Solar PV based mini-grid: admirable rural pilot, but tough to replicate

While attending a solar industry conference about a month ago, Ravi Khanna, CEO of Scatec Solar, talked about a successful rural electrification demo project: a 8.7 kWp photovoltaic power plant, and a “mini-grid” connecting it to all 70 households in Rampura, a village near Jhansi in the Bundelkhand region.

Now this is unique, I thought, but I wondered if this was really a sustainable and replicable model. If it did work, what pre-existing conditions and post-execution mechanisms contributed? I wanted to see it for myself, so last week I visited Rampura. Development Alternatives (DA), the NGO that helped identify the village and execute the project, played host for the day sharing great insight into how the project came to be.

Sponsored by Scatec Solar, and executed by Bergen and Solar 23, the solar PV and mini-grid installation took under a month. But DA was laying the ground work for about 6 months prior to that. It helped identify the village and built support in community and local government. DA also helped pull a 13 member governing committee made up of villagers. The committee operates the installation with technical help from Bergen and collects monthly bills based on usage.

According to DA folks on the ground, one reason Rampura project works is because the village has no access whatsoever to another power source, grid or otherwise. Often, villagers get used to “free” (albeit irregular and undependable) power from electric grid using metal hooks to tap into uninsulated power lines. That could become a siginficant hurdle to accepting a mechanism that requires to them pay as per usage.

Also, Rampura is a small close-knit community, with strong family and social support structure. This meant, they easily came together seeing an opportunity to improve their collective standard of living. This cohesiveness is more difficult to achieve in villages closer to urban centers, where significant number of villagers migrate to cities.

Household and population density matters too. Mini-grid costs and inefficiencies go up with goegraphic spread. I don’t have information on financial aspects yet, but was told informally that it cost about Rs.13-14 lakhs. That’s about Rs.150-160 per Wp. To me that seems low.

Even if we ignore the financials, it is obvious that the “Solar PV + Mini-Grid” approach is not for all villages. It is not a model that lends itself to fast replication easily, even with support from local NGOs like DA. Remember it took DA almost six months to identify the village and prepare for execution. A for-profit entity will need to build this function (alone or collaborate) at a large scale to have enough projects in the pipeline.

India’s solar industry eyes huge rural opportunity

| Stumble it! | Del.icio.us | Digg | Reddit | Facebook

I was at ICORE 2009, a renewable energy conference organized by Solar Energy Society of India (SESI). This year’s focus: Renewable Energy for Rural Development.  

I heard industry leaders talk passionately about potential for solar to truly bring electricity to rural communities and catalyze grassroots social and economic development. Plenty of discussion circled around industry’s demand for adequate support, recognition of its potential, “leveling the playing field”  and inclusion on policy discussions. Overall, the energetic conversaion between industry and government reps was indicative of an evolving sector keen not to miss growth opportunities during a time that many see as the inflection point.

The following observations are not new, but are notable because they were made by industry representatives and collectively signal that India’s solar players “get it.”

1. There are more villages and rural population without electricity or access to quality electricity than government statistics let on. The need is such that the entire “20 GW by 2020″ goal could be met by rural systems and hardly make a dent in demand. We need more aggressive goals.

2. Decentralized solar can more cost effectively make a difference than centralized multi-MW solar power plants because of the grid’s poor quality. Transmission losses are as high as 50-60% in some states where the need for rural power is greatest.

3. Government’s policy framework should recognize the above facts and incentivise rural electrification via decentralized solar deployment accordingly. Today it does not.

The hot button issue of the event clearly was about how central government should support both manufacturing and usage (including rural) of PV and solar thermal. The lively conversation between MNRE (Ministry of New and Renewable Energy) representatives and industry leaders bordered on an open negotiation.

The following were the broad themes in this regard.

1. Comparison with conventional energy sources, especially coal: It is wrong to compare solar with coal simply on upfront costs alone. Costs associated with fuel (coal), operation & maintenance, grid losses and cost of grid need to be accounted for. MNRE’s response was mixed. While acknowledging the need to devise “apples to apples” comparison, they maintained solar is costly and that their goal is to reduce costs for the consumer.

2. Consistent support for on-grid & off-grid solar power generation: Given the poor quality of the grid and significant hours in a day when the grid is “down,” government should provide consistent tarriff for solar energy produced & used irrespective of grid connection. MNRE’s reps were amenable to the idea and said this may require a certification mechanism via independent 3rd party entities that are able to verify useful electricity produced from distributed power generation.

3. Support for Indian manufacturers to compete, especially with Chinese manufacturers: Industry reps feel Indian goverment needs to do more to “level the playing field” for them to compete with Chinese companies, which apparently receive free land and very cheap capital from China’s government. MNRE reps gave a sneak peek into November announcements stating that “generous” support is on its way.

4. Anti-dumping / quality laws: As PV prices tumble, manufacturers are feeling the pinch. Some industry reps clearly were enraged by what they called “low quality, low cost” products entering India. MNRE indicated new quality certification programs will help here, but ultimately consumer should remain the decision maker.

Both MNRE directors and SESI officers repeatedly referred to an upcoming MNRE policy/tarrif announcement expected around November 15, 2009.  I can’t wait to see its details!

In the next couple of posts, I will focus on the most interesting speakers/conversations of the event from my perspective.

India’s Electricity Transmission and Distribution Losses

| Stumble it! | Del.icio.us | Digg | Reddit | Facebook

.

According to World Resources Institute (WRI), India’s electricity grid has the highest transmission and distribution losses in the world – a whopping 27%. Numbers published by various Indian government agencies put that number at 30%, 40% and greater than 40%. This is attributed to technical losses (grid’s inefficiencies) and theft.

Theft, in Delhi, accounts for 42% losses as per this BBC article. For those who don’t understand how power theft actually happens, the photograph in this The Hindu article is instructive. (Incredible. Never ceases to amaze me.)

By contrast, China apparently loses just 3% of it’s electricity to theft as part of 8% total power transmission losses. OECD countries’ transmission and distribution losses are just 7%.

By the Numbers: Indians Without Grid Electricity

See how World Bank and Indian Government estimates of number of Indians without access to grid electricity compare in our new page: BY THE NUMBERS. You will be surprised.

Green Ventures’ $300 million fund will boost India CDM projects

When the Kyoto Protocol’s Clean Development Mechanism (CDM) went into effect China, Brazil and India stood out as countries with greatest potential for carbon offset or reduction projects. You only need to look at CDM projects interactive map to realize that prediction was accurate: these three countries have the greatest concentration of dots representing project locations.

Take a closer look and you will see a difference. While China and Brazil are dominated by red and orange dots representing large scale projects, India is predominantly yellow representing small scale projects. It is in fact true that India has the largest number of projects, but they are smaller when compared with China’s. Now, a new entry into India’s CDM landscape may change that.

New York based Green Ventures International has launched a $300 million India Carbon Fund — the largest such allocation in the carbon credit space in India by a single private entity. The entire sum will be aimed at a wide variety of CDM projects including energy generation, distribution and efficiency. Registered under the name of “Green Ventures Advisors Pvt Ltd” with UNFCCC, Green Ventures will act both as a buyer and seller of Certified Emissions Reduction (CER) credits.

As founder and CEO Krish R. Krishnan points out, global financial & carbon players find the Indian carbon space very fragmented and difficult to navigate. In a recent interview with Mint, he said it took him two years to research and develop local understanding and networks in India. With offices in New York, London and Mumbai, his team is now well placed to connect India’s need for energy and cleantech with capital and technology from developed markets.

Not knowing the GVI team, its difficult to predict what kind of projects they may end up financing. They are open to the entire gamut and all mechanisms that CDM allows. But I think the market factors are ripe for large scale solar and energy efficiency in particular. Despite the huge potential, solar hasn’t take off in India because of cost. But solar cell prices are set to decline sharply as more silicon capacity comes online and around 50 VC-funded solar companies (many not c-Si) start itching for revenues. In energy efficiency, India’s large cement and agricultural sectors will prove to be low hanging fruit. Central and State (most recently Haryana) policies are increasingly lending support to such energy efficiency projects make them more attractive.

Anyway, here’s wishing Green Ventures a great success and hoping that its entry will spur cleantech activity to the benefit of India’s power-hungry masses and industry.

Cleantech: a panacea for India’s foreign policy mess?

American politicians of all stripes have jumped on the corn ethanol bandwagon in the name of energy security and some even propound ethanol will solve the country’s foreign policy problems related to Middle-East. By contrast, you can’t find many Indian politicians talking up alternative energy though like the Us, India’s energy needs have left its foreign policy in mess. At least to some extent, I agree with the US politicians. No, I am not proposing ethanol alone and certainly not corn ethanol. Instead I believe clean technologies (a.k.a. cleantech) in energy transmission and energy efficiency represent a not-so-obvious solution to significantly reducing India’s energy demand and curbing the need for “dirty” oil and gas.

First, let me explain India’s foreign policy “catch 22″ situation. That India is desperately trying to overcome internal resistance to complete the nuclear energy deal with US is no secret. What’s not as publicized is the fact that India has been trying to join hands with China to compete with western oil giants in bidding for some African oil & gas fields. Similarly, the long-standing proposal for an Iran-Pakistan-India natural gas pipeline isn’t common knowledge either.

Ironically, deeply distrustful of its new business partners – China and Pakistan – India continues to build its military might with help from the usual suspects: US, Russia, UK and Israel. Also, as unthinkable as it sounds, India started joint naval exercises with US and followed that up with joint military exercises with China at the same time.

Most recently, India’s space agency ISRO launched an Israeli spy satellite into orbit, upsetting both Iran and Pakistan, who now threaten to take the natural gas pipeline to China instead. The prospects of the Indo-US nuclear energy deal don’t look much better either. What a mess!

So here’s an idea: How about pouring the same billions of dollars into economic incentives and R&D support for distributed energy generation, reducing transmission losses and energy efficiency projects instead? India’s electric grid losses are legendary (26% of production on average and 62% in some states) and India’s agriculture and manufacturing sectors are no models of efficiency either. Take a look at these case studies by The 3 Country Energy Efficieny Project for an inkling of what the the most unglamorous of energy efficiency initiatives could achieve.

Seriously speaking, I reluctantly admit that cleantech will not solve all of India’s foreign policy troubles, but you cannot deny that we cleantech zealots may be onto something here, after all.