Biggest reason why India has a bright economic future

How the falling cost of solar energy is changing India's fortune

The world is changing all the time.

What is the benefit of being able to predict or knowing where some of those changes will happen? 

You can plan on how to take advantage of those changes, by positioning yourself well. After all, most people only react to changes and do not prepare themselves proactively for those changes!

Think of all those companies which thought the pandemic will be over in 3 months and life will be back to normal. It has been 9 months, and it does not look like things will be normal any time soon. 

So companies like us which moved to a full work-from-home model and developed the necessary systems, infrastructure, and mindset to work from home in the long term, benefitted immensely from that competitive advantage.

And it is just the beginning! 

There are others who have made a career of predicting what will not change. For example, Warren Buffet is a master at this. He tries to find companies that are well-entrenched and which will not be affected by momentary changes. 

A very successful candy company? It will probably not lose business. In what world will children stop eating candies? 

A razor company. In what world will people stop shaving?

Warren Buffet’s success is of course testimony to the strength of his hypothesis.

Those who anticipate ahead what will change and what will not change, and are spending time learning to engage and dance with those factors are more likely to succeed.

I am always trying to understand in which direction the wind is blowing, beyond what is common wisdom. Not only I try to steer LawSikho in the right direction accordingly, I also try to share these trends with you guys, as you may have noticed, with the intention that they benefit from my research. 

So today, I am going to tell you about something that experts could not predict even 3 years back, but this profound change is already rewriting human history, forever.

The growth of our civilization entirely depends on energy consumption. Let me give you a useful analogy to convince you of the reason. 

Soviet astronomer Nikolai Kardashev, back in 1964, proposed that a civilization’s level of technological advancement could be measured based on the amount of energy that this civilization is able to utilize. He identified three types of civilizations called Type I, II, and III.

A Type I civilization, also called a planetary civilization, can manage the entire energy and material resources of a planet. Kardashev thought that we are a Type I civilization. Other scientists have since disagreed, saying that this won’t be true until we start harnessing all the energy on our planet, including sea waves, geothermal energy and even earthquakes. These scientists observed how we are not so good at harvesting solar energy, that is abundantly available all around us. 

A Type II civilization, on the other hand, is capable of harnessing the energy and material resources of a star and its entire planetary system. If someday we are able to get the energy we need from the sun directly and do mining in Jupiter and probably asteroids, we can call ourselves a type II civilization.

A Type III civilization is able to marshal the energy and material resources of an entire galaxy. I can’t even imagine what that looks like.

However, the idea is simple. To make progress as a civilization, we have to learn to harness energy. If you look at human history, this looks very real.

The first industrial revolution started when we built the first engine powered by steam! The energy we harnessed at this time was coal-based. The second industrial revolution happened when we learned to use petroleum and electricity, which were far more efficient sources of energy, and caused massive growth in productivity and enabled technology that became viable due to these sources of energy.

The third industrial revolution is still due. Some believe it has just started. In 2015 the Wharton magazine published an article called Welcome to the 3rd Industrial Revolution. However, not everyone agreed. Solar energy looked critical for this to happen, and solar energy remained very expensive. 

It was hard to tell, but not anymore. Price of solar energy and solar infrastructure has plummeted in the last 5 years. Today, even without any subsidy, the cost of solar energy is far lower than the cost of coal-based energy! Solar energy is available to be bought at incredibly low prices and is costing a fraction of coal or even nuclear energy. You can read more about that here: https://rameznaam.com/2020/05/14/solars-future-is-insanely-cheap-2020/

Not only is this energy cheaper, but it is also zero-emission, and does not carry hazards associated with nuclear energy. This means we have a meaningful way to save our planet from all the massive negative effects of fossil fuel observed in the last century in the form of climate change that has endangered our planet.

What would be the impact as energy becomes increasingly cheaper and widely available?

Here are the impacts that will reshape the world as we know it:

1. Developing countries will grow faster - developing countries and underdeveloped countries in the world have always suffered from a lack of energy resources. Countries like India which had to import a lot of our energy needs always struggled as much of our revenues we paid for energy. However, the future looks very different. India is poised to become a leader in solar energy and is one of the biggest beneficiaries from this solar revolution. The savings from lower export and cheaper energy will work as a massive propellant for India’s economic future. More of our money will go towards consumption and far less towards energy bills, which indicates a richer economy ahead as the solar saga plays 
2. We are likely to see a massive and rapid shift towards electric cars and public transport, especially in India as the electricity price becomes cheaper by the year. It would make no sense to retain a car that burns fuel worth a few lakhs every year. 
3. Our massive state-run coal and petroleum companies are on notice. India’s energy future would likely be built by giant renewable energy companies. 
4. We would see massive geopolitical changes. The USA will be no more dependent on import of petroleum from the middle-east. Europe is likely to massively reduce the import of natural gas from Russia. Oil-producing countries will have to rethink their economies really soon. We can expect a massive shift in geopolitical power as countries with more sunny weather ceases to import coal and petroleum.
5. Battery tech is going to be more important than ever, as the sun does not always shine. We are seeing big investments in battery tech and storage of solar energy. An entire ecosystem of batteries and distribution are on the cards. Production of batteries as well as their disposal can have a negative impact on the environment.
6. Industries of the future will be cleaner. In fact, 10-20 years ahead we may see industries pulling CO2 or other gases that heat up the world out of the atmosphere! 

Implications for lawyers 

• We can expect plenty of large renewable energy and infrastructure projects. Projects and project finance lawyers will see increasing demand.
• Renewable energy law practice to become mainstream instead of a niche area of practice.
• Import-export will see a rise thanks to us importing photovoltaic cells, solar panels and batteries. India could become a manufacturing hub given local demand as well. 
• The Indian government has been promoting a solar energy corridor in countries that see a lot of sunlight, as a response to the Road and Belt initiative of China. Whether this will materialize remains to be seen. 
• Technology, as well as patent lawyers, are likely to see a surge in demand from the solar industry.
• Investment lawyers, M&A, JV and FDI experts will be immediate beneficiaries.
• However, it would be wrong to attribute prosperity to only a few areas of practice. Even if indirectly and over time, the entire legal industry will benefit from this trend as solar energy replacing fossil fuels is a massive economic boost to each and every Indian.