Does the support from the Selco Incubation Centre assist enterprises in providing access to energy? – Time to look back

-- Nilanjan Ghose

Is the support of the Selco Incubation Centre actually helping enterprises with their business in providing access to energy? Would the new enterprises ventured out even without the support from Selco Incubation Centre? Is it necessary to have a “hands -on” operational incubation support? Should the incubation support be limited to the development of business plans? What can be done to support clean energy enterprises even better? These are just some of the questions asked during the detailed impact assessment study by the Indo-German Energy Programme-Renewable Energy Component” (IGEN-RE) programme of GIZ which has provided financial support for setting up and operating the Incubation Centre for the last 20 months (August 2012- February 2014). Since then, the Embassy of Switzerland and Deon Foundation are supporting the operations of the incubation centre.

Has the engagement with Selco Incubation assisted the clean energy entrepreneurs?

According to Mr. Rustam Sengupta, Founder of Boond Engineering & Development Pvt. Ltd, a last mile clean energy enterprise, Selco’s services have been beneficial. “The engagement with the Selco Incubation Centre has supported us in focusing on quality control of our products, assisted us in organizing banker’s awareness camps. The close interactions with the bankers have helped us in developing linkages for end user financing” says Mr. Sengupta. He adds that “last but not the least, it has assisted to raise capital from market without compromising on our core business model”.

“Yes, I would still have moved into the area of providing clean energy products and services even without the support of Incubation Centre. Actually, I started my operation before I came to know about the Selco Incubation Centre” points out Dr. Susmita Bhattacharjee, Managing Director / Founder, Pushan Renewable Energy Pvt. Ltd. “However” she continues, “the support from the Incubation Centre has allowed me a smoother transition in understanding of the technology and has also assisted me to have a better knowledge of the existing ecosystem.”

Pic 1 : On the job training in progress for the Selco Incubates

 

How can the incubation centre assist the clean energy entrepreneurs better?

Despite the largely positive feedback of entrepreneurs, Selco Incubation is searching for ways to customize and improve their programme. “Access to working capital is one of the key challenges which Mangaal is grappling with”, says Mr. Soraisam Devakishor Singh, Founder, Mangaal Sustainable Solutions Private Limited. “I have a ready market but have to slow down due to lack of working capital. Access to some initial working capital to support the firm’s growth is essential until the firm raises the first round of capital. The combination of access to working capital along with operational training would be of great help to us”.

Pic 2: Incubates with the Selco Incubation professionals

Eastern Envo Protect (EEP), a Guwahati based enterprise, is providing clean energy based home lighting systems to villages which are located within the flood plains of the Brahmaputra, one of the main rivers in eastern India, is in need of support for product innovation. “There is an opportunity to design the solar home lighting systems in a manner which can be easily removed/ dismantled from their present location in case of emergency. The flexibility of dismantling the system under stressful situation may be a unique and a key feature for the product” says Fazle Illahi, co-founder of Eastern Envo Protects.

Based on the discussions with different incubates, we feel that there are potentials for innovations to serve end users better. GIZ plans to focus on the product and process innovations necessary to encourage entrepreneurs to customize their products and services for rural consumers for different geographical regions.

 

About Selco Incubation Centre The Solar Electric Light Company (SELCO) through its Incubation Centre is promoting the access to energy by supporting clean energy enterprises. The objective of the Incubation Centre is to provide technical support to start-up enterprises selling clean energy products and services in rural area. The incubation centre strives to strengthen both, internal capacities of the enterprises and assists in developing the external market ecosystem to support the enterprise. Apart from assisting in developing the technical capacity of the enterprises to design solar home lighting systems, the Incubation centre also helps in training and capacity building of the selected rural technicians in the operation and maintenance of the system and in addressing the after sales services. In order to facilitate an enabling ecosystem, the centre is also organizing awareness creation camps for the rural bank officials within the project area of the entrepreneurs. Assessing the needs of the entrepreneurs, the Incubation centre has developed three training curriculums for incubates and rural technicians both in English & Hindi (regional language).

Spread the word on solar pumping ! Supporting farmers in Bihar to adopt clean technologies to improve agricultural outputs

                                                                                                                by Franziska Kohler

Water is running through irrigation channels to the fields where vegetables, maize, mustard, wheat and other crops of Vaishali farmers are being cultivated. The water is supplied by Vaishali Area Small Farmer Association (VASFA) – which has been supporting irrigation groups since over 40 years, providing more than 700 farmers with water from their diesel powered pumping systems in exchange for a monthly membership fee and an additional amount paid for water on an hourly basis. Recently, however, the usual loud pounding of the diesel pump has fallen silent.

The GIZ initial study titled “Solar Water Pumping For Irrigation” highlighted that low awareness about the technology among farmers and financial institutions, who can play significant role in the development of market for solar water pump by providing consumer finance, is a major challenge. Renewable Energy Component of the Indo German Energy Programme (IGEN-RE) of Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH hired the service of Claro Energy a private company providing off-grid solar solutions, to replace two diesel pumps with solar powered ones.  At these demonstration sites, diesel pumps, which were being operated by two VASFA groups, were replaced by solar water pumps, and the tariff collected by these groups will contribute towards upfront costs of replacement for the remaining groups.

Currently, farmers whose land are located outside VASFA’s catchment area either own private diesel pumps or rely on renting pump sets on an hourly basis. The former option is expensive, especially due to high maintenance and operating costs. About INR 3000 are spent by each of the farmer on diesel alone in the seasons of Rabi and Kharif. For renting a pump set for one hour farmers in the area pay INR 120 making rented pumps an equally  expensive as well as unreliable source of irrigation. “Getting water from an institution, such as VASFA, instead of private individuals”, Ram Chandra Thakur (62) says, “would give us more security concerning water access. Solar pumping would furthermore help us to save on irrigation cost.”

Educating farmers about solar pumping technology, including  operation and maintenance as well as technical features, such as output and operating times, is one of the main goals of the demonstration sites. About 250 farmers will visit the site(s) each year and attend the workshops and information sessions where their questions related to solar pumping will be answered. Simultaneously, these events will give solar companies the opportunity to gain a better understanding of their customers’ preferences and choices relating to the technology. In addition, the presence of bankers, NGOs and government agencies will be an integral part of these events giving them a better understanding about the technology as well as the obstacles faced by farmers interested in converting to solar. “The planning and installation of the two solar pumps has been a very enriching experience” highlights Nilanjan Ghose, technical expert of IGEN-RE. The sites for replacement of the two pumps were selected democratically involving all the irrigation groups under VASFA. The installation of the solar panels was customized to ensure minimum blocking of agricultural land. Santosh Singh, technical expert of IGEN-RE explains: “we hope that these demonstration sites will aid in educating and awareness raising amongst all stakeholders concerned, paving the way for similar installations and finally leading to a broader market-based uptake of the technology in Bihar”. GIZ is working towards development of market ecosystem for solar water pumps.

Water gushing out from solar pump to the agricultural fields at Lalpura Village at Vaishali, Bihar 

 

A solar pump demonstration site at Vaishali, Bihar

Starting a clean cooking revolution - Impressions from the Indian Clean Cookstove Forum 2013

The India Clean Cookstove Forum 2013, organised by IGEN-RE on 25/26 November, 2013, was the first event on cooking energy of this dimension in India. The presence of high ranking keynote speakers, such as the minister of New and Renewable Energy, Dr. Farooq Abdullah, and the participation of over 150 representatives of NGOs, entrepreneurs, research and finance organizations, as well as government agencies demonstrates the high importance attributed to clean cookstoves – a topic that has been around in India for over 30 years.

Dr. Farooq Abdullah, Minister of New and Renewable Energy,
calling for new action and cooperation in the clean cookstove sector

“The innovation of chulhas that was introduced in the 1980s didn’t work. The mission failed. What we need is a chulha that is effective, cheap and which people will be able to use. What we need are industrialists who produce this. Not because they are in love with our country and its people but to make money”. Referring to the National Programme for Improved Cookstoves, Farooq Abdullah, called attention to the needs of millions of Indian households suffering from indoor air pollution caused by the usage of traditional cookstoves, or so-called chulhas, and the crucial role attributed to the private sector to solve this problem. In order for the sector to live up to these expectations, adequate policy frameworks and market conditions have to be established requiring action and involvement of policy makers, donors, private enterprises, and the financing sector. The need for clean cookstoves is real and the technology to solve these problems is available; however, as Michael Blunck, IGEN-RE project leader, pointed out, the last mile to bridge the gap and reach consumers remains the sector’s largest bottleneck. To overcome this last mile, the forum aimed at bringing key players of the sector together in order to spur new dialogue and create a network for knowledge exchange and cooperation.

C. Liedtke, technical expert of IGEN-RE, summarising key
challenges and potential solutions for the supply of clean
cookstoves 

The event was preceded by a Practitioner Workshop where about 30 representatives from stove manufacturers and distributors used the opportunity to actively engage in discussions organised in breakout groups and jointly work out current challenges faced by the sector with regards to demand, supply and the market ecosystem. The pinpointed core issues identified served as valuable input for the panel discussions on the following day.

Representatives of manufacturers, NGOs, finance,
policies, and logistics discussed how the demand
for clean cookstoves could be created, their supply
improved and the market ecosystem developed

Panellists called for a more holistic and solution-based approach as opposed to a technology-driven one. It was pointed out that “the only thing that can be generalized about India is that nothing can be generalized: there are as many cooking solutions as there are cooking culture” (Paranjoy Guha Thakurta, journalist), and therefore the main focus has to move away from clean biomass cookstoves to tackling the cooking sector as a whole: users, and the food they cook have to stand in the centre of the discussion. Also the engagement of a broader and more interdisciplinary base was called for since the subject touches upon many fields, such as health, energy and gender. The general lack of awareness and demand for improved cookstoves was repeatedly named as a core challenge for reaching economies of scale and the cause for fragmented markets.“Potential end-users have to be able to see: what’s in it for me?” says Sujatha Srinivasan, Director of Servals Automation, highlighting the point of a missing value proposition for users.Mass awareness and marketing campaigns, improved market data on consumer preferences as well as direct support in the form of end-user financing, risk guarantees for banks and MFIs, as well as seed capital, soft loans and a more favourable tax structure for entrepreneurs, rather than grant and subsidy based approaches were called for.

Michael Blunck, project leader of IGEN-RE, presents Dr. Farooq Abdullah, Minister of New
and Renewable Energy, and Mr. Alok Srivastava, Joint Secretary of the Government of India,
with the CDM Programme of Activities that has been successfully registered. The Programme
will reduce the cost of stoves for end users through the sale of carbon credits.

The continuing cooperation between GIZ and MNRE and IGEN-RE will make an effort to integrate these inputs, such as providing risk guarantees to financial institutions, into their activity portfolio. Since 2012, the cookstove initiative under IGEN-RE has followed a holistic approach engaging in activities ranging from creating new financing opportunities through Carbon Finance to designing a marketing toolkit for cookstove entrepreneurs, and undertaking field studies to better understand user preferences and market conditions.

To learn more about the issues discussed at the event and to follow the next steps, please visit www. Energypedia.info.

Adding new value to traditional ways of production - Innovative business models for watermills in Uttarakhand

Traditional watermill in Baliya, Uttarakand

Using the power of water and converting it into mechanical energy has a long tradition in Uttarakand. However, owners of traditional watermills, so-called gharats, are recently facing increased competition from diesel and electric mills located directly at the markets where they grind wheat to flour. Although many nutrients get lost in the accelerated milling process of diesel and electric mills, the shortened processing time and convenient location allows them to sell their products at a higher price than traditional mills.

In cooperation with the Uttarakhand Renewable Energy Development Agency (UREDA), IGEN-RE follows a two-pronged approach to improve the livelihoods of mill owners: firstly, IGEN-RE supports the process of upgrading traditional mill technologies to increase their efficiency level and output. Secondly, the project develops models to set up additional sustainable livelihood activities based on the energy generated.

Water mill owners in Baliya, a small village near Almora all share concerns for their businesses in the near and long-term future. “It is the older people that come here. They like our flour and appreciate its superior quality” the mill owners say. “They are loyal customers who don’t mind travelling the extra distance down the river. But what will happen once they are gone?”

Khemsingh next to his flour scales

Further down the mountains, Khemsingh, the head of a 15 person household and owner of a watermill located along a water channel close to Dehradun faces a different situation. He explains: “there is no competition from electrical or diesel powered mills here, and there are only a total of three water driven mills in this area, but the demand for wheat grinding is higher than these mills can cope with”. Kamla, who has been operating her family’s watermill on her own since her husband died 29 years ago, confirms this statement. For 12 hours she grinds up to 500kg of wheat every day – when the demand is too high or if she needs the additional income, she also works throughout the night. For each kilogram of ground wheat, she earns 1 Rupee amounting to a daily wage of 400 to 500Rs. “With a more efficient mill, I could shorten my workdays and maybe also increase my income”.

      

Kamla at her work place

A Self Help Group (SHG) of 15 members, with support from the local NGO IDS, has developed a promising business idea based on the assumption that the improved mills will shorten processing time and increase milling efficiency. The concept foresees to carry out bulk purchases from mills, package the flour, and sell it off to wholesalers who would then distribute and market the product in local markets. By emphasising the product’s premium quality due to the traditional milling process, they can achieve a higher market price. Currently, individual farmers deliver their wheat to the mills and pick it up again once it is processed paying either in cash or flour. The new set-up would enable mill owners to increase their daily throughput allowing them to raise their turnover and revenues whilst decreasing transaction costs and establish long-term business contracts. SHG members on the other hand would get the opportunity to increase and diversify their portfolio of livelihood generating activities. So far, the SHG has been successfully engaged in the set up of dairy farming businesses, sewing classes, intra group lending schemes as well as insurance provisions to members and non-members.

One obstacle for the venture is a general lack of market data, e.g. it is unclear whether a premium price for traditional watermill products can be achieved and how much output the improved mill as well as the SHG are able to deliver. Another difficulty that has yet to be overcome is the need for a certification process that guarantees the superior quality of products from watermills in a transparent manner to wholesalers and end consumers. In cooperation with local and regional stakeholders IGEN-RE is working to overcome these barriers and to identify additional potential uses of the energy generated by the mills which, for example, could be utilized as a source of independent and decentralized electricity provision.

Synergy for Energy - A Workshop on Energy Access in Patna, Bihar

by Santosh Singh

"There is no silver bullet to address the energy needs. A variety of solutions are needed and there is no need for an either/or comparison across different solutions.”

By making the above statement at the UN Foundation's workshop ”Advancing Energy Access in South Asia”, Ms. Leena Srivastava (Director, Ministry of New and Renewable Energy, Govt. of India) aptly summarized the status of energy access efforts.

The UN Foundation, along with its several partners, organized a workshop on Advancing Energy Access in South Asia in Patna (Bihar). The workshop, held during 10-12 September, was well attended by practitioners, investors, government agencies, and multilateral and bilateral donors. The entrepreneurs shared their successes, challenges and next steps that they are working on for providing clean energy solutions. Financial institutions, government bodies and donors informed the audience about different ways through which they are helping entrepreneurs.

Mr. Satish Babu sharing his insight on adoption of technology.
 Picture Credits - Energy Access Practitioners Network 

The followings are the main lessons from the workshop:

1. The sector is in an early stage. Mr. Harish Hande (Co-founder SELCO) drew an analogy between a baby learning to walk and the sustainable energy access sector. He warned against impatience. He said the sector would become profitable gradually. Most of the entrepreneurs are working on finding a profitable way for providing clean energy in rural India. It is a tough task and it will take time.

2. All stakeholders need to work together. The entrepreneurs and others, who are working in this sector, need to work together and share their experiences. There are many success stories of individual entrepreneurs overcoming challenges. For example, SELCO (a pioneer in Solar Home Systems) figured how to work with bankers to get easy loans for buyers of solar home systems. ONergy (an enterprise working in West Bengal) solved the problem of providing repair services for its product in remote areas by creating small renewable energy centers. Greenlight Planet worked with villagers and trained them to become resellers of renewable energy products. All of these successes need to be shared so that other entrepreneurs can learn from them.

3. The sector needs more active support from financial institutions. Almost all entrepreneurs present in the workshop underlined the challenge of arranging finance for their ventures. They also felt that most of the buyers of renewable energy products require cheap and easy loans for their purchase. The existing financial institutions are not very forthcoming to provide these loans. On the other hand, the bankers mentioned many challenges they have to deal with in the rural energy sector, such as a perceived high risk and lack of information about the available products. However, entrepreneurs believe that many of the challenges can be overcome if financial institutions work more closely with the existing entrepreneurs.

The IGEN-RE team shared experiences from its different activities. Mr. Hari Natarajan presented learnings from GIZ's experience with micro-grid work in UP and West Bengal (you can download the presentation here).