Once again a case for Solar Powered Air Conditioner

--------------- Read this after games which RIL plays for logical flow of thought. --------------------------

Many people participated in the research we conducted some 3 months back on FB/Twitter/Orkut and Linkedin. The survey results were astonishing and overwhelming. At the cost of being repetitive, our group would like to thank everyone for being part of this project. I have been thinking on this idea more and more that why we are not using solar powered AC. Are they really expensive? Or the marketing department in these companies is dud. Well that might be an exaggeration, but can marketing techniques be used to push this product. I believe it can. Of course, there are problems, but in the following paragraphs I would like to make you believe, that it is not all that difficult.

One important question:

 Respondents of the survey were asked the reason for not installing Solar power based product.

The top three reasons for not installing based on the survey are:
- Initial set up cost is too high.
- Most of the comments in others indicate that the product is not at all popular and they don’t know how to use it.
- They don’t know where to buy.

These findings point to one point in bold:

Value articulation of Solar based product is not up to the mark.

The message that should go out from all the companies which are involved in selling the solar based products is summarized:

Based on these major customer pain points, the problem can be summed and looked upon with the help of this 2X2 matrix.

 

With low credibility and low visibility of this product, we are at the quadrant which is “unknown”. The Strategy to come out of this should be two step:


1. Increase the credibility (most important step) and

2. Increase the visibility.

Focus on value rather than cost:

I won't go into the detail of the case for solar power in this post, but will highlight one general point that I feel is very important. This concerns the importance of focusing on value rather than cost.

There is, for example, an active debate in the UK at present about whether nuclear is cheaper than CCGT (= combined cycle gas turbine I think!) electric power. People will typically address this issue by preparing charts that show the cost of a unit of electricity produced either way. They sometimes also show a point on the chart for solar power and this tends to look pretty unfavourable (i.e. solar power is shown as being high cost). Analysis such as this may seem very logical but it misses an important fact. This is the fact that for a commercial company the objective function is to maximise value not minimise costs. Value comes from cash flow which in turn comes from sales revenue less costs. So a focus just on cost means that sales revenue impacts are missed out.

The need to focus on value is not just an issue for policy makers considering solar power. For example:

• when considering cost reduction exercises my view is that targets should be set in terms of the value benefit from a cost reduction rather than simply the headline saving in the year in question. This would pick up factors such as the sustainability of the reduction and any impact on sales.

• when considering working capital the aim should not be simply to minimise it. It should be to ensure that working capital decisions maximise value. Hence, some working capital increases may well be good. 

Redefining “Being Rich” – Game which RIL is playing

Things change with time:  not long ago the rich were supposed to be fat and well fed!!
Now the rich are slim and trim.

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The rich had carpets on the floor.

Now the rich have wooden floors and poor have carpets. (In US at least)
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We will see a change in trend. You would be rich if you have your own vegetable garden and work from home.

While the poor will commute to work and shop in stores!!
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It was fashionable to eat the most exotic fruits and vegetables. Now it is fashionable to eat local grown “organic” vegetables..
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So the demand curve will not shoot up while resources drop the demand will shift to a new medium.
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As the Saudi minister said. “We did not move out of stone age because we ran out of stones!!”

The oil producing nations are living in fear that if and when the demand for petroleum drops they will be finished. 80% of all fuel used is for transportation so, a global move to efficient mass rapid transportation will sound the death knell for Auto companies and refineries and oil producing nations.

Go to you tube and search: http://www.youtube.com/watch?v=F-QA2rkpBSY&feature=channel
Most important video you`ll ever see

Globally Growth is going to fail, as we do not have the resources to sustain it..

What is Reliance doing now? Connections to what I said above.

1. Reliance is generating a lot of Cash which it does not have a place to invest.
2. Oil business in itself is in a decline.. Global warming and peak oil both are negatives.
3. These new frontiers (power/telecom) are going to be the future of Reliance.

Telecom and Power are cash guzzlers and for the next 5-10 years all cash flows from Reliance industries can flow into these sectors..

It is a calculated bet, why else would you see Reliance sell the equity it was holding in its reserves?? A few months back?

Question is when "Peak oil" is made public. Will the Govt of US or India for that matter allow Reliance/Exxon to use the gas as Reliance/Exxon would like to use??

I dont think so!!

That is one reason Reliance was going to buy the chemical company because petroleum products can be used more efficiently in manufacturing speciality chemicals, fertilisers than as automotive fuels.

Most likely when the oil crisis hits the world we will see::

- Ban on private transportation.
- Ban on private use of petroleum products.

When there was a shortage of rice, we banned rice export which is renewable asset as we can grow it.
Unfortunately oil is a non renewable asset.

ü  Do not know much about Crude pricing.

ü  Only thing that I am certain about is the peak oil theory and it is just round the corner. (maybe 5-10 years down the line).

We must understand that wealth of an individual (and of nations) is determined by the amount of energy used/available at his/her disposal. This is true even today

A Poor farmer has a cycle and a pair of bulls for farming. While a well off farmer will have a tractor and a motorcycle/vehicle at his disposal.(more energy.. consumption)

Even in case of an urban household a more well off household will have washing machine, dryer,  airconditioner, water filter, microwave, car, SUV and the total consumption of energy per person is higher.

The same no of people in not so well off household will have a much lower energy consumption pattern per person.

In fact every Rupee we earn is nothing but a currency to purchase/trade energy. We pay and receive energy in return.

Long term Global growth is suspect.. even Indian growth is suspect!!!

-  When there is no growth then demand for consumables will drop and so will the interest rates fall.

-  You will see a fall in all energy consuming goods  and see an increase in Video games..TV..3D.. and other not so energy intensive forms of entertainment.

-  Food.. medicine.. shelter.. demand will exist but not increase..

- Electrical grid/gas pipelines will gain prominence as the only efficient way to transport energy.

- Wireless networks.. Internet.. will also benefit from drop in movement of goods and personnel..So the moves made by Reliance makes much sense strategically!