Renewable energy-based microgrids have proved to be a viable business model in the off-grid space. However, only a few players have created a success story on the back of this model. One of these is Husk Power, which has set up several biomass-based microgrids and is predominantly operational in Bihar. The company uses rice husk as the primary fuel for power production as it is available in abundance in the region. In an interview with Renewable Watch, Ratnesh Yadav, co-founder, Husk Power Systems, shared his views on the off-grid rural electricity segment in India, the challenges it is facing and the way forward…
What have been the key developments in the off-grid rural electrification segment, especially off-grid renewables, over the past one year?
The government has been pushing for the electrification of off-grid areas for a long time and in recent years, many rural areas have been connected to the national or the state grid. Over the past one year, many of our plants had to be shut down because of the state grid. Renewable energy sources like solar panels are getting cheaper, reliable and easy to use day by day. An increasing number of plug-and-play systems are available in the market. Small wind turbines for household use or micro turbines for small water streams are also available.
What are the key challenges being faced by microgrid operators in India?
I feel that there has been complete disregard for microgrid operators by the government. At one time, we were powering over 350 villages in Bihar alone and we were never consulted or informed about the state rural electrification plans in the areas where we were already operating mini grids for power distribution. The government’s focus seems to be on megawatt-level plants and not on micro or mini grids. How can any private player operate under such uncertainty? Power generation and distribution were de-regularised by the government but no such amendments have been done with regard to power tariffs. When private players bear the burden of power generation, distribution and the distribution network, they add all the cost to the tariff, which seems very high when directly compared to the state electricity cost because state electricity is subsidised at many levels. Tariff collection in rural areas is a huge challenge. It is a never-ending battle that is fought every month. Electricity is politicised during elections and the promises for free or cheap electricity are quite common in the manifestos of politicians. This does not go well with private microgrid operators.
What is the investor perception on the success of the microgrid model in India?
I do not see any microgrid model scaling up in India. There are renewable energy companies that provide power to mobile phone towers or nearby factories that are doing fairly well. But the microgrid model for rural electrification has been disturbed by the government’s rural electrification project.
The government could have worked out a plan to include microgrid operators in its rural electrification plan. It could have laid its grid and then leased it to microgrid operators, who would have remained operational by generating renewable energy. This would have meant a lesser burden on the state grid and the government could have taken carbon credits as payment from the microgrid operators. This would have been a win-win situation for all.
What is the outlook for biomass and solar power-based microgrids in India?
Microgrids make more sense compared to the national or state grids due to strategic reasons, low costs, etc. The transmission of power using high voltage networks entails a huge cost and also results in the loss of power. This price is ultimately borne by the consumers. For remote and sparsely populated areas like mountains or forests, microgrids make all the sense. Natural catastrophes such as rainfall can destroy the grids in hilly areas, which are then repaired with great difficulty and at a huge cost.
Solar panel costs have been continuously declining and plenty of biomass is also available, which goes to waste if unused. This should be used to generate power to replace coal-fired thermal power plants. However, there is a need for a clear and effective policy and proper on the ground implementation. Policies for the promotion of renewable energy have long existed but their implementation has not been effective.
There is still a huge market in African countries like Uganda and Tanzania for microgrids and many initiatives have been taken by the United Nations Foundation, the Overseas Private Investment Corporation, etc. for promoting renewable energy in Africa.