Sunday, April 8, 2012

Making Public Innovation Work: The Pune Power Model

Any kind of innovation is challenging for it involves questioning the status quo. But innovation in the public sphere is particularly difficult because it involves acceptance by diverse stakeholders who often have conflicting interests. I am currently studying one such innovation that helps us understand what makes public innovation work.

In the early years of the new millennium, citizens of the growing industrial and commercial city of Pune often faced power cuts and “load-shedding” as the state-run electricity utility struggled to meet the increasing demand. Government projections suggested that this situation would continue for several years to come due to the time involved in setting up new power plants and the shortage of resources to do so.

Rather than take this situation for granted, a group of concerned people from the business sector met under the umbrella of the Confederation of Indian Industry and the leadership of Pradeep Bhargava to brainstorm to find solutions to tackle this problem.

They soon realized that the large companies resident in the city – Tata Motors, Bajaj Auto, Bharat Forge, Thermax, and Praj Industries to name just a few – each had huge back-up diesel generation sets that were often idle since the power supplied from the grid was cheaper, even after they paid a commitment charge to the utility for ensuring continuous power supply.

Could this back-up resource be used to meet the shortfall of power faced by the city? A quick back-of-the-envelope calculation revealed that the city’s shortfall and the captive generating capacity of the largest companies matched each other. Feeding this power into the grid was complex technically as well as from a regulatory perspective. Instead, the group realized, why not get the companies to use their diesel gensets for their own consumption during peak periods, thus freeing up grid power for use by the citizens and other businesses of the city?

Using their own gensets involved higher costs for the companies, so a mechanism had to be found to compensate the companies. And this compensation would obviously have to come from the other consumers of the city who would benefit from a continuous power or “Zero Load Shedding” (ZLS) regime.

The ZLS model became a reality in mid-2006 after:

  • The local utility under the Maharashtra State Electricity Distribution Company Limited (MSEDCL) confirmed the technical feasibility of this arrangement and put in place a system to measure the daily generation of power by the companies using their own gensets.

  • The Maharashtra Electricity Regulatory Commission (MERC) held a series of hearings where citizen groups, political parties, NGOs and other stakeholders could discuss and clarify how this scheme would work.

  • Citizens consuming less than 300 units of electricity per month were exempted from any additional charge due to this arrangement. But consumers using more than 300 units per month would have to pay 42 paise extra per unit as a reliability charge that would be used to compensate the companies for the additional power costs incurred by them as well as the maintenance costs of their gensets (however, no capital or financing costs would be reimbursed to the companies).

The “Pune Power Model” as it came to be known worked in this form till mid 2008 when, thanks to a further growth in demand, the corporate diesel genset capacity was no longer adequate to meet the power demand-supply gap in the city. Subsequently, with the support of the MERC, other variants of the Pune Power Model involving external purchase of power were put into place to ensure continuance of ZLS in Pune.

I recently interviewed several key stakeholders who were involved in the early stages of the introduction of the Pune Power Model. Some key points that emerged from these interviews:

  • When the idea was first proposed, many of them were skeptical that it could be put into practice. A “veto” from any powerful stakeholder could jeopardize the whole model.

  • Social groups and NGOs were particularly suspicious of a proposal of this nature coming from industry!

  • Exempting consumers who used less than 300 units per month from the reliability charge helped overcome the opposition of political and social groups. But, this same segment of consumers may have been the biggest beneficiaries of this model because the rich can often make arrangements of their own to overcome public infrastructure deficiencies.

  • The willingness of the MERC to consider this proposal as well as the public hearing process of the MERC provided a platform for the open and transparent consideration of such an innovation.

  • Once it understood the potential of the Model, the media played a useful supporting role in spreading information and ensuring the transparency of the process.

  • Pradeep Bhargava and the leadership team in CII Pune persevered for months as they tackled the concerns of different stakeholders, worked out the nitty-gritty’s, and made the Pune Power Model a working reality. Their efforts remind me of a quote attributed to the social anthropologist Margaret Mead: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.”

The Pune Power Model is a good example of what Michael Porter and Mark Kramer call “creating shared value” (HBR, January-February 2011) – policies that enhance the competitiveness of companies while at the same time advancing the social conditions of the communities in which they operate. At a small cost, Pune’s largest companies improved the quality of life of the people of the city, enhanced mutual trust, and paved the way for more enduring ways of ensuring continuous power supply to the city.


  1. Interesting! These kind of innovative solutions can solve many a problems of society. Thanks for sharing.


    Sandeep Vij

  2. Related to Power utility companies, there is this fascinating (long) piece about how sophisticated, real-time management of power generation is done across multiple grids to ensure optimal cost, in spite of the vagaries of weather and unexpected in flows from a thunderstorm and even, you will wonder whats the connection, but helping salmon fish get safe passage! This article contrasts with the 'Jugaad' feel of PPM, more so at the people's ethos that varies. Both remain relevant to their geographies - Please read

  3. Hi, we are running a programme called (GIVP)global innovation venture partner, A programme that looks to present the best of innovation to the world. Nominations Now Open