According to reports, amidst scores of un-electrified villages in Uttar Pradesh, Ram Sahu, a farmer in Thigra village, relishes his dinner beside a solar powered electric fan and LED lamp. Miles away in a village near Agra lit up only by kerosene lamps, another farmer enjoys benefits from solar appliances which source power through a microgrid- a small standalone system connected to solar panels which can supply power to about 100 households.
And by the looks of it, every village in India will soon be electrified, thanks to a solar microgrid revolution heating up.
In this model, a customer registers with the microgrid owner with a monthly subscription, and the service provider provides him solar power for two lights, a fan and cell phone charging socket.
A microgrid costs under Rs 60,000 to set up and the project costs get recovered in three years — including maintenance, upgrades and other overheads. Households save money each month which helps ensure payments. These micro-economics are sound, low-risk and sustainable and are attractive for investors,” says Sameer Halai, co-founder of SunFunder, a crowdfunding platform which gets investors to invest in microgrid projects. SunFunder has just raised funds from Vinod Khosla, testimony to microgrid market’s potential.
With such clear economics, more companies are looking at the sector. “People in the industry clearly see the business opportunity here now as there are hundreds of villages with no electricity and it doesn’t make economic sense for the government to put up a grid” Shaad said.
While Mera Gao Power has electrified about 20,000 households, another firm, Minda NextGenTech, has put up 250 microgrid systems. Minda operates on a slightly different model where it doesn’t own the system but sells them to an entrepreneur and helps with funding.
Mera Gao Power plans to add about 2000 more subscribers every month, while Minda is targeting another 200 villages.
SunEdison, which put up a project in Madhya Pradesh, is working on projects in Andhra Pradesh and Madhya Pradesh, while Welspun Renewables, for instance, will soon commission its first microgrid project in Uttar Pradesh.
“Solar micro-grids help supply electricity and have potential to create jobs,” says Vineet Mittal of Welspun Renewables.
However, there are still some snags to be ironed out. “The main barrier to their success is access to financing to help scale their operations. It’s difficult to bring high volume foreign funds for business lending into India. This is a challenge we are working to solve actively,” Halai said.
Firms say that while for the immediate term, lending from NABARD would help, to take this on a longer term, government support would be required in terms of giving service providers protection and status to function like a state electricity utility.