Husk Power is ready to scale up and the potential for others to replicate their model is huge. The government has a great subsidy programme that covers most of the costs of establishing biomass rural electrification projects. Yet even with the huge unmet demand for electricity in Bihar, we’re still not seeing that replication. Why is that, Caroline Hartnell and Simon Desjardins asked Deepak Gupta, Secretary of the Ministry of New and Renewable Energy since 2008.
“I think the biggest challenge is to get more Mr Pandeys.”
I think the biggest challenge is to find the entrepreneurs, to get more Mr Pandeys. The second issue is bank lending. Scaling up requires a large amount of funds to be lent at low cost. An entrepreneur wanting to do a mini-grid electrification project will need a bridge loan to tide them over until the MNRE subsidy can reach them and then a further loan.
Is there anything you can do to encourage banks to lend on better terms?
I think we should do a CSR project with an Indian bank. The government has made it compulsory for companies to spend some money on CSR, so we need to find a banking institution that is able to go in and show that lending is possible and desirable. We are trying very hard with the banks, but so far we have not succeeded.
With solar lights, etc, banks are very much on board and doing a lot, but not with rural mini-grid electrification, which is much more viable than solar, as Mr Pandey has shown. Solar is expensive.
The key here is low-cost funding, not grants. Tomorrow I’m going to New York to a conference organized by Bloomberg New Energy Finance and I’m going to make the case for a global energy access fund of $500 million, which then has the ability to lend at say 4 per cent.
Are you thinking of a revolving loan scheme?
There would be some administrative expenses and some projects that may not succeed, but in general they will succeed so it will go on rotating. The Husk Power model can obviously be adapted, but ideally we want the fund to finance experimentation with other materials too, like pine needles.
Do you think if the money is there, the entrepreneurs will come?
No, finding entrepreneurs is also a task, but the money should be there and then we can go looking for entrepreneurs full tilt! When I retire from this job I will try to be involved in some activity where I will be full time chasing entrepreneurs. But the finance needs to be in place, too. The entrepreneur then just puts in their money, the bridge loan is taken up and paid back by the government subsidy, and this leaves a small, low-cost loan, which hopefully they’ll be able to repay. The Shell Foundation and Rockefeller Foundation and Khemka Foundation and others should all put in some money. Or it could be a matching fund – say, 50 per cent from the government, 50 per cent from some kind of fund.
The question is how do I motivate people, how do I bring in the entrepreneurs, even if we can lend to them at a low cost? I think we need to look beyond people like Gyanesh Pandey. We need more than just social entrepreneurs, otherwise many projects would already be under way! We need to find some way to overcome the lack of entrepreneurship.
Our idea is that you have local entrepreneurs who earn a reasonable amount of money but do their work in a limited area. So if there are 5,000 villages to be covered and I have 500 entrepreneurs, very good. They earn some income, they create jobs for the technical people involved, and they create jobs in the buying and selling of the by-products. Then with light becoming available, maybe more jobs will be created, so it’s good for rural areas. And it’s self-financing after some initial low-cost funding and training. I think it’s the best thing that we can do.
India’s energy deficit
At present around 500 million people in India have no electricity, of whom the vast majority are villagers. In Bihar, an estimated 75 per cent of the population of around 90 million either have no access to electricity or receive power only for an unpredictable two or three hours a day. The government has declared that more than 20,000 villages in Bihar ‘cannot be reached’ by extending the traditional grid.
Photo credit: Pradeep Chakraborty