Business Models for Off grid solar for Electricity Access in Rural/Urban India

Transcription

1 Conference on The Business of Off grid Lighting in India 22 November 2013 IFMR, Chennai Business Models for Off grid solar for Electricity Access in Rural/Urban India Anoop Singh Associate Professor Dept. of Industrial and Management Engg. IIT Kanpur Electricity Access Left outside the Grid CPSUs G IPPs Captive T & BS Regulated Market D&RS G C C C C C C Note: Arrows Represent Contracts Unregulated Informal Supplies 1

2 Emergence of Informal Electricity Suppliers Areas not served by distribution utility Unaffordability to pay access fees Operational difficulties Lack of infrastructure Quality of Supply Erratic, unreliable Emergence of Informal Electricity Suppliers (Contd.) Micro entrepreneurs fill the need gap but Serve as a stop gap Charge exorbitantly high rates No quality standards, precautionary measures observed Increase financial burden on state utility by contributing to T&D losses (in case of wire taps) Non regulated markets 2

3 Alternatives in Informal Markets Users pay far higher prices for these alternative sources Entrepreneur supplying through generation unit Entrepreneurs renting out battery units Solar Lanterns (own/rental) RE Mini grids (solar, biomass, hybrid etc) Self owned battery units Self owned gas cylinders Candles Illegal use of grid supply! Characteristics of Business Based Market Users are charged a fixed amount for each connection on dil daily basis Questionable Legality (no rural areas) No payment receipts No payment delays 3

4 Drivers for Demand for SPV based lighting in Developing Countries Demand for Lighting Demand for SPV Limited Access Demand for Clean Energy Demand for SPV is driven (more) by lack of access to electricity than a desire for clean energy. Limited access means Legislative Framework Electricity Act 2003 Rural Electrification ti Policy Provision of access to electricity to all households by year Quality and reliable power supply at reasonable rates. Minimum lifeline consumption of 1 unit per household per day as a merit good by year

5 Definition of Village Electrification Before October 1997 if electricity is being used within its revenue area for any purpose whatsoever. After October 1997 if the electricity is used in the inhabited locality, within the revenue boundary of the village for any purpose whatsoever. MoP February ) Basic infrastructure such as Distribution Transformer and Distribution lines are provided in the inhabited locality as well as the Dalit Basti hamlet where it exists. 2) Electricity is provided to public places like Schools, Panchayat Office, Health Centers, Dispensaries, Community centers etc. 3) The number of households electrified should be at least 10% of the total number of households in the village. RGGVY RGGVY provides for Decentralized Distributed Generation (DDG) Systems based on conventional & non conventional energy sources where grid supply is not feasible or cost effective. 5

6 Informal Markets for Electricity Limited access to Grid power and continued Power Shortages. Millions of hawkers in urban, semi urban and rural areas with no grid access. Traditional sources of illumination candles, kerosene wick lamps, lanterns. Open circuit battery incandescent bulbs/cfl and or LPG based mantle light. Informal Markets: Mini grids supported by Diesel Generators (DG) and battery lamps with compact fluorescent lamps (CFL) on rent. Note: As per a report on Informal Sector in India ( ), there were an estimated over 9.32 million enterprises outside household premises without fixed location (NSSO, 2001). Rental Business of CFL Battery Lamps Use of CFL Battery Lamps, LPG Mantle Lamp 6

7 5KVA Diesel Generating Set Powering Mini grids Mini grids power by DG set Table: Sources of Illumination for Hawkers: General Characteristics Lamp Energy Hours of Case No. Description Wattage Source Use Case 1 Owned CFL Battery Lamp 8 Grid 4 Case 2 Rented CFL Battery Lamp Rawatpur 8 Grid 4 Case 3 DG Based Mini-grid Nankari Diesel 4 Case 4 DG Based Mini-grid Kalyanpur Diesel 4 Case 5a Temporary Grid Supply Unmetered 100 Grid As reqd. Case 5b Temporary Grid idsupply Mt Metered 100 Gid Grid As reqd. Case 6 LPG Mantle Lamp --- LPG 4 Case 7 Solar Lantern 10W/ 7W (Self-financed) 7 Solar 4 Case 8 Solar Lantern - 10W/ 7W (Financed) 7 Solar 4 Source: Singh, Anoop, Informal Markets for Electricity: Economics of lighting for Hawkers in India, Intl. Journal of Energy Sector Management,

8 Making Choice Initial cost Vs Daily Cost Da aily User Cost (Rs.) Initial Cost vs User cost per day Case 4 Case 5 Popular Case 2, 3 Case 6 Case 1 Economical Case 8 Case Initial Capital Cost (Rs.) CO2 Emissions Vs User Costs per day Cost (Rs. per 100 ns for 4 hours use) User lumen CO2 Emissions vs User cost per day Case 2 Case 4 Case 5 Case 1 Case 6 Case 3 Case 8 Case 7 Green Options CO2 Emissions (gms per 100 lumens for 4 hours use) 8

9 Solar PV Based Business Model Objective: Greening the Informal Market Interventions by replacing use of Diesel in DG based mini grid and grid based electricity charging Project: PV based direct Access and stored electricity access Business Model: Profit fitoi Oriented scalable lbl and replicable business model based on user charges. Schematic Layout of Kalyanpur Vegetable Market Project A B C D F 36m x 12m G E Notes: A Rooftop for Phase I; B E Rooftop for potential extensions in Phase II; F G Hawkers area for mini grid 9

10 Project Description Location: Kalyanpur on NH 2, Near IIT Kanpur Technology: c Silicon / mc Silicon based fixed panel Photo voltaic modules with duel mode operation and limited storage capacity Size: Phase I 5 kw PV Panels at A, Phase II 5 KW at B/C/D/E Storage: Phase I 3 kw battery Monthly Av. Solar Radiation: (kWh/m2/day) Equator Pointed 26 0 Tilted Surface Potential Investors: Existing Mini grid operator, VCs, External Financing, Banks/Financial Institutions Revenue model: Daily user charge from mini grid connected users (evening), day users, battery charging for CFL/LED lamps (individual and rental business) Total Scalable Size (multi site, one city): kw in 3 5 years Financing Corporate Structure: Limited Liability Partnership (Proposed) Equity: 30 % (Promoters, VC) Debt: % (Banks/ Financial Institutions, Carbon Funds etc.) Grant: % (Local/Central Govt., International/Bilateral Agencies (higher for initial projects). Low or none for later projects. 10

11 Structure of the Proposed Business Model Financing (Equity) Existing DG operator / Investors Financing (Grant) MNRE & MLA/BA Financing (Loan/Grant) Banks/FIs, Carbon Funds, External Institutions Finan ncing Small Scale CDM / Programatic CDM Rights over rooftop use Shop owners owners (Phase II) PV Based Hawker Lighting Project (Kalyanpur) Equipment Supplier (incl. LTM) O & M Existing DG Operator / New entity / Equipment Supplier Op peration & Ma aintenance Consumers Minigrid Connected Hawkers Charging Station for Individual and Lamp Rental Business Institutional Consumers Nearby School (Day Users) Consumers Permanent Shops (Day & Night Users) Revenue Model Business Model: Key Drivers Participation of Existing Operators in the Informal Market Replicable Project Design and Project Report Modularity of the Project Cluster Approach (Identified similar potential project locations nearby) Scale in O & M for investors setting up multiple projects Economies in maintenance contracting to vendors Peer Learning from Nearby Projects Access to Trained Manpower for setting up projects and O & M 11

12 Implementation Strategy Award! PV Based Replicable Business Models for Informal Markets PV Based Replicable Business Models for Informal Markets for Electricity received the Best Business Model Award at the Asia Clean Energy Forum 2010 organised at the Asian Development Bank (ADB), Manila in June

13 Market for Off grid Solar Proportion (per 1000) of households with electricity for domestic use NSS Report No. 535: Housing Condition and Amenities in India: July, 2008 June,

14 Proportion (per 1000) of households with electricity over NSSO rounds 49th round (January June 1993) 58th round (July December 2002) 65th round (July 2008 June 2009) Electricity Access to Weaker Sections of the Society (Census 2011) Rural Total number of Electricity Kerosene Solar energy Other oil Any other No lighting Urban households SCHEDULED CASTE HOUSEHOLDS BY MAIN SOURCE OF LIGHTING Total 44,226,917 26,104,596 17,464, , , Rural 32,919,665 16,282,275 16,136, ,455 88, Urban 11,307,252 9,822,321 1,327,104 29,836 23, SCHEDULED TRIBE HOUSEHOLDS BY MAIN SOURCE OF LIGHTING Total 23,329,105 12,061,513 10,637, ,737 69,711 73, ,998 Rural 20,142,434 9,306,073 10,258, ,471 61,842 65, ,819 Urban 3,186,671 2,755, ,902 9,266 7,869 8,015 27,179 SCHEDULED CASTE HOUSEHOLDS BY MAIN SOURCE OF LIGHTING (%) Total 44,226, Rural 32,919, Urban 11,307, SCHEDULED TRIBE HOUSEHOLDS BY MAIN SOURCE OF LIGHTING (%) Total 23,329, Rural 20,142, Urban 3,186,

15 State/UT community TV cable TV cooperative society self-help group centre connection (1) (2) (3) (4) (5) Jammu & Kashmir Himachal Pradesh Punjab Chandigarh Uttaranchal Haryana Delhi Rajasthan Uttar Pradesh Bihar Sikkim Arunachal Pradesh Nagaland Manipur Mizoram Tripura Meghalaya Assam West Bengal Jharkhand Orissa Chhattisgarh Madhya Pradesh Gujarat Daman & Diu Dadra & N. Haveli Maharashtra Andhra Pradesh Karnataka Goa Lakshadweep Kerala Tamil Nadu Pondicherry A & N Islands all-india

16 Sustainability of Business Models Technological Sustainability Operational Sustainability Financial Sustainability Environmental Sustainability Challenge to off grid electcity access business models Difference between Generation Profile and Load dprofile Hence Storage Btt Battery Scalability to serve growing need of existing consumers (mini grids) Environmental issue battery disposal Growth in income, aspirations and, hence, electrical load. Competition from free/cheap grid power! 16

17 Thank You Selected Readings Economics, Regulation and Implementation Strategy for Renewable Energy Certificates in India, India Infrastructure Report 2010, OUP. A Policy for Improving Efficiency of Agriculture Pump sets in India: Drivers, Barriers and Indicators, Climate Strategies, UK, Working Paper 2009 Climate Co benefit Policies for the Indian Energy Sector: Domestic Drivers and North South Cooperation, Climate Policy 9 (5) Informal Markets for Electricity: Economics of lighting for Hawkers in India, International Journal of Energy Sector Management: Special Issue on India, 3(3), , A Market for Renewable Energy Credits in the Indian Power Sector, Renewable and Sustainable Energy Review journal, Elsevier, 13 (2009) Nationally Tradable Renewable Energy Credits for Renewable Portfolio Obligation in the Indian Power Sector, SEE Conference Proceedings, Bangkok., kk Nov Rural Electrification in India: Economic and Institutional aspects of Renewables, with James Cust and Karsten Neuhoff, EPRG WP 0730, University of Cambridge, UK.,

18 Courses, Workshops and Conferences Short Term Course Challenges and Implementation Issues post Electricity it At2003 Act 2003: Regulatory, Policy & Technical lsolutions, April, 2004 International Conference on Power Market Development in India: Reflections from International Experience, April, 2005 National Workshop on Project Financing for Energy and Infrastructure Sector, April 19 22, nd National Workshop on Project Financing for Energy and Infrastructure Sector, April 24 27, 2008 Capacity Building Programme for Officers of Electricity Regulatory Commissions, 30th June 5th July, 2008 Courses, Workshops and Conferences (contd.) 2nd Capacity Building Programme for Officers of Electricity Regulatory Commissions, 3 8 August, rd Capacity Building Programme for Officers of Electricity Regulatory Commissions, August, 2010 Energy Conclave 2010, 8 15 Jan th Capacity Building Programme for Officers of Electricity Regulatory Commissions, July, th Capacity Building Programme for Officers of Electricity Regulatory Commissions, Oct., 2012 Ppts and selected papers are available on 18