Cloud Computing and Energy Use

 

Cloud has arrived to tech world as a storm. Google, Apple, Amazon, Microsoft, HP, Dell all have jumped on the bandwagon. Cloud music, cloud office and cloud storage everything is available on click of a button. Most of these services are offering free 2 GB to 10 GB of data storage. Google has gone one step further and launched the Chrome OS based computer which will store everything in the cloud. Companies are adding massive amount of server space everyday. Companies like Intel, EMC are manufacturing even more chips and storage devices to meet the demand.

Cloud is a good concept but I am worried about the fact that people are not giving up their current machines to move to the cloud. When the prices of storage devices are falling each day it has become affordable to buy 1TB or more of hard drive space. People are having multiple copies, backups of the same data on local machines, portable hard drives and now on the cloud. From my own example, I can say I am using 4 times the amount of storage space I need. It is not a big deal if storage is on a local machine but when you are talking about the cloud it is indeed a big deal.

Amount of energy needed to run these massive servers is enormous. Bad part is that these servers are running 24X7. Each server has 2 synchronized back up servers. So assume you create a 1 MB file on your computer. You take a back up on portable hard drive. You have synced your hard drive with cloud and cloud server itself has 2 back up servers so total storage you are using is 1+1+3= 5MB. When you are not working on these files, your computer and hard disk is not consuming any significant energy but that 3 MB in cloud is still running. It is still consuming power 24X7.

I am not sure how they manage the server energy cost and whether these servers are better in energy conservation than local machines but cloud is certainly creating more carbon footprint for you. Server energy consumption is just one part. Bandwidth needed to work on these files, uploading and downloading the files also takes a lot of energy. Storage in cloud plus the bandwidth needed to process them every time you access is too much for energy needs I guess. But industry is moving to the cloud because it offers many advantages over normal systems. So you have to find energy efficient way to run these servers and deliver the bandwidth. People are not talking too much about these implications and companies are not disclosing what will be environmental impact of their fancy new music in cloud services. Many will be surprised to see how much unnecessary emission these services can cause.

Signing off

Nikhil

Land Fights–Hurdle or Challenge

 

As India transforms itself from agriculture dominated country to industry power house the biggest problem that is coming up is land acquisition for industrial projects. There are many examples starting from Tata Motor’s Nano plant in West Bengal to recent protests against Posco Steel.

It is totally expected but industry is not looking at this as a challenge instead it is looking at it as a “Hurdle”. Instead of finding solution by themselves they are involving government into it and according to me this is the biggest mistake. As soon as you involve government into your business it is bound to face problems, hurdles and delays. Industry thinks they can simply offload the “dirty” work to government.

We see police force being used to oust people from villages, their livelihoods and their land, which they are using for past many generations. The clash is imminent but we have to find way to reduce the conflict, it can never be avoided.

The problem as I see currently is the pace at which industry wants to execute its projects. CEO’s and Chief ministers sign pacts and MOMs, so called one window clearance gives all clearances like environmental clearance, financing arrangements, legal clearances etc. Govt. issues ordinance and takes control of the land. The rate given is always less than present market rate so the land owners do not get any advantage of their land being at a prime location for some multi billion dollar project. Do you need any other reason for a conflict? And then there is the Politics. People are used to gain political advantages and often the losers of the game is the common man as we have seen in case of Tata Nano plant in West Bengal.

I see only one solution for the problem. Giving ownership to people. This may sound crazy but this is the way to go forward. Forming special purpose vehicle for the project and giving people the preferred stock worth value of the land  with some premium to existing prices. If you calculate land costs are generally less than 10 to 20% of total project costs so if you are giving preferred stock to the people you are not losing any control and they are earning fixed income for lifetime. Giving common stock is even better but I guess it is not possible for many companies.  (Difference between Preferred and common stock : http://www.investopedia.com/ask/answers/182.asp)

By this way people get to participate in your growth, get security of payment for lifetime. The biggest worry currently people face is losing their livelihood. It is far easier to convince people once you remove that worry. Once convinced they may help in reducing local issues and problems. I see two advantages of this approach. First if local communities are on your side there is lesser chance of disruptions in operations. Uninterrupted operation is very important for efficiency of the plants. Second brand value and respect for company will increase many folds. People will experience that company cares for them and not here only to stock their banks with cash. This will lead to faster execution of future projects and far less resistance from people.

So it is important that industry looks at this issue as a challenge not as a hurdle. It should consider this in the feasibility process and should tackle it on its own. Relying on government and thinking of outsourcing the dirty work will only lead to more clashes and failed projects

 

Signing off

Nikhil Parchure

Mad Rush for Solar

 

Everyone around the world is talking solar. Solar photovoltaic, thin film solar and other solar technologies. Few years back it was wind. Government all across the world are giving generous grants to companies that are setting up solar power plants.

India also started its solar mission where it is offering Rs17 (USD 0.35) per kWh for generation. And it wish to set up 10,000 MW capacity. Government is collecting this money by levying surcharge on coal and gas. The strategy looks nice on paper. You are charging surcharge on fossil fuels to encourage renewable energy sources. Everyone will think that is great strategy and government is doing an excellent job.

I beg to differ. You can “encourage” in many ways. Giving incentive to generate power is the most bad way to do it. What is going to happen is Companies are going to set up 100 MW projects, get into 25 year power purchase agreements and then sit back and relax. Half of the companies who have dived into the scheme are just opportunity hunters, looking to take advantage of price difference. As many companies start their solar plants what is India going to get is huge amount of power generation capacity of old soon to be outdated technology.  Renewable energy sector is changing rapidly and today’s impressive technology can be obsolete within few years. The proper approach is to incentive technology developers and equipment manufacturers and not power producers.

For example Currently to set up a 1 MW solar power plant Rs 15 Crore (USD 3.4 million) are needed. instead of giving grant to power producer Govt. can give grant to make equipment cheaper. This will encourage competition and developers will get choice of many technologies. Also you will not be acting against market to setup a market.

Such approach will allow innovation and will develop new technologies. According to me giving grants to old technology is the last thing to do. Considering speed at which Govt. approves projects, banks provide loans and problems faced in land acquisition, the technology selected to set up a plant will be old by the time developer passes all the hurdles. Throwing cash at problem such as global warming is not going to solve it. To solve such problems you need innovation and cutting edge technology. I fail to understand how current solar incentive schemes used all across world are going to achieve that.

 

Signing off

Nikhil Parchure