): the Post-Reform Electricity Network.
 ARTICLE IN PRESS
1540 A. Kumar et al. / Energy Policy 38 (2010) 1537–1547

Fig. 1d shows how wireless models have brought disruptive
changes to telecom. Consumers have a choice of operator and
operators have been able to decimate distribution costs.
It is common to state that there has been ‘‘sweeping reform’’ in
electricity markets. Fig. 1e shows how two fundamental aspects
have not changed. Firstly, the ‘‘vertical unbundling’’ has not
given a choice to the consumer. Secondly, electricity retailers have
not found a solution to many problems of distribution in countries
like India: transmission losses remain high, theft of power is
common, acquiring right of way for new lines is difficult and titles
to land are often not clear. An official of the Asian Development
Bank noted in 2003 that 55% of the power generated was billed by
utilities and 41% was paid by consumers (De Jonghe (2003)).
The Economist (2000) had hoped that ‘‘in a few decades’ time,
the notion of a micropower unit in every home and office may
even have come to fruition. The whole conceit that electricity is
generated far away from where it is consumed may then come to
seem as quaint as the idea that every phone has to have a
wire attached.’’ Taxation, standards and regulation were pointed
out as the three steps holding back a revolution based on
micropower.
Economic Growth in India
7.00
6.00
Annual Growth (%)
4. The case for wireless electricity
4.1. India rising – but poverty persists
Sengupta et al. (2008) have summarized the economic growth
of India since 1920 (see Fig. 2). Rapid strides were made after in-
dependence in 1947, but ‘‘progress made on two fronts—aggregate
economic growth and reduction in mortality—offset each other in a
kind of developmental irony that most developing countries go
through.’’ A combination of factors has now created a dynamic and
vibrant market-driven economy. The economy shows clear signs of
being on an irrevocable growth track.
India’s Planning Commision (2006) noted that ‘‘The average
growth rate (from April 2002 to March 2007) is highest growth
rate achieved in any plan period. This performance reflects the
strength of our economy and the dynamism of the private sector
in many areas. Yet, it is also true that economic growth has failed
to be sufficiently inclusiveyFar too many people still lack access
to basic services such as health, education, clean drinking water
and sanitation facilities without which they cannot claim their
share in the benefits of growth. ‘‘
Fig. 3 shows how Indian society has churned between 1993–94
and 2004–05. Sengupta et al. have used consumption expenditure
based on the surveys of the National Sample Survey Organization
(NSSO) on employment–unemployment and consumption exp-
enditures. They have classified households as explained in Table 1.
Definite progress has been made in poverty reduction, but about 77%

5.00 of India’s population still had a daily per capita expenditure of rupees
4.00 twenty or less (United States dollars 2.2 at purchasing power parity).
Faster progress in poverty reduction in India—which still has
3.00
the largest number of poor in the world—can create a virtuous
2.00 cycle of ‘‘inclusive growth’’ which can serve as a model for many
1.00 other countries.
0.00
1920-47 1950-60 1960-70 1970-80 1980-90 1990-00 2000-05 4.2. The bottom of the pyramid
-1.00
Years
GDP Population Per Capita Income CK Prahalad (2004) created the BOP paradigm. Drawing on
various examples, he argued that ‘‘when the poor at the BOP are
Fig. 2. Economic Growth in India (based on Sengupta et al. (2008)). treated as consumers, they can reap the benefits of respect,

Distribution of Population by Poverty Status

2.70 2.60 4.00
15.50 16.70
19.30

32.40
% of Population

34.80
36.00

18.80
19.90
19.00

19.20
17.30
15.40
11.50 8.70 6.40

1993-94 1999-00 2004-05

Year of Survey
Extremely Poor Poor Marginal
Vulnerable Middle Income Hi g h Income

Fig. 3. Distribution of Population by Poverty Status, 1993–94 to 2004–05 (based on Sengupta et al. (2008)).
 ARTICLE IN PRESS
A. Kumar et al. / Energy Policy 38 (2010) 1537–1547 1541

Table 1 (and in other developing countries), the first communication device

Classification of Indian Households By Consumption Expenditures, from Sengupta
et al. (2008).
Type of Criterion Met Daily Per Capita
Household Consumption
Expenditure (US$, PPP)
Extremely Monthly Per Capita Consumption 1.0
poor expenditure (MPCE)r 0.75 times
Poverty Line (PL)
Poor 0.75PL o MPCE rPL 1.3
Marginal PL oMPCE r 1.25 PL 1.6
Vulnerable 1.25 o MPCE r2PL 2.2
Middle 2PL oMPCE r 4PL 4.0
Class
High MPCE 44 PL 10.2
income
group
Note: Poverty Line was Rs. 346.2 for rural areas and Rs 514.0 for urban areas (1 US$
PPP =9.12 rupees )
choice, and self- esteem and have an opportunity to climb out of
the poverty trap.’’
Karnani (2007) has presented a different perspective on the
BOP and he states that ‘‘the only way to help the poor and
alleviate poverty is to raise the real income of the poor. There are
only two ways to do this: lower prices of the goods that the poor
buy (which will in effect raise their income); or raise the income
that the poor earn’’.
4.3. Climate change fears
Diamond (2006) has linked the demise of some civilizations to
their disregard of environmental conditions. Many of the environ-
mental issues he highlights in China apply to India as well. Stiglitz
(2007) states that ‘‘no issue is more global than global warming:
everyone on the planet shares the same atmosphere.’’
A key issue before the world is that India’s economic progress
will leave a carbon footprint. The per-capita energy consumption
of the more affluent layer of the Indian population was observed
to be causing CO2 emissions 15 times greater than the rest of
India’s population (Myers and Kent (2003)). On the other hand,
Indians see hypocrisy in comments made in developed countries
on the environment impact of their growth.6 The fact remains that
the economy is on a growth trajectory and it is definitely desirable
to continue to rescue hundreds of millions of people from
vulnerable levels of existence.
4.4. Beam me down: wireless as a distribution strategy for the BOP
Vachani and Smith (2008) describe three alternatives to
solving the problem of distribution to the BOP: taking cost out,
reinventing the distribution channel and taking a long-term view.
Mobile operators in developing countries build on all three.
Mobile telephony is the biggest success story in reaching out to
the BOP. Most observers do mention it in the context of the BOP, but
do not focus on the characteristics which helped mobile penetration
comfortably cross 23% in March 2008, in a country where 77% of the
population was recently estimated to live in vulnerable conditions.
From a First World perspective, the cell phone brought the power
of mobility to the consumer. For the vast majority of adopters in India
6
See, for example, an article from The Telegraph dated 5 August 2009 (last
accessed 9 November 2009): http://www.telegraph.co.uk/news/worldnews/asia/
india/5977599/India-attacks-British-and-Western-hypocrites-over-cutting-emissions.
html
and the only one available is the mobile phone. Wireless distribution
drives services to the poor in several ways.
Firstly, it saves the cost of the wire, which can be substantial in
‘‘coverage dominated’’ scenarios (compared to ‘‘capacity dominated’’
scenarios). Secondly, it solves the problems of ‘‘right of way’’: it
reduces interaction with multiple government departments and
complex negotiations with private parties in the absence of clear
land titles. Thirdly, it makes competition possible—beyond a point,
laying wires to households in the same locality is less feasible for
competing service providers than accessing that locality over the air.
Fourthly, faster rollout means quicker payback for operators.
Fifthly—and many observers miss this point—wireless microwave
radios are used to connect network base stations to one another and
to the network core. Without this wireless transmission of mobile
‘‘backhaul’’ traffic, the mobile telephony revolution would never have
happened in emerging markets.
To put these dynamics in perspective, consider the results
achieved by Bharti Airtel. Its latest annual and quarterly financial
results show that ARPU from mobile subscribers is about one
fourth of that from fixed line subscribers and yet both divisions
have roughly the same Earnings Before Interest and Tax (EBIT) as
percentage of revenue (see footnote 3).
4.5. A blind spot in policy formulation
In spite of the facts presented till now, there is no visible,
urgent and disruptive strategic initiative to replicate the success
of wireless models in the Indian electricity market.
Sachs (2005) has listed energy systems for remote rural areas as
one of the essentials for ending poverty. Prahalad (2004) has
described the case of the rural energy finance company E+Co, which
works to develop wireless electricity as we have defined it. However,
the company had reached 200,000 people after ten years of effort in
twenty countries. Clearly, there are some dynamics which prevent the
large-scale deployment of wireless electricity.
5. The economics of wireless electricity
In this section, we summarize our learning from our practical
work on renewables for the mobile networks in the Indian context.
Fig. 4 shows our proposed solution matrix for electricity
consumers. For those with reliable access to the electricity grid,
this is the preferred solution. Inverter- battery combinations are
proposed for those who have some grid supply and run
applications which are intermittent enough for the battery to
remain charged.
With spiraling economic growth, many electricity consump-
tion points are now placed in areas where the grid supply is less
than four hours a day! Some of these points, like mobile network
base stations, hospital intensive care units (ICUs) and cold storage
units are 24  7 operations. They are powered by diesel
generators because of the pressing business need to roll out
services. Diesel generators (DGs) are considered a proven and
practical, while renewable energy solutions are still viewed as
exotic and infeasible.
However, in data from one pilot solar–wind–DG site which has
run successfully since December 2005 shows the DG runs for only
five hours a day and diesel fuel expenses have been cut to one
third of what they would have been on a conventional DG-
powered site.7
7
The site was set up by Bharti Airtel in Keonjhar district of Orissa. It was
maintained by Nokia Siemens Networks from December 2005 till September 2007
 ARTICLE IN PRESS
1542 A. Kumar et al. / Energy Policy 38 (2010) 1537–1547

24

Renewable
Mobile Network
BTS, Hospital Energy
ICU, Cold Sources
Storage Unit Hybrids

Number of Hours of Use Per Day

Grid
Hybrids Supply
Fan
Inverter
and
Battery
Light

Diesel
Water Pump
Generators

0 24
Number of Hours of Grid Supply Per Day

Fig. 4. What’s The Good Fit? Suggested Appropriate Solutions from the Consumer’s Viewpoint.

We have shown that based on actual cost data (see Appendix Total Cost of Ownership
2), the payback on a solar–DG hybrid solution can be less than five 250,000
years. The results are shown in Fig. 5. Essentially, the solar- DG DG
Solar- DG
solution entails a high capital investment but minimal operational 200,000
expenditure (it also calls for the replacement of a large battery
every three years).
NPV in US$

150,000
Interestingly, this is the payback scenario when the one-time
depreciation benefit for renewables is negated by the forced subsidy
on diesel. Fuel prices in India are capped to subsidize the vulnerable 100,000
sections of society. This subsidy creates one more barrier to the use of
renewables—which, ironically, have the potential to make the subsidy 50,000
less indispensable. When oil prices were at a high in 2008, the three
state-owned Indian oil marketing companies submitted a concept
paper to the Petroleum Ministry asking for permission to increase 0
1 2 3 4 5 6 7 8 9 10
diesel prices for industrial users by 64%.8
If there is a reasonably satisfactory payback in some situations, Number of Years Considered
what stops the deployment of wireless electricity solutions? Fickle- Fig. 5. Overall Cost Performance in One Case—Diesel Generator (DG) vs. Solar–DG
ness of power generation, theft of solar panels, space requirements Hybrid.
are among the issues. None of these issues are unsolvable. But there
are more fundamental issues, discussed in the next three sections. Mobilink in Pakistan and Grameenphone in Bangladesh have
emerged as a result.
Fig. 6 shows heavily simplified conceptual diagrams of the
inputs and outputs in wireless communication and in renewable
6. The case of the missing operator
energy. In telecoms, the mobile operator converts a set of inputs
into chargeable minutes of voice for consumers. This entity is
Microwave spectrum is a limited natural resource and it is
missing in the renewable energy market. There are equipment
considered natural for governments to auction it to licensees. The
providers, non-governmental organizations (NGOs), state
auction process and the underlying disruptive wireless technol-
renewable energy development agencies (REDAs)—but no real
ogy have created opportunities for entrepreneurs to challenge
service providers. The consumer of electricity is forced to buy
incumbents. Giant corporations such as Bharti Airtel in India,
equipment and manage the conversion of energy from other
sources (such as sun or wind) to units of electricity.
(footnote continued)
and then handed over to the company Bharti Infratel for maintenance. Information
is based on emails dated 3 November 2009 from Shirish Pawar, Circle Head of 7. Ignoring the long tail
Nokia Siemens Networks, Orissa.
8
Business Standard website , article titled ‘‘Diesel May Cost Rs 57 for Industrial
Users’’. http://www.business-standard.com/india/storypage.php?tp=on&autono= India has a Ministry for New and Renewable Energy Sources
45252, last accessed 9 November 2009. (MNES). Many reports highlight the achievements of the last
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A. Kumar et al. / Energy Policy 38 (2010) 1537–1547
Mobile
Network
SIM Card
Channel
Minutes of Mobile Billing &
Voice IT
Operator
Inter-
connect
Contact
Centre
Fig. 6. The Case of the Missing Operator: A Comparison of Inputs and Outputs in the Wireless Telecom and Renewable Energy markets.
decade as a case of India becoming a major power in wind energy,
specially mentioning the fact that India has the fourth largest
wind power generation capacity, and an Indian company, Suzlon,
is one of the largest wind power companies. About 8.8% of India’s
installed capacity now comes from renewable energy.9 The
question is: what has this done for the consumer?
Porter et al. (2007) have commented on distortions arising
from poorly designed tax policies. Capacities have been set up by
companies to get depreciation benefits—not to provide reliable
power to consumers. These capacities languish along the critical
path in the electricity network—the grid. A 2008 report stated
that in one state, windmills worth almost 1 billion US dollars were
idling because of poor integration with the grid.10 In July 2008,
the MNES responded with a Generation-Based Incentive to rectify
the situation (see footnote 8). Once again, this incentive aims to
help producers to sell their power to the same grid which has
been failing consumers for decades.
There is clearly a long tail (Anderson (2006)) in electricity.
Demand for electricity in households without air- conditioners is
of the order of 3 KW or less. Households which require only
lighting and fans can run on a few 100 W of supply. But the energy
establishment continues to build larger power plants and then
worry about transmission and distribution losses.
8. Discussion and implications
In this section, we first examine some relevant frameworks
from management literature. We then use a causal loop diagram
(CLD) to show the dynamics which explain the status quo, and
propose three steps to tip the equilibrium towards the diffusion of
wireless electricity. We also touch upon the implications for
academics.
8.1. A system in equilibrium
The dominant design (Utterback (1996)) of a product is ‘‘the
one that wins the allegiance of the marketplace, the one that
competitors and innovators must adhere to is they hope to
command significant market following.’’ The dominant design of
an off-grid electricity generator in India (and elsewhere) is the DG.
9 Subtitling to provide reading practice to 300 million viewers of
http://mnes.nic.in/annualreport/2007_2008_English/Chapter1/chapter1_1.
htm Annual report of the Ministry of New and Renewable Energy, available at the
ministry website. Contribution of renewables to installed energy generating
capacity contained in the Press Release dated 27 June 2008 on the new Generation
Based Incentive, available on the Ministry’s website. Last accessed 9 November
2009.
10
Business World website, article titled ‘‘Gone With the Wind’’, dated 1
February 2008. http://www.businessworld.in/index.php/Energy-Power/Gone-
With-The-Wind.html, last accessed on 9 November 2009.
1543
Solar/ Wind
System
Fuel
Cell
DG for
The Standby
KWH of
Electricity Missing
Controller
Operator
Billing & IT
Fuel
Channel
The dominant design may be determined by chance events,
technology or by social and organizational factors. Utterback
(1996) concludes that ‘‘no matter how a dominant design is
determined, it is doubtful that it can be recognized except in
retrospect.’’ Two important aspects deserve consideration here.
One is that ‘‘at the time an invading technology first appears, the
established technology generally offers better performance or cost
than the challenger, which is still unperfected.’’ The second is that
‘‘industry insidersy have abundant reasons to be slow to
mobilize in developing radical innovations.’’ These reasons
include economic investments in the current technology, emo-
tional binding to the status quo and encumbrance of managerial
attention by existing systems.
Christensen and others have defined some relevant frame-
works in the area of innovation (e.g. Bower and Christensen
(1995) and Christensen et al. (2006)). Christensen et al. (2008)
show that conventional financial tools are often misused to kill
innovation.
Fig. 7 is a causal loop diagram (Sterman (2000)) which depicts
the current scenario. While there is economic growth in the
absence of reliable grid coverage, there will be demand for new
off-grid electricity systems. Today, the market share between DG
systems (denoted by variables suffixed with ‘‘DG’’) and renewable
systems (denoted by variables suffixed with ‘‘REN’’) is tilted
towards the former. This is a system in stable equilibrium with
reinforcing loops supporting the status quo. Interestingly, the
diesel subsidy is one of the factors which kills innovation in
renewables—which may actually make the economy less reliant
on diesel if they are allowed to fulfill their potential.
Both the entrepreneurs and the state have systematically
ignored the facts that Wireless Electricity systems already
provide good returns in some cases, that they can help the
electricity market to leapfrog its current state and that they
can power overall economic growth while minimizing
environmental damage. The perceived low return from invest-
ment deters large-scale use by users, and the absence of volumes
prevents cost reductions in a country which is able to produce the
Tata Nano car.
Hurley (1967) had hoped that satellite TV could promote
literacy in India. The platform was available and the audience was
captive, but this did not visibly happen for decades. Now, an
organization called Planet Read now uses Same Language
the state-owned Doordarshan TV channels.11 A market model built
around the consumer’s acceptance of the content finally made TV
useful to combat illiteracy.
11
http://www.planetread.org/home.php Website last accessed 9 November
2009.
 ARTICLE IN PRESS
1544 A. Kumar et al. / Energy Policy 38 (2010) 1537–1547

Availability of Service
+
Providers, DG
+ Scale of
NETWORK EFFECT :
Operations, DG SUPPORT RESOURCES
ECONOMIES
OF SCALE
Diesel Subsidy
-
- Unit Cost, DG
Cumulative
Sales, DG + Experience, DG -

+ +
LEARNING EFFECT

+ Perceived
Reliability, DG
DOMINANCE OF
DESIGN
+ +
Economic -
Growth Rate Market Share, DG + Attractiveness,D

+ Demand for
New Off- Grid
Electricity
- Generators
Attractiveness,
Geographic coverage Market Share, + REN
REN + -
of grid electricity +

Perceived
Reliability, REN
DOMINANCE OF
DESIGN +

LEARNING EFFECT
+ + Cumulative
Sales, REN + Experience, REN Unit Cost, REN
- -
- Depreciation
Benefit
ECONOMIES NETWORK EFFECT :
OF SCALE SUPPORT RESOURCES

Scale of Availability of Service

+ Operations, REN + Providers, REN

Fig. 7. A System in Equilibrium.

Similarly, renewable energy systems have been around for
decades. They are promoted by state agencies, by industry profes-
sionals and by environmentalists. However their disruptive power is
undermined by the collective failure of this ‘‘closed college’’ to use
them to unleash a wireless revolution in electricity.
The government played a role in the development of the Indian
IT industry (Kapur (2002)) and it continues to play an active role
in regulating and promoting telecoms. In their study of the
transformation of the Chinese electricity industry, Hafsi and Tian
(2005) have noted that ‘‘(there) are enduring institutions in China,
some obvious and others unseen even to the ordinary Chinesey
law and order is a fundamental pillar of Chinese life. Once
adopted, the law must be obeyed and its enforcement is seen as
legitimate.’’ The growth of India has followed a different path
from that of China—a path of ‘‘organic growth’’ based on home-
grown entrepreneurship (Huang and Khanna (2003)). This con-
trast is visible in the wireless communications industry. China’s
mobile operators are State Owned Enterprise (SOEs), while India’s
operators are all privately owned, with the exception of
BSNL/ MTNL.
The framework for a large-scale market for wireless electricity
needs to be created by the government in consultation with
entrepreneurs. On the other hand, entrepreneurs need to see the
opportunity created by the dismal condition of the electricity
market, in India and in many other countries which have seen
robust growth in wireless communication.
For example, there will an estimated 500,000 base station sites
of mobile networks in India within a few years. Surely a small
fraction of these can be candidates for renewables. The wireless
communications market which adds about ten million subscribers
per month only added a few tens of thousands of subscribers per
month from the upper strata of society for three years. This is a
standard S-curve. Appendix 1 has details of our estimate of the
market potential for Wireless Electricity in India.
8.2. Three small steps
Three small but tangible steps can create a whole new market.
These steps do not need to wait until 2012 or 2020.
First: tax breaks on profits generated through wireless
electricity. Income tax breaks which reward large-scale renewable
energy operators for selling locally generated units of clean energy
to consumers would create a climate for change. In the causal loop
diagram, the weak stimulus provided by the depreciation benefit
would be reduced by more effective income tax breaks, similar to
the ones originally used to promote the Indian software industry.
Second: assurance of demand volumes from state-owned agen-
cies. State-owned entities are still large players in telecom, health,
agriculture and education. All of them are consumers of electricity. If
the market fails to generate large-scale demand for Wireless
Electricity, these state entities can step in and place orders in those
situations where they get good returns on investment. This will perturb
the stable system shown in Fig. 7, and the positive feedback loops will
increase the attractiveness of renewables.
Third: the system needs established corporates or new
companies to set up large-scale operations through which they
run renewable energy solutions and sell units of electricity to
 ARTICLE IN PRESS
A. Kumar et al. / Energy Policy 38 (2010) 1537–1547
consumers. Large DG manufacturing and servicing companies
need to get over their marketing myopia and seize the
opportunity presented by renewables. This is a critical missing
link, as we have explained earlier. Apart from mobile operators,
India has seen huge new industries built around service provision.
These include private security agencies, consumer banks and
courier companies. If the first two steps are taken, the resulting
scale of operations will create the ground conditions for viable
Wireless Electricity service providers.
8.3. Implications for the diffusion of diffusion studies
Rogers (2003) proposed that the rate of adoption of an
innovation is dependent on its perceived attributes, the type of
innovation decision, communication channels, the nature of the
social system, and the extent of change agent’s promotion efforts.
He stated that most innovations have an S-shaped rate of
diffusion, but the slope of the ‘‘S’’ varies.
In the marketing tradition, the Bass Diffusion Model (BDM) was
proposed in 1969 Bass (1969) and it has been the ‘‘main impetus
underlying diffusion research in marketing’’ (Mahajan et al. (1990)).
The stark contrast between the telecom and electricity sectors
in India (and other countries) highlights the fact that the S-curve
really applies only to successful innovations. Many innovations
continue to languish without experiencing an S-curve. Academic
research tends to follow successful innovations. Exhaustive
research is conducted on all aspects of the diffusion of mobile
communications. However it is difficult to even get data on the
number of subscribers who have reliable access to grid electricity
in India. Academics ignore a rich lode of material by focusing on
successes and ignoring failures.
9. Concluding remarks
Experience in Indian telecoms has shown that corporates and
the state can interact so that the policy framework supports
market growth, consumer rights and societal benefits. We hope
that with this article we have contributed to starting a similar
process for the electricity market.
McLuhan (1964) commented that ‘‘message of electric light is
like the message of electric power in industry, totally radical,
pervasive, and decentralized.’’ In India, the decentralizing effect of
electricity has been hampered by the two forces which blocked
the diffusion of telecoms in the pre-mobile era.
Firstly, being ‘‘wired’’ has meant that access to electricity is
through the grid (except for those who have captive power
plants). This is similar to the earlier situation in telecoms: some
entities had dedicated networks, but mostly communication
required a ‘‘line’’. The line had cost and effort associated with it
and the infamous ‘‘lineman’’ was the king. Secondly, the lines are
added and maintained by monopolies which are not exactly
revered for customer orientation.
These barriers of technology and market can be smashed in the
electricity market, just as they were in the telecommunications
market, by going wireless. Interestingly, an Indian sage and
reformer, Swami Vivekananda (1985), had something to say on
the subject of wireless electricity—before even the advent of
wireless telegraphy. Though he wrote in a different context, we
think it is relevant to quote him: ‘‘Taking the analogy of
electricity, we find that man can send a current only along a
wire, but nature requires no wires to send her tremendous
currents. This proves that the wire is not really necessary, but that
only our inability to dispense with it compels us to use it.’’
1545
Table 2
Split of Lighting Used in Indian Households (Source: Census of India).
Source of Electricity Kerosene Solar Other Any No
lighting energy oil other lighting
No. of House- 107,209 83,127 522 184 305 614
holds, In
thousands
Acknowledgements
The authors are indebted to VS Rawat, Vigneswara P
Ilavarasan, KK Roy, Anuradha Roy, P Ponsekar and Rajarshi Sen
for their inputs. Feedback from three anonymous reviewers
helped us to completely revise the manuscript.
Appendix 1. Market Estimation
According to the Census of India12, there were 193,580
thousand households in India in 2001, out of which 447 thousand
were houseless. Table 2 gives the split of source of lighting used in
various households.
From the census data, we can conclude that of the ‘‘non-
houseless households’’, most had some access to lighting.
Effectively only 167 thousand (614 minus 447) households did
not have some form of lighting. 72.2% of the population lived in
rural areas.
The National Council for Applied Economic Research, NCAER,
estimated 188 million households in India in 2001–02 and 221
Million in 2009–10.13
NSSO estimated that there were 17 Million unorganized
manufacturing units in India in 2001–02, out of which 11.9
Million were in Rural areas.14 In addition, the Ministry of Micro,
Small and Medium Enterprises stated that there were 12.3 Million
small scale industries in India in 2005–06, in its Annual Report
2006–07.15 Further, there are hospitals and health centres,
schools, telecom sites, bank ATMs, warehouses, cold storages,
government offices and other establishments which are consu-
mers of electricity.
We estimate that 60 Million households (about three-fourths
of those running on kerosene for lighting) and 15 Million (about
half the number of surveyed small and unorganized industrial
units) non-residential units make up the potential market for
wireless energy systems.
We assume that on the average, one wireless electricity system
caters to the demand for 10 residential units and 1 non-
residential unit. With these assumptions, we conclude that the
market potential for wireless energy systems is 21 Million
systems.
12
http://www.censusindia.net/ Website of the Census of India, accessed 2
March 2009.
13
National Council for Applied Economic Research (NCAER), The Great Indian
Market, available at http://www.ncaer.org/downloads/PPT/TheGreatIndianMarket.
pdf (accessed 2 March 2009)
14
NSSO , Report Number 477(56/2.2/1): Unorganized Manufacturing Sector in
India, available at http://mospi.nic.in/mospi_nsso_rept_pubn.htm (accessed 25
March 2009).
15
http://msme.gov.in/msme_ars.htm website of the Ministry of Micro, Small
and Medium Enterprises, accessed 25 March 2009.
 ARTICLE IN PRESS
1546 A. Kumar et al. / Energy Policy 38 (2010) 1537–1547

Table 3
Example Cost- Benefit Analysis carried out in 2007.

Base Case: Site Running on DG- 4 Hr Battery Alternate: Site Running on Solar- DG- 1 day Battery

DG Run Hours per day 18 DG Run Hours per day 6

DG Run Hours per year 6480 DG Run Hours per year 2160
Diesel consumption, lt/hr 2.55 Diesel consumption, lt/hr 2.805
Diesel cost, Rs/ Lt 40 Diesel cost, Rs/ Lt 40

DG life, hours 15,000 DG life, hours 15,000

DG AMC per month: DG AMC per month:

DG Servicing cost/250 h 2000 DG Servicing cost/ 250 hrs 2000
DG major repair/ 5000 h 17,500 DG major repair/ 5000 hrs 17,500

DG cost, Rs 230,000 DG cost, Rs 230,000

Diesel Filling cost/ month 750 Diesel Filling cost/ month (reduced 25%) 562.5

Annual costs Annual costs

Diesel 660,960 Diesel 242,352
Diesel Filling 9000 Diesel Filling 6750
DG servicing and repair 74,520 DG servicing and repair 24,840

Annual Diesel price increase 2002–07 11.12% 11.12%

http://www.iocl.com/Diesel_prices.aspx
(% by which higher than 2002–07 CAGR) 0% Capex on RE for 3KW load, Solar + Battery 2300,000
Capex net of depreciation benefit 1768,700

AMC/ MS of equipment other than DG 24,000 AMC/ Managed Services of system 60,000
Per AH cost of one cell 13
Battery cost (life 2 years), 600Ah 224,438 Battery cost (life 3 years), 1600Ah tubular 658,351
fld, 10% costlier
Annual increase in Battery and Price 10% Annual increase in Battery Price 10%

Appendix 2. Example cost- benefit analysis of a wireless
electricity solution, carried out in 2007
The case taken here is of an off-grid mobile network site which
would run round the clock on a DG in the base case and the
alternate case explored is of running the site with a solar PV array
of 5.1 KWp and a battery bank of 1600 Ah capacity. Table 3 gives
example values of the operational and cost data. The figures are in
Indian rupees (INR) and the cost levels are those prevailing 2007.
The initial capital expenditure on the renewable energy system is
very high (INR 23 Million). On the other hand, the running of the
DG is reduced and the resulting reduction in operating expenses
pays back for the capital expenditure as shown in Fig. 5.
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