Problem

Lack of access to energy is a critical problem in rural India, including in the state of Bihar. Poverty rates are high, so rural communities often need subsidies to afford electricity. In the few communities that have electricity, service can be unreliable.

Solution

DESI Power launched in 1996 as a non-profit organization dedicated to meeting rural energy needs. The organization works to reduce rural poverty by creating local jobs based on electricity from power plants that use local renewable energy resources.

DESI Power designs and installs biomass gasification mini-grid systems in villages, primarily in Bihar. Systems range in size from 30 kW to 150 kW and use locally produced feedstock consisting of agri-residue, twigs and rice husk. The organization serves both commercial and residential customers, but their primary customer base is commercial, including micro-enterprises, agricultural services (water pumping for irrigation) and cell phone towers.

India’s unregulated mini-grid market presents opportunities for power producers. In the absence of regulation, DESI Power can sell electricity to any willing buyers, including customers connected to the central grid. DESI Power provides high-quality power that’s more reliable than the central grid and cheaper than diesel-powered electricity, so its services are attractive to customers. The organization is focused on biomass-powered mini-grids, but it also serves some grid-connected customers.

DESI Power works closely with local communities on all of its projects. The organization’s model is built on developing local communities, energy resources and markets. To promote economic development across sectors, DESI Power invests not only in energy infrastructure but also in local activities that promote productive uses of energy. By developing the local economy and infrastructure, DESI Power builds sustained demand for its energy services.

Innovation

Community development drives DESI Power’s success. The company links energy services with productive uses of energy, such as irrigation pumps, agricultural services and refrigeration. By promoting energy-based businesses, DESI Power overcomes a key barrier: low or non-existent demand in poor communities.

During the planning phase, DESI Power conducts extensive village-level market surveys to identify the most promising locations for mini-grids. Market surveys ensure that the project will have a reliable customer base. DESI Power also develops commercial activities alongside its residential projects. Through Rockefeller’s SPEED program, for example, DESI Power is working to establish power purchasing agreements with cell phone towers to serve as anchor loads for its operations.

Service reliability is key to DESI Power’s success. Even grid-connected customers opt for DESI Power’s services, because the electricity is often more reliable than what the grid provides. In the village of Araria, for example, poor grid performance made DESI Power’s mini-grids a more attractive option, even for grid-connected customers.

Challenges

DESI Power faces barriers to serving larger loads and scaling up its operations.

First, each of DESI Power’s installations operates as a stand-alone plant independent of the others. This model is less efficient, with higher generation costs. As DESI Power grows, consolidating plant operations could increase efficiency and reduce overall generation costs.

In addition, as DESI Power expands, it will need new sources of biomass feedstock. Currently, power plants rely on local farmers to provide biomass to generate electricity. As demand for electricity grows and loads increase, local agricultural by-products won’t provide enough fuel. To meet the need for additional sources of biomass, DESI Power is working to develop fuel crop plantations.

As part of its expansion strategy, DESI Power is also exploring hybrid energy systems. The organization has retrofitted some of its biomass gasifiers to run on biogas, and the organization is also exploring solar technologies.

Lessons Learned

Low demand for electricity is the primary challenge for energy development in rural villages. DESI Power’s business model depends on a reliable market with a significant load prior to investment. These mini-grid projects succeed because DESI Power develops new markets for energy by promoting productive end uses.

In addition, using anchor customers to create loads makes residential projects more sustainable. Commercial anchor customers provide significant, reliable revenue.