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Innovative Business Models
Debajit PalitAssociate Director, TERI
February 7, 2013, Kathmandu
Workshop on
Sharing Business Models and Scaling up Mini
Grids in Asia and Pacific
Mini-Grids in India
� Pioneer of Mini-Grid system
� First mini grid commissioned in 1996 in Sunderban Islands
� State-of-the-art system designs & use of components
(converters & inverters), continuing till date
� Cooperative model of service delivery
� Involvement of local community from planning stage
� Policy enablers from time to time
� Around 5000 villages covered through mini-grids, serving
more than 50,000 HHs
� Multiple technology adopted
Managing Mini Grids: Earlier Model
FUNDING AGENCY
PIA
Power PlantVEC
System
Supplier
Consumers
Consultant (DPR, system design, TA support)
Organize VEC
System Engineering.System Owner
$
Installation &Commissioning
• System custodian• O&M • LT line Maintenance
Electricity
Grant from Central GovernmentEquity by PIA/NGO or Beneficiaries
Revenue: Tariff, billing, collection
Village Energy Committee (VEC) Model
Source: TERI, 2011
Case Examples of Emerging Models
• Community Based
• Entrepreneur Driven
• Pro-Poor Public Private Partnership
How we can Introduce Smartness
Multiple Energy Sources
• Solar PV
• Wind Aero Generators
• Biomass Gasifier
• Hybrid Systems
Multiple Applications
• Charging lanterns
• Powering computers,
• Charging cell phones
• Water purification
• Micro enterprises
Located near the energy utilization points in a village to provide
electricity services as per the community’s need
Solar Multi UtilityCommunity based model
Source: TERI , 2012
Solar Multi Utility
Self Help Groups, Farmer’s Associations & Individuals from the
surrounding villages access the SMU & utilize services for a fee.
Self Help Groups, Farmer’s Associations & Individuals from the
surrounding villages access the SMU & utilize services for a fee.
Source: TERI , 2012
TERI
• Overall Project Management
• Raise Grant support for the projects (~ 75%)
SMU
Technology Provider
• Installation of power
plant
• AMC
Local Partner (~ 15%)
• Scoping, community
mobilization, monitoring
& training
Users (~ 10%)
• Farmer’s Associations,
SHGs, Individuals
• Payment for services &
new investments
VEC
• Operation & collection
of revenue
• Maintenance & saving
for replacement
Institutional Model
Source: TERI , 2012
Sustainability – going beyond technology
Institutional
� Creating linkages with other developmental
programs/ marketing agencies
� Local capacities developed to operate and manage
the system
Technical/
Social
� Energy efficient system & intelligent load
management for reduced peak demand
� Need based design with standard procedures for
operation
Financial
� Variable grant : equity ratio.
� Customized pricing strategies to suit particular
livelihood activities
Some glimpses
Manure
Mixer
Sattu
Grinder
INR/kg
Annualized Equity for
setting up of unit
0.75 0.43
Buying cost of
Electricity
0.21 0.21
O&M cost 0.5 0.5
Logistics Cost 1 1
Value of service 5% 5%
Risk 10% 10%
Inflation 8% 8%
% of profit 25% 25%
Service charge 7% 7%
Actual process cost 4.04 3.48
Ability to Pay 5 2.5
Profit/Loss 0.96 -0.98
Final Processing Cost 5 2.5
LUCE
INR/kWh
Elect Price
INR/kg
Prod Cost
INR/kg
7 0.21 4.04
10 0.3 4.19
15 0.45 4.44
20 0.6 4.68]
• Sale price of solar electricity
can be kept high and it does
not significantly affect the
price of service
• Regulation vs. No regulation
SMU Business Unit
Source: TERI , 2012
DC distribution lines (voltage varies depending on distance) run along
rooftops from the battery bank to households over a short distance to
power lights, mobiles etc.
Solar DC micro grid Entrepreneur Driven
Running time : 5-6 hours
Installation Cost: Rs 3200 – 3800 per HH
Tariff: Rs 120 – 150 per month, charged
by the operators
Source: TERI , 2012
Institutional Framework
Entrepreneurs have invested 45% of the hardware cost. Having
seen the success of this initial phase, more entrepreneurs are now
willing to invest around 60% of the cost.
2%
12%
11%
74%
1%
34 systems implemented 34 systems implemented 34 systems implemented 34 systems implemented in UP, India in UP, India in UP, India in UP, India
Handicraft cluster Handloom cluster
Households Market place
Poultry
End user Distribution
� Providing access to population earning less than 1$/day
� Remote, tribal communities w/o cash disposable income
� Subsidy vs. financing – affordability ?
� Subsidy for capital infrastructure ?
� ensuing operational sustainability improved
quality of life
Solar Mini Grids in ChhattisgarhPro-Poor PPP
CREDA has reportedly electrified around 35,000
households through solar PV based mini-grids
Financing • Capital cost ~ 25000 INR (500$) per household
• Capital subsidy
- 18,400 INR (368$) per HH – by MNRE under RVE program
- Balance by state government
• Tariff per connection = 30 INR/0.6$ (2x11 W CFL)
• Tariff subsidy (by Chhattisgarh government)
- 25 INR (0.5 $) per HH connection
- In Sunderban region, tariff for mini-grids ranges between 2-3$ depending on light points (3-5) for 4-5 hours supply
Source: CREDA and WBREDA
Solar mini-grid model of CREDA
Source: TERI , 2012
Some Lessons• Decentralized, usually low
capacity, covering remote areas
• Usually small loads served
• Limited by capacity and duration
of supply
• Community as stakeholder
• Tariff based on flat rate
• Clustering of projects more
successful
• Inability to meet increased demand
• Single energy resource catering to
fixed load for fixed time
• Battery – vulnerable, overdrawl by
most consumers
• Difficulty in O&M because of
remoteness
• Social issues – tampering, non
payment etc.
� Technology development – Smartness of mini-grid addressing
some of the above challenges
� Hybrid systems – addressing single resource and load issues
� Opposed to popular approach “let the community handle” -
Each entity sticks to what it does best
In conclusion
Ecosystem(AAQS)
Appropriate technical
design
Innovative Financing
Local Skills
Enabling Policy
Su
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