Business Today

'Electric' goes local

Tiny, stand-alone power plants are powering village after village in India with rural folk willing to pay what it takes for assured electricity.

K.R. Balasubramanyam        Print Edition: March 21, 2010

The year: 2004. The movie: Swades (Hindi for homeland). Shah Rukh Khan is playing the character of Mohan Bhargava, a non-resident Indian space scientist in the US. On a trip to meet his grandmother in India, Bhargava is appalled by the living conditions in her village, Charanpur, set in the plains near a river. The crowning moment, three hours into the film, for Bhargava is when he builds a reservoir across a stream to run a small turbine that generates enough electricity to light bulbs in the forgotten village.

The Khan-starrer was not a blockbuster, but had quite successfully highlighted how effective such micro initiatives can turn out to be. Today, there are several Charanpurs cropping up across India, as startups, NGOs, villager groups and, even, large companies turn to standalone power plants to light up villages that are either not connected to an electricity grid or have not-functioning power lines running through them.

Less than a year after Swades hit the screens, NTPC, India's largest power generating utility, commissioned a 10 kilowatt (KW) biomass plant at Jemara, a small village in central Chhattisgarh, lighting up 100 households there. In the five years since then, lighting up remote villages without access to grid power has become a big part of NTPC's corporate social responsibility programme. The utility has set up 11 projects with a cumulative capacity of 231 KW and covering about 1,780 village homes. Five more projects with a combined capacity of 110 KW are poised to go on stream in the next 12 months. (Roughly, 1 KW can run five homes, each with three 40 Watt bulbs and one fan or TV running.)


 Husk Power SystemsNTPC
230.5 KW
UP, Chhattisgarh, Rajasthan

The NTPC off-grid systems help run flour mills, hullers, oil pressing or extraction machines and irrigation pump sets during the day and lighting in the evening hours. NTPC's "small units have brought about transformational socio-economic change in villages," says the utility's Chairman and Managing Director R.S. Sharma. Two critical reasons for their success, he adds, are local participation and easy availability of raw material or feedstock.

Off-grid projects are not a new concept. The earliest reported example was in 2002: Bilgaon in northern Maharashtra, home to a micro-hydel project. They have been promoted by the Ministry of New & Renewable Energy (MNRE) for about two decades now. MNRE's capital incentives are yet to make a big bang impact where it really hurts India and its people— about 50,000 villages have no electricity. At the same time, for many years, off-grid or distributed generation projects were not popular largely due to lack of awareness, say experts, predicting this could change in the coming years.

As NTPC's projects gained velocity, other projects are sprouting: an initiative in Bihar by four entrepreneurs is leading to a raft of off-grid power plants there. Husk Power Systems, the brainchild of two childhood buddies— Gyanesh Pandey and Ratnesh Kumar, both 32—created a kind of a sensation at Tamkuha village in West Champaran district in August 2007 when it commissioned a 33 KW plant fired by rice husk. In the months that followed, the firm repeated the initiative by adding one project after another and, today, has nearly 25 times that capacity covering at least 50 villages. Its over 9,000 customers include households and businesses.

The company, funded by the MNRE, Shell Foundation, among others, charges a household a minimum of Rs 80 a month for six to seven hours of daily supply for two CFL lamps. Businesses in market places pay as high as Rs 1,500 a month for 12 hours of supply and run their TV and freezers in addition to lighting. "We provide discounts in fee for consumers who use more," says Pandey, an electrical engineer with a background in the semiconductor industry and now Chairman & CEO of Husk Power.

Husk PowerBhuidharwa, Bihar33 KW480Nov. 2009
Husk PowerDhanaha, Bihar33 KW400April 2008
Husk PowerMadhubani, Bihar33 KW500Jan. 2009
Husk PowerTurkaulia, Bihar33 KW270Dec. 2009
NTPCDhumadand, MP10 KW42Dec. 2009
NTPCJemara, Chhattisgarh10 KW100Feb. 2005
NTPCBhaogarh, Rajasthan10 KW89March 2005
NTPCBirhuni, UP35 KW405March 2008

Customers root for the company supplied electricity. Take V.P. Singh Yadav, a medical compounder who runs a clinic offering treatments for ailments such as fever, cough, stomach disorder and even eye infections in Tamkuha. After electricity came to his village over a year ago, Yadav says, life has changed. "People come to my clinic as late as midnight, you can walk around with less fear, you don't see teenagers loafing around, children are studying in the evening... this place will change by the time the next generation comes up,” he says, with a tinge of regret that his children (the youngest is appearing for Class X exams this year) missed the days of electricity in his village. Yadav pays Husk Power Rs 160 a month to run two bulbs, a fan and a TV for about 6.5 hours a day.

Husk Power, operationally profitable, is reinvesting returns on new projects: 28 more are taking shape. Pandey says the firm's secret sauce lies in using rice husk—bought at less than Rs 100 a quintal—as a feedstock in custom-tweaked gasifiers (machinery in which material ranging from bio-waste to wood chips is burnt with controlled infusion of oxygen to produce gas that can then be fired to run turbines). He and his team had worked for a couple of years with organic solar cells as also generators powered by jatropa and bagasse before deciding on rice husk as the feedstock.

"Our plants are quite unique; they use 100 per cent rice husk in small gasifiers. We provide the lowest amount of power (30 Wminimum) to consumers, and our installation costs are one of the lowest," says Pandey. Bihar makes business sense for Husk Power—the state has a peak electricity shortage of 34 per cent, the highest among Indian states.

In neighbouring Uttar Pradesh, a similar initiative has met with success. Rampura village in the Bundelkhand region symbolised backwardness in its most stark shape: a bundle of illiteracy and poverty, wrought by unfailing drought. In January 2009, Scatec Solar, a Norwegian company, commissioned a 8.7 KW solar power station that charges batteries powering some 400 homes for about five hours daily through a micro grid of one kilometre in length.

"This is a demonstration project from our end, and it's fully managed by the local community members starting from operation to billing and collections. The households not only have CFL lamps but also television sets," says Amitabh Verma, Vice President (Technology), Scatec Solar. CFL or compact fluorescent lamps that consume as less as onesixth electricity compared to conventional bulbs.

The success of off-grid ventures highlights the willingness of villagers to pay top dollar for electricity. While an urban consumer pays about Rs 4.50 a unit in Karnataka, users of off-grid power pay anywhere between Rs 6 and Rs 12 a unit depending on usage. Off-grid power costs more because they lack advantages of scale.

Buoyed by recent trends, MNRE is targeting 2,000 MW capacity from micro projects over the next 12 years under its National Solar Mission, which was kicked off on January 11. In the short term, until 2013, the target is 200 MW, and the government thinks solar energy applications are cost-effective where grid penetration is not feasible.

"We are in the process of making a paradigm shift from supply driven delivery model to entrepreneurial based business model to draw investors to niche areas of energy," says Gauri Singh, Joint Secretary in the Ministry. The Ministry meets between 30 and 90 per cent of a project's cost depending on the technology suggested and the location. "We have a huge gap between demand and supply of electricity, and entrepreneurs can tap this market of unmet demand by investing in offgrid units," adds Singh.

That opportunity becomes huge, especially if seen as a means to supplement grid power, clarifies K.P. Sukumaran, National Project Manager of United Nations Development Programme Project on Access to Clean Energy. "Offgrid power is promoted not as a replacement for grid power but to supplement it in places where grid power cannot meet the demand," he says.

An example is wind turbine maker Suzlon's corporate complex in Pune, where a 155 KW wind-solar hybrid system supplies electricity for about eight hours daily with the ability to automatically switch over to grid power. "This is perhaps the biggest hybrid system in the country consisting of 20 wind generators of 5.1 KW rating with roof-top photovoltaic panels of 55 KW. This will meet 8-10 per cent energy requirement of the Suzlon campus," says P. Ravindranath, Director (Product Engineering), Unitron Energy Systems, which set up the wind-solar hybrid unit.

Instances of such uptake may be what will make off-grid power a widespread reality in India and end up lighting up thousands of Indian villages. Like Bhargava's Charanpur in Swades.

 TamkuhaUchlengaSuzlon's Corporate ComplexRampura
DEVELOPERHusk Power Systems
NTPCINSTALLED BY: Unitron Energy SystemsScatec Solar
PLACEWest Champaran, Bihar
Korba, ChhattisgarhPune, MaharashtraJhansi, Uttar Pradesh
CAPACITY33 KW20 KW155 KW (100 KW wind + 55 KW solar)8.7 KW
October, 2006
August 2009January, 2009
SOURCEPaddy huskBiomass (woody)Wind-solar hybrid systemSolar
SUPPLY6-7 hours daily6-8 hours daily8-10 hrs a day to corporate office with auto switch to grid
5 hours daily
PROJECT COSTUnder Rs 50 per WattRs 25 lakh
Rs 3.2 crore
Rs 50 lakh
134 housesMONTHLY GENERATION: 16,000-18,000 KwH400 plus
WHAT CONSUMERS PAYRs 40-45 for 15 Watt a monthRs 30 per month or 30 kg of woody bio-mass Rs 30 per month

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