“The Microgrid Revolution: Business Strategies for Next-Generation Electricity”: Research Seminar by Prof. Mahesh P Bhave, IIM Kozhikode
Prof. Mahesh P Bhave, visiting professor of strategy at Indian Institute of Management Kozhikode, delivered a talk on his book titled “The Microgrid Revolution: Business Strategies for Next-Generation Electricity”.
About the book:
Two hypotheses are proposed in the book:
a) sum of parts valuation of microgrids for a service territory surpasses the aggregate valuation. I argue, “split up the service territory of electric utilities into chunks, the size of microgrids, and then sell them off.” My argument is: the value of the split up parcels, when added together, surpasses the value of the overall service territory today.
b) sum of product-markets valuation for a territory – extension of the Ansoff matrix – also surpasses the aggregate valuation. If true, profound industry structure changes are indicated by these hypotheses.
Much has been written about the utility death spiral – as more customers deploy solar, the costs of grid electricity for all customers rise, and the more the costs rise, the more customers deploy solar panels. The demand defection leads to revenue defection, and eventually to loss of customers. Electricity demand is leveling off in mature electricity markets; the distribution utilities face an existential threat. What might they do? My book proposes some strategies.
What this means for India, for example, is that the state electricity boards may be split into suitable sized market chunks, and then privatized, that is sold off to willing new service providers. The state gains revenue and the private players can inexpensively offer more services to customers than today’s regulated and monopolistic, government-owned suppliers.
I argue that if the grid were largely comprised of a cluster of microgrids – a federation of microgrids – there would be at least a 20% reduction in global warming emissions that cause climate change, since we would need fewer coal-burning power plants. The Table of Contents, Acknowledgments, and illustrative paragraphs from the book are available on Google books.