Oorja‘s mission is to democratize clean energy access by acting as catalysts in empowering rural off-grid communities to transform their crop waste and sunlight into reliable and affordable energy. As project developers of decentralized energy solutions, our aim is to deploy smart mini-grids that are operated by BoP communities. This would address their unmet needs of lighting homes, powering small businesses and irrigation pumps, thus leading to socio-economic growth and climate change mitigation.
Sun-Connect had a chance to interview Amit Saraogi, CEO & Co-Founder.
SC News: What is your experience: which product, beyond lighting, customers request the most? And which other appliances for Solar-Home-Systems you think should be provided in future?
Amit: At the household level the strongest demand is for mobile phone charging at home, oftentimes more than lighting. Thereafter, they request for fans and TV. For productive uses of energy, small shops require lighting to extend business hours beyond daylight, SMEs particularly agro processing industry want reliable power to run cold storages and refrigeration units. Farmers ask for water services using solar irrigation pumps to reduce their input costs. There is also demand for electricity to start computer training centres, tailoring units and beauty parlours.
Based on our surveys, rural business consumers spend up to 50% of their revenue on diesel and households spend 20% on kerosene and therefore, are willing and able to replace these fossil-fuels will cleaner and more affordable resources.
SC News: When companies grow, the need for good and reliable staff is big. How do you find your staff?
Amit: It has been difficult to find well qualified, talented and motivated personnel and there is high attrition in this sector as a lot of them are not suited for rigors of off-grid rural environment. We find our staff by posting vacancies on job boards at academic institutions, training centres, publicizing opportunities in newsletters from clean energy networks and alliances, through word of mouth at conferences and references from colleagues and friends.
SC News: The market in developing countries is often influenced by local corruption, insecure governmental policies, bureaucratic hurdles for customs clearance. Which obstacle is/was for your business the most challenging one – and why?
Amit: We have experienced some structural and institutional barriers. The regulatory regime remains unclear for private distributed energy providers and the existing legislation is open to alternative interpretation and rent-seeking with bureaucratic delays. There is also the hurdle of navigating through caste dynamics, social and cultural barriers in rural markets.
We recently imported solar panels and lithium ion batteries from Germany for installing our first mini-grid and did confront problems with customs clearance with excessive administrative paper and need to liaison with several government authorities which was both costly and time consuming and a distraction from actual execution. We eventually had to employ a customs agent to obtain the necessary clearances on the consignment.
SC News: In your view, what are the main challenges in making renewables an affordable easy-to-access energy resource?
Amit: There are number of challenges that are preventing clean energy from becoming a large-scale reality, including access to finance and building the value chain where opportunities are limited for raising equity and debt capital; sustainability and scale with last mile linkages for distribution and sales to consumers in rural locations remain an obstacle; access to talent as a result of inadequate finance to pay market rate salaries to hire and retain qualified staff, particularly at the mid-management level; difficultly in measuring impact and an absence in the standardization of impact measurement metrics impedes investors to compare social, economic, and environmental returns of different investments; and range of policy barriers, including restrictive laws on foreign capital flows and regulations on equity investment and blended finance. Some specific operational challenges are, as below:
- Solar power, despite tariffs having dropped significantly, is still considerably more expensive than conventional resources like coal and operators have to compete with the highly subsidized grid tariffs.
- The capital costs of mini-grids and micro-grids are distributed over a large number of components, making it very difficult to achieve major cost reductions.
- Storage technologies for decentralized systems are not very advanced and cost-effective. Lead-acid batteries, which are the default technology for energy storage in micro-grids have significant technical challenges that limit their usability.
- Smart meters for electronically monitoring and managing usage are too expensive, largely due to the small size of the current market.
- Anchor productive load users to ensure adequate, predictable consumption, can be hard to find and manage.
Despite these hurdles, the market for renewable energy technologies is gaining currency. Around 1.2 billion people, or over a fifth of the world’s population, have no access to electricity, and a billion more have only unreliable and intermittent supply. 85% of these people live in off-grid rural areas, mostly in India and Africa. Lack of energy access is a fundamental barrier to economic development, women and children from reaching their full potential, and basic health and education services from functioning. Global demand for energy is rapidly increasing due to population and economic growth — with majority of that growth taking place in emerging economies. We can no longer provide electricity to all citizens purely from conventional resources like coal and gas and by extending the grid. It is time to embrace new clean technologies. Solar and other renewable hybrid systems and micro-grids offer the ideal choice for much of off-grid communities. They have immense potential to gain more market traction with the appropriate enabling conditions. I am buoyantly optimistic renewables would become a significant part of the global energy mix in the next few years.
SC News: Is the off-grid market Driven More by Policy or Technology?
Amit: I believe policy is a bigger driver for the off-grid market. Although universal electrification in India was promised before the turn of the century, successive governments have failed to expand sufficient energy access, due to systemic failures at the policy level with regulatory bottlenechs, conflicting legislations between the central and state governments, corruption, bureaucratic delays, poor implementation and lack of resources for large infrastructure projects.
The problem is that governments are too focused on the incumbent energy generation model of centralized gigawatt-scale generation, transmission and distribution. The existing national grid is highly resource-intensive and state utilities are mired in debt due to power transmission losses and theft. Generation capacity in the national grid is woefully short of the rapidly increasing demand of India’s rising population and economic growth. Supply in rural and peri-urban areas is highly unreliable, inadequate or completely unavailable. As a result, rural economies face stagnation, electricity being a necessary condition and critical enabler of economic development. This leads to high unemployment, an unsustainable rural-urban migration crisis, and reliance on traditional fossil-fuels.
India is at the intersection of two major challenges when it comes to electricity: how to provide reliable electricity to approximately 235 million people in rural communities who currently lack access; and how to control the environmental impact of powering such a large population and expanding economy. Not only is the grid no longer a viable option but also incapable of reaching those who need energy the most in off-grid rural areas. It is enormously expensive, takes decades to expand, and typically relies on ‘unburnable’ resources like coal and gas causing large-scale adverse climate impacts. There is no favourable policy to mainstream decentralized systems in the national planning process and this needs to change, if we are to accelerate energy access for hundreds of millions of people. Decentralized generation offers a more flexible, faster and affordable system of distributed, sustainable power sources that will allow the developing world to leapfrog the centralized model. Thus, an Integrated Energy Policy that advocates decentralized stand-alone systems for generation, and micro-grids and mini-grids for distribution where grid connectivity is not feasible and allows for private sector engagement on license-exempt models needs to be adopted.
Governments will have to set ambitious renewable energy targets, commit sizeable budgets, increase the availability of capital through government provisioning of grants, equity and subsidized loans to move from energy poverty to energy access. A good example of that is the new Uttar Pradesh energy policy, state where our first mini-grid is being inaugurated. According to this policy private distributed energy providers are being promoted to generate, store, transmit and distribute clean energy from solar and biomass with up to 30% of capital cost available in subsidies. It has also laid the foundation for these companies over time to integrate with the national grid. If we are to reach the mission of universal electrification, other states should replicate this policy framework.
Facts and figures
Name of the company: Oorja Development Solutions India Private Limited
Founded: June 2015, incorporated on 15 December 2016
Headquarters based in: Delhi, India
Oorja is a for-profit social enterprise that deploys smart DC solar mini-grids (8-10 kWe) and hybrid AC mini-grids (25-30 kWe) powered by biomass gasification and solar PV to generate, store and distribute clean, reliable and affordable electricity to un/under-electrified small businesses and households in rural communities. We also replace diesel pumps used for irrigation by farmers with solar powered DC tiny-grids and valorize char, by-product from gasification into a natural soil amendment to help improve crop yields and sequester carbon. Our business model is to franchise the mini-grids for operations to local entrepreneurs and women’s cooperatives, leveraging their position of trust within the community to establish last-mile linkages. This micro-franchise model allows us to enter the market more easily and scale up rapidly. Revenues come from sale/lease of plants to franchisees and annual maintenance contracts. Franchisees have multiple revenue streams (electricity, char, waste heat) and employ PAYG for collections.
We are focusing on productive uses of energy to establish an anchor load as businesses have significant, stable demand for power, enhancing viability of the mini-grid. We also help stimulate creation of new micro-enterprises and jobs through entrepreneurial skill development, capacity building and access to finance. Clean, reliable and affordable energy from mini-grids will not only promote Enterprise Development, Agriculture, Education and Health but also reduce energy costs by up to 40% versus the costs of kerosene and diesel, and lead to a reduction of ~1 million tons of greenhouse gas emissions per year for every 1000 villages electrified.
Countries/regions of activity: India
Number of staff worldwide: 7
Email contact: email@example.com
Any other interesting Fact/Figures?
It gives us great pleasure to announce the inauguration of our first clean energy mini-grid in “Sarvantara”, an off-grid village in Bahraich district, Uttar Pradesh, India on 6th June 2017. After months of preparation, we will be deploying an 8 kWe solar DC mini-grid that will provide reliable and affordable electricity and irrigation services to more than 1000 BoP consumers. We are installing smart meters to collect and analyze live consumption data for demand forecasting and system sizing. This will also enable us to integrate prepaid mobile bill payments and reduce downtime in customer servicing. We are hiring a woman to operate and maintain this mini-grid in our effort of gender mainstreaming and unlocking women’s potential towards energy access.
This is the first step towards our mission of democratizing energy access to build inclusive economies and resilient communities. It will provide us the necessary platform to begin promoting enterprise development, agricultural improvements, education and health through decentralized energy solutions. By harnessing distributed energy for productive uses, we will be able to strengthen local economic development, increasing demand for our solution and bringing jobs into the local economy. We thank all our partners and supporters in helping us achieve this milestone and bolstering our resolve to scale up rapidly to accelerate the impact and empower millions of underserved to live with dignity.