Business, renewables and rural development

I recently came across a report that found UK businesses were increasingly investing in onsite renewable energy generation. The number of onsite generation projects developed by UK businesses increased by 53% in 2012, and with the majority of these using wind and solar technology.

In recent years the costs of renewable technologies like wind and solar have fallen considerably, whilst the annual average price of gas and electricity has dramatically increased since 2002 for non-domestic customers: gas by 121% and electricity by 93% (p.30). Together this has contributed to the current trend of businesses taking up onsite renewable generation.

©SolarSister

Beyond this, many companies are now taking steps to own or acquire renewable energy directly at source. Ikea recently bought a 46MW wind farm in Canada, just three months after acquiring a 7.6MW wind farm in Ireland as part of its ongoing efforts to achieve energy independence by 2020. The company has also begun offering ‘off-the-shelf’ solar power packages to UK consumers, helping bring domestic solar installation to the mainstream.

Google is another company making global efforts to secure a direct supply of renewable energy. It has just signed a power purchase agreement to acquire all the electricity produced by a new 240MW wind farm in Texas and is now making its first renewable energy investment in Africa. 

Google has long been a global leader in advocating renewable technology, but this recent investment in a 96MW solar power plant in South Africa is especially admirable. South Africa is nearing grid parity and the country needs to invest in greater electricity supply capacity as it currently suffers from an unreliable, inadequate electricity system (Winkler, 2007). Only 55% of the rural population had access to electricity in 2009 according to IEA data, as outlined in this report from the US Energy Information Administration. Google’s project, which will be one of the largest solar PV installations on the African continent, plans to help address this by delivering a supply of renewable energy to over 30,000 South African homes. The project will create jobs for rural people in the Northern Cape area and has also committed to providing rural development programmes that focus on education, skills and technology transfer, enabling transformative social and economic development. 

©Google

The installation of renewable energy systems has long been association with job creation and economic development, and there is a need for more businesses, small and large, to be investing in renewables in rural areas (Akella et al., 2009). To maximise this form of economic development there needs to be greater transfer of technical knowledge and skills, greater support of rural households and entrepreneurs participating, more awareness of the social benefits of renewable installations, effective and replicable business models, appropriate subsidies put in place where needed and greater infrastructural support generally for accessing renewable resources, especially in Africa (Martinot et al., 2002; Bugaje, 2006). If these are established, the (potential) success of Google in the future can be replicated across the African continent and in rural areas over the world.

Water and Solar

An interesting development regarding the use of solar PV technology to desalinate drinking water for cattle in the US recently came to my attention. 

©flickr/MartinPilat

There is obviously massive potential for technology that enables solar-powered water desalination, and there could be a huge market for this application, but so far high costs have prevented further development. The application of such technology to small-scale systems in off-grid areas, however, may be more viable - especially so when considering the falling cost of solar PV. In 2006, India’s Barefoot College built the country’s first solar-powered desalination plant in Kotri, a small village in the water-deprived region of Rajasthan. The village receives grid electricity, but this is erratic and insufficient to power an adequate supply of desalinated water for consumption and use in cooking and cleaning. The plant now provides a regular and affordable supply of drinking water for the entire rural community.

Khanna et al. (2008) write that solar distillation and desalination units in Rajasthan are “most appropriate for remote area dwellers because (they are) economical, easy to construct and maintain”. Their study determines that the use of solar energy for this purpose can help improve the health of rural people, is very cost-effective and requires greater investment by the government. They also point to ample solar radiation across the region as an important factor in their support. Arjunan et al. (2009) also consider the status of solar desalination in India and call for the wider use of solar distillation technology across the country. They argue for the attractiveness of solar distillation over other conventional technologies, pointing to its effectiveness as a small-scale solution for remote communities in rural areas where there is a lack of water. They do, however, point to the need for further research into improving efficiency. Bhattacharyya (2013) discusses how solar stills have improved in efficiency in recent years, and looks at the rising popularity of new ‘capillary’ forms of solar stills, a method of solar-powered water desalination that uses specialised material to facilitate rapid evaporation with minimal heating (Bhattacharyya, 2013). Bhattacharyya suggests that this type of solar still is an attractive method of accessing drinking water for rural people in remote areas. You can read a brief description of how the solar-powered distillation of water actually works here.

Children in Bolivia purifying water
using a solar water disinfection
method
©flickr/EcoagriculturePartners

In 2006 Kang et al. completed a study into a new commercial solar water heating system which was found to be cheap, easy to transport, effectively operational at scale and effective in preventing waterborne disease in both emergency situations and in small rural communities generally (Kang et al., 2006). Other solar-based water decontamination technologies that have spread over the world range from water disinfection via simple sun exposure to more complex hybrid solar water purification and PV conversion systems (McGuigan et al., 2012; Vivar et al., 2010).

Water scarcity is one of the biggest problems facing the world today. The application of solar power to decontaminating and desalinating water has been around for a while, but new technologies that are even more efficient and sustainable need to be invested in to ensure rural communities have access to a constant, continued supply of consumable water at both small and large scales in the future.

The challenges facing solar in India

In my last post I talked about why solar power has such potential in India, and so thought it would be a good idea to look at some of the challenges facing the spread of solar power in India. Across the Indian power sector in general, there are a variety of challenges that in turn are affecting the success and effectiveness of the current “solar shift”.

The IEA categorizes applications of solar power into: off-grid domestic, off-grid nondomestic, grid connected distributed and grid connected centralized. When looking at India – specifically, when looking at the supply of renewable energy to rural areas of India - the most exciting developments taking place are usually related to the growing use of solar power for decentralized, off-grid domestic and nondomestic purposes, and in this blog I am generally referring to these types of applications over others when discussing India. There are various ways off-grid solar power can be delivered to rural consumers, and I’ll consider some of these in this post.

I’ll start with looking at a report on the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) of the government of India, which points to distribution as being the weakest link in the power sector value chain, and notes that sustainable development of the Indian power sector relies on resolving issues such as Aggregate Technical and Commercial losses (AT & C losses). The concept of AT & C losses was introduced to provide a “realistic picture of the energy & revenue loss situation” (p.2) that was occurring in the Indian power sector. “Technical Losses” generally refers to transformation losses, low power factor and high resistance; issues which plague India’s power distribution network and can lead to large amounts of wasted energy in the grid system. “Commercial Losses” usually refers to the illegal consumption of electricity that is not metered and for which revenue is not collected. In 2013 India registered around a 30% loss in AT & C. This means a third of power generated is lost before getting used (at least officially) in India.

These inefficiencies in distribution, along with a high dependence on fossil fuels for power generation, leave the Indian grid system ineffective and undesirable in its current state. The wider issue of electrifying hundreds of thousands of villages across the country that do not have access to the grid should not, and in many cases cannot, be resolved by expanding the grid system. Of the off-grid renewable energy alternatives, solar PV is the leading favorite across the country due to its noiselessness, easy maintenance, simple operation, zero-emission power generation and superiority in efficiency (Moosavian et al., 2013). An analysis by Kolhe et al. (2002) demonstrates how solar PV-powered systems are a lower cost option to diesel-powered systems even under unfavourable economic conditions. The use of solar generation and other renewable energy technologies for powering heating, ventilation and air-conditioning systems (HVAC) is especially popular in India (Khare et al., 2013).

Where grid power is unavailable due to economic or practical reasons, solar has now become a relatively cheap source of energy, the use of which India has become increasingly receptive to. It should be remembered that India was the first country in the world to set up a ministry of non-conventional energy resources in 1980. Being a tropical country, India has an average annual temperature ranging between 25°C and 27.5°C and receives adequate solar radiation for 300 days of the year, meaning that the country as a whole receives an annual amount of sunshine that is equivalent to over 5,000 trillion kWh. Almost all regions of India receive between 4-7 kWh of solar radiation per square meter per day. A recent study assessed the potential of CSP* generation in northwestern regions of India, where there is the highest annual solar radiation in India and a large amount of available land, and estimated this to be over 2000GW (Purohit et al., 2013). The potential for solar in India is huge, and many are taking advantage of the available market for it (Arora, 2013).

©flickr/meghta2016

Across India’s poorest states, hundreds of small private companies are setting up local solar power stations, bringing off-grid power to rural and unconnected villages. One such company is the Omnigrid Micropower Company (OMC), which works to power unconnected rural communities by building small-scale power plants with renewable sources. The company works according to the assumption that access to power in these communities will encourage job creation and therefore economic development. It has enjoyed recent success with its ‘Micropower Business-in-a-box’ scheme, which encourages rural entrepreneurs to sign up for starter kits that include rechargeable solar lanterns, solar-powered fans and take-home power boxes that they can then rent out to the wider community.

The work of the OMC serves as an example of how the introducing cheap, accessible, renewable energy, that is both economically and environmentally beneficial, can have a huge impact on rural communities. Similar efforts being made across India are demonstrating how they have the potential to completely transform the lives of rural people through stimulating local economies, and are contributing to social development in poorer areas of the country. The government of Tamil Nadu, one of the more progressive Indian states in encouraging the expansion of installed solar capacity, has recently signed a power purchase agreement for 700MW of solar power, which will increase the country’s installed capacity by 30%. Also, the Indian government is currently implementing a Remote Village Electrification Programme (RVEP) using various renewable energy sources, with work completed in 10154 villages and hamlets as of June 2013.

But despite this progress, and the poor state of the current grid system, there are still significant obstacles impeding the expansion of solar to rural areas. Policy disruptions causing delays in the implementing the second phase of the Jawaharlal Nehru National Solar Mission (JNNSM) have affected demand for solar. The launch of the second phase, which aims to expand solar power capacity in the country by 10,000MW by 2017, has been hampered by several issues. The recent depreciation of the Indian rupee is thought to have affected confidence among firms importing solar panels which, when combined with wider budget problems, has helped to delay the launch of the second phase. As well as economic constraints, the solar mission has been affected by political uncertainty arising from the upcoming national elections in 2014.

Solar manufacturing in India has also had to face many challenges, including competition from other countries, the high cost of capital expenditure and financing for projects, periods of low domestic demand and competition over the availability of land for solar installation versus other uses (Khare et al., 2013). Also undercutting efforts at expanding solar power is a government policy that allows 100% foreign direct investment in all areas of the power sector, meaning that the financial returns on installing solar and other renewable energy capacity in India are often directed out of the country.

Recently, the introduction of ‘mini-grids’ (local, small-scale generator systems providing wired power to neighbouring households) as a solution for off-grid rural electrification has been proposed. As shown in the graph below, which was taken from a publication produced by the IFC in 2012, mini-grids (local, small-scale generator systems providing wired power to neighbouring households) may be economically viable over the provision of standalone lighting products once a specific population density has been surpassed:

Source: IFC (2012) ‘Lighting Asia: Solar Off-Grid Lighting’

But large capital expenditure is a major factor stopping the proliferation of these solar mini-grids, which effectively are just decentralized, independent solar power units serving small clusters of households in rural areas. The large amount of capital needed to install capacity for this kind of solar generation acts as a significant barrier to entry for small companies hoping to enter the ‘mini-grid market’. The maintenance and operational costs are also a proportionally greater burden for smaller companies than for large-scale companies, who can outsource such services or have easier access to technological solutions that can reduce such costs. Another issue is that many rural households are not used to regularly paying for electricity, and many are simply not able to. Additionally, a history of sub-standard, poor-quality solar panels, lanterns and other lighting products being sold has affected trust in solar technology in some rural regions (p.29). These issues need to be effectively resolved if mini-grids are to take over as the dominant mode of off-grid rural electrification in India.

Perhaps what has been most encouraging about the solar push in India is the commitment and support of the government. In other countries a lack in government interest and engagement has often been the main obstacle in expanding the use and application of solar energy. Recently, however, there has been “a high degree of policy and regulatory uncertainty for investment in renewable energy” (p.8) in India, and it is crucial that the government renews its commitment, as the continued success of India’s solar mission depends on it (Khare et al., 2013).

Go to this link to read an interview with India’s power minister Jyotiraditya Madhavrao Scindia on last year’s blackout that affected 700 million people, the largest power outage in history.

*Unlike solar photovoltaic (PV) technology, where sunlight is directly converted to electricity via a photovoltaic effect, the more common concentrated solar power (CSP) converts sunlight into heat, often using mirrors, which is then turned into electricity. CSP has formed a large part of the JNNSM.