Almost simultaneously, coal is becoming more difficult to obtain, sources of domestic gas are shrinking, and there is more focus than ever on sustainability. The result: The market is scaling back expectations that conventional energy sources can fulfill India's power needs. India’s renewed focus on solar power—led by the Jawaharlal Nehru National Solar Mission (JNNSM)—could not have come at a better time.

Solar will become a crucial component of India’s energy portfolio in the next decade—perhaps more so than it is in most other countries. We believe a solar market can develop fairly quickly, and go from zero to several billion-dollar solar-centric firms within a decade.

While some companies have begun preparing for this scenario, most have yet to place a bet on solar because of the uncertainties within the sector. Success in solar energy will require a long-term commitment and a sound understanding of local dynamics.

We recently studied India’s nascent solar-energy initiatives, combining our research and observations with perspectives from interviews with developers, manufacturers, investors, value-chain, regulators, and policy makers at both the state and national levels. We have three major conclusions:

• India’s solar market could be worth billions of dollars over the next decade. India’s solar potential is real enough, and the support environment is improving fast enough, to forecast a $6 billion to $7 billion capital-equipment market and close to $4 billion in annual revenues for grid-connected solar generators over the next decade.
• Project execution, financing, and localization are crucial. A frugal cost base will be at the core of successful Indian solar ventures. As the number of projects and players increases, procurement effectiveness will become a requirement. Longer-term value will come from efficiently executed projects, low-cost (and often innovative) financing, and localization.
• Local players will dominate the downstream solar industry. In contrast to the global nature of the upstream industry (solar modules), we expect local, or at least well-localized players to dominate the downstream side in the initial years; this includes project development, installation, and distribution. Given sufficient time to fine-tune their business models, global players entering India for the first time will be able to prosper. Entering and learning the ropes early will be important for both local and global players.

Despite all the talk about shale gas development—the potential environmental consequences of hydraulic fracturing, the potential to replace coal with gas for generating electricity, the potential for the United States to export liquefied natural gas (LNG)—none of it addresses the bigger picture: The market is structurally out of balance, and it can’t stay this way. The technological triumph of shale gas has led to production that far outstrips demand, and if this were a normal market, price and demand shifts would have already delivered a quick rebalancing.

But shale gas is not a normal market and a rebalancing is not likely in this complex ecosystem where a wide array of players have diverging incentives and investment horizons. Over the past 20 years, gas prices have fluctuated between $2 and $15 per million BTU. At the low end, the producers are not viable, and at the high end, users of gas cannot afford to use it. Will we face more years of such fluctuations before achieving balance, especially since numerous decisions affecting that balance are still up in the air? And yet, bets must be placed now. Infrastructure must be built. With fortunes to be made or lost, these decisions must be as informed as possible. 

Managing multibillion-dollar capital expenditures (capex) is a balancing act where it is easy to lose sight of the basics due to the intricacies of the allocation process, the internal politics, or the complexity of the business case. This last distraction is almost always dealt with by quantifying every aspect of the business case, which may give the impression of "managing all the details" but in reality often results in at least three symptoms of poor capital management. The first symptom is failure to prioritize—when capital investments are not linked to corporate strategy and financial targets, it is almost impossible to capture the required level of returns across the portfolio. The second symptom is loss of accountability—when accountabilities are not clearly defined, followed, or enforced, and reviews are not conducted, no one owns the outcome. The third symptom is poor visibility—without a corporate-wide reporting structure there is limited visibility into spending and even less control of the investment portfolio. As cost overruns mount and projects slow down, the economics of the original investment case are often lost. Any one of these symptoms can lead to poor returns. However, four principles can lessen the chance of a fall.

Creating a unique customer experience is one of the best ways to achieve sustainable growth, particularly in industries that are stagnating. If a telco, a utility, or an insurance company can create a highly differentiated customer experience that turns dissatisfaction or indifference into delight, it will recruit an army of vocal advocates online and offline, gain market share, and generate revenue growth.

Sound simple? It isn't, especially in sectors where the core product or service is difficult to differentiate. But it is doable, as Disney, IKEA, and ArcelorMittal have demonstrated. These firms are among the 15 Summer Champions identified by A.T. Kearney from an initial list of 500 as companies that outgrew their markets consistently over a five-year period despite being the largest players in their sectors.

On the Richter scale, the quake is 9.0, the most powerful ever to strike Japan. Even as the aftershocks rumble, none of us imagines the approaching tsunami traveling behind the quake, across the Pacific, toward Japan's eastern coast. When the waves break, the news is immediately horrifying, and only grows more so. More than 20,000 people are dead or missing.

The catastrophe is not over. Three reactors at the Fukushima Daiichi nuclear plant flood and suffer core meltdowns. Radiation levels rise. An estimated 150,000 people move out or are evacuated while municipal officials impose a 20-kilometer exclusion zone around the power station. Around the world Fukushima becomes a household name for the worst possible reasons.

Capital expenditures are never far from a CFO's agenda, but the issue has received more attention than usual these days, as global capex spending has risen to $10 trillion per year. Using a comprehensive long-term approach, CFOs can "pull the capex lever" to determine how much to spend, where it should be spent and how that spending translates to real returns.