"Sarkari sasti hai, par aati nahi," says Ram Kumar Shukla, 48, referring to the power situation in Thigra , his village in Uttar Pradesh's Sitapur district. Indeed, while state-supplied power is cheap, Thigra, just 90 km from Lucknow, doesn't get any of it - the village is not connected to the grid. Nevertheless, Shukla and other villagers have been enjoying the benefits of electricity, thanks to Mera Gao Power (MGP) and its solar microgrids.
MGP was set up in 2010 by Nikhil Jaisinghani and Brian Shaad, both from the United States. To date, the company has given people in 35 villages in Sitapur district, including Thigra, access to electricity through its solar microgrids. The electricity is more expensive than state-supplied power, but the villagers don't mind - they're just happy to have it.
MGP's microgrids are standalone devices. They consist of two solar panels of 120 volts each and two batteries that store power. Each microgrid generates enough electricity to power 35 households for seven hours every evening. The power that is generated is sufficient to run low wattage appliances such as lights and mobile chargers. The villagers pay the company Rs 100 each month for their consumption.
Video:Lighting up rural India through solar microgrids
The initial cost of the system is high - each microgrid costs around Rs 65,000. MGP invests that money and expects to recoup its costs in three years. The for-profit organisation has received a grant of $300,000 from development agency USAID. In addition, the two founders have together brought in seed capital of $30,000. Jaisinghani also expects MGP to get some equity investment by the end of this year.
Solar projects get a capital subsidy on purchase of solar panels and batteries from the central government. With such market imperfections it is difficult to assess the long-term viability of such projects or their commercial operations. According to Bharat Bhushan Agarwal, a solar energy analyst with Bloomberg New Energy Finance (BNEF), India, this is a high-risk, high-return strategy. In addition, he points out, there is no benchmark for margins in microgrid systems. "In many cases microgrid power has no competition and the villagers have no alternative," he adds.
Once installed, MGP's system has no operational cost and only needs occasional maintenance. It functions well even on cloudy days. Many villagers have now stopped buying torch batteries or using kerosene lamps since they no longer need them. "Solar runs on its own. We don't want huge human resources, or the operational and maintenance costs that come with other modes of microgrid power," says Jaisinghani.
The company, which began commercial operations in December 2011, has strict criteria about where it operates. For starters, it focuses only on villages that are not connected to the grid. "We don't want to go to villages where people are used to drawing more power by using fans, televisions etc," says Sandeep Pandey, Operations Manager of MGP. It is also essential that users' houses are located close to each other, and at least 35, or 70 per cent, should opt for the service. The system works on community pressure. If one house draws more power, that particular line, which will have around 10 households, suffers an outage.
MGP currently serves around 900 households in Sitapur. It aims to ramp that up to 100,000 households by 2014. "Once you have understood the basic dynamics of the market operations, the whole process of identifying and construction is easy," says Jaisinghani.
Earlier, the company was constrained to pull out its microgrids from some Uttar Pradesh villages when local thugs and politicians refused to pay for the power.
So, what happens when a village is connected to the grid? "Our system is very simple. We will uproot and move on to another village. Most of the resources can be reused," says Jaisinghani.