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January 31, 2011

Powering India with Rice Husks? An Interview with Ratnesh Yadav from Husk Power Systems

Ratnesh Yadav of Husk Power Systems, a social enterprise working to empower Bihar (one of India's poorest states), was gracious enough to take time out of his extremely busy schedule to deliver a simple and powerful message: Traditional electrification routes have failed; Decentralized, off-grid renewable energy is the need of the hour.

He backs this bold statement with the fact that Husk Power Systems now delivers renewable energy for a capital expenditure of 1$/watt - the lowest in the world. Indeed according to Husk Power, India has enough rice husk to generate 27 GW of electricity. To put that in perspective - it is roughly the size of all the remaining coal fired ultra mega power plants (UMPPs) in the government pipeline. Read on to find out how Husk Power plans to make its mantra, From Darkness to Light, a reality.

Give us a basic rundown of your business model...

Ratnesh Yadav: Husk Power Systems builds, owns, operates small biomass gasifiers using waste rice husk as fuel to produce electricity. Then using its own network of wires that electricity is supplied to near by villages on pay for use basis. There are about 125 thousand unelectrified villages in India that are dependent on kerosene lamps or diesel generator sets which are costly, polluting, dangerous and unhealthy.

On an average every household spends at a minimum Rs.150-200/month ($3-$4.50 which can constitute as much as 30% of their monthly income) just to light a kerosene lamp for 2 hours. We charge Rs.80 ($1.70) for two 15 watts CFL's/month and mobile charging is free. These villages had cell phones even before they had electricity and they had to go to a near by town to recharge their battery @ Rs.5/recharge ~ ($0.11)

We hire local village people, give them training and they are the ones who operate and manage these plants. Right now we have about 60 plants, spread across 270 villages, directly impacting 200 thousands lives.

(Click image below to see larger version of the Husk model)

Can you explain how you have used "jugaad" to deliver energy access and what the term means?

RY: I don't know the English word for Jugaad. I would say Jugaad means finding a simple, effective and new kind of solution to a problem. For example:

-Rice husk based producer gas is very dirty (high tar content) and it was declared unfit for biomass gasification and power generation. Instead of putting our effort into fighting it we prepared a maintenance chart for the machine so that it keeps functioning.

-For our distribution network we use locally available bamboo poles instead of concrete or metal poles. These bamboo poles are 100 times cheaper, locally available and eco-friendly.

-You'll see in the diagram above that all the shades and huts are made of bamboo and "jhaj"(wild grass). All these are locally available, very low cost and again eco-friendly. Our system is very simple, low cost but efficient. We don't need an engineer or highly qualified person to operate it. We hire local villagers, give them training and a job. It's a new model and whatever we need doesn’t exist in the market. So we have to customize things to make it fit our model.

I think the way we look at technology should change. Why do we always think that if something is high tech then it has to be sophisticated or complicated? The purpose of technology is to make things easier and simple. The technology that we use is old and simple and we always intended to keep it that way. Turbines are more efficient but you need highly qualified person to operate it. It is not for our use.

What are the impacts you have seen from husk power operations in rural communities?

RY: Our business model builds an ecosystem around every plant where every one benefits and growth becomes inevitable. If you look in the diagram above you'll see that at every step every one is making profit. We purchase rice husk from local rice mills. They are earning more now - earlier rice husk was waste. We collect Rs.40-50,000 (~$900-1,100) as revenue from the sale of electricity but give back Rs.10,0000/month ($222) to the villages as salary, rice husk, incense sticks, bamboo etc.

The by-product of Rice husk is Rice Husk Char (RHC). We use it to make incense sticks. We give training and raw material to local women who make it and get paid for it. We then sell those sticks in the market. We can also extract silica but the incense sticks model gives us an opportunity to share our profit with them, which makes our model more sustainable. Shops are open late, business hours and turnover has increased and new shops are coming up.

Kids can study at home in the evening and now they have a better prospect for the future. We have also started product channeling. HPS sends 250 kids to school in villages. With lights all around crime has gone down significantly.

There have also been no cases of snakebites in any of the villages that we have electrified. (perhaps because we only allow CFL's and snakes have a problem in white light)

Another rural entrepreneur working in West Bengal - Onergy - came to their decision to pursue renewable energy to alleviate energy poverty when they filmed a documentary that asked a simple question: why new coal? Why did you choose to build small-scale biogas plants rather than follow the traditional route of large-scale centralized coal plants?

Traditional routes have failed. In Bihar 70-80% of villages are un-electrified. Last year the peak demand of the state was around 1,500 MW yet the supply was around 1,000 MW. Out of this 500 MW was consumed by Patna (the capital city with 1.8 million people). The rest of the state (Bihar population is around 80 million) was dependent on the remaining 500 MW. There is no other district in Bihar after Patna whose demand is in triple digits, all are below 100 MW. This is because a large part of the population is still off-grid.

There is huge disparity in distribution of energy. Decentralized, off-grid renewable energy is the need of the hour. We use a waste product to produce electricity and also replace fossil fuel (kerosene, diesel). We supply electricity within a radius of 3 km of the plant. This way our transmission and distribution losses are low (10% compared to the grid average of 25-40%). Our capital expenditure for a complete plant which also includes the cost of distribution network is 1$/watt which is the lowest in the world. We have also activated smart grid monitoring systems by which we get live data (voltage, ampere, hrs of operation, temperature) from our plants online.

Can you explain what scale means to you and what your vision for achieving it is?

RY: In simple terms scale means reaching out to more number of villages, more plants, more customers and more employees. We will soon be moving to other states in India and then to other countries through a kind of franchise/partnership model. Our Target is to install 2014 plants by year 2014.

What are the most important things policy makers seeking to scale innovative solutions like yours do to help? What about international financial institutions (IFIs) like the World Bank?

The Government of India (Ministry of New and Renewable Energy) deregularised decentralized power generation and distribution in 2003.This was a big step in promoting renewable energy. Otherwise enterprenuers like us wouldn’t have started. One of the main questions that we ask people from outside who are interested in partnering with us is what is the policy of the government? Will they allow decentralized generation and distribution by a private firm?

One important thing that IFI policy makers should think of is promoting manufactures not just entrepreneurs. For scaling up fast you need machines at a faster pace. Organizations like the IFC can provide soft loans to such companies. These are very big organizations and rarely invest in small companies like ours.

If you could give readers one final parting thought, what would it be?

RY: This is part of a Sanskrit shloka that we use to recite in school days "Tamso Ma Jyotirgamaya." It means 'From darkness to light'.

-- Justin Guay, Sierra Club International Program


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