Desi Power

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Overview

Bringing Power and Livelihoods to Villages through Community Scale Biomass Power Pants

 

Overview

Headquarters: Bangalore, India
Established: 1996
Impact Areas: India
Type: For-profit
Energy Sectors:
  • Power Source: Biomass Power, Moving on to Hybrid Systems with Biomass, Solar, Biogas and Bio-fuel (non-edible oils)
  • Power Use: Off-Grid Lighting and Electricityfor telecom towers, local enterprises, water pumping and energy services.
Business Model Types:
Staff Size: 30 direct employees, 50 people working part time on DESI projects, 100-150 people indirectly working on projects, such as local farmers doing marketing and selling
Annual Budget: N/A
Major Funders: World Bank, Carbon credit sales, Government of India, ICICI Bank, fairPlanet Muenster, SCI
Awards: 2006: World Bank Development Marketplace2009: Tech Museum of Innovation Award
Top Ten Business Plans, New Ventures India Competition

ABOUT

DESI Power installs biomass power plants in villages while at the same time helping villagers develop businesses to turn generated power into value addition and boosted income.

 

Energy Products/Services

  • 50-100kw NETPRO biomass power plant
  • LED lanterns, water pumps, battery chargers

Target Market

  • Off-grid communities and industries in Bihar and across rural India

 

Desi Power

Revenue Streams

  • Sale of power to villagers paying for lighting and enterprise power
  • Sale of power to agribusinesses and mobile phone companies

Value Proposition

  • The simultaneous development of plants supplying power and enterprises demanding it creates a self-sustaining system boosting economic growth.
  • Micro-enterprises using generated power include villagers pumping and selling irrigation water, charging batteries, and making ice.
  • DESI creates further demand for generated power by supplying powered products such as home wiring and LED lanterns, and by supplying power to businesses in the vicinity of the villages, such as agribusinesses needing irrigation and off-grid mobile phone towers.

Problem Addressed

  • Most rural villages in India have no electricity, limiting the possibilities for local, income-generating businesses.
  • With few businesses, there is not enough demand to support power plants.
  • Poverty and lack of electricity perpetuate one another, and many leave their villages to seek work in already overcrowded cities.

Where They Are Now

Impact to Date

  • Biomass gasifier developed
  • Plants running in 3 villages
  • Registered under CDM mechanism
  • Development of DESI Mantra management training program

Milestones

  • 1996: DESI founded
  • 1999: First plant built
  • 2003: 9 plants built
  • 2006: Technology proven viable for larger rollout and Empower 100 program to place plants in 100 villages started.
  • 2006: World Bank Development Marketplace winner
  • 2007: Creation of DESI Mantra center training women to run plants

Growth Plan

  • Over the next 2-3 years DESI wants to install 20 plants themselves and 50 units with partners.

How They Deliver

Product Sourcing

  • Plants:
    • DESI has developed its own power plants through a laborious 10 year process, building 9 pilot power stations in different parts of India to do field testing, improvements, and redesign, with the goal of a plant which can use a variety of biomass feedstocks.
    • Initially DESI’s plant was designed to run on 35% diesel and 70% biomass fuel.  When the cost of diesel went up, DESI switched to a pure biogas engine, which has led to the need for further development, but should be stabilized within the next few months.
    • When DESI started the project, solar PV was too expensive to be feasible, but now solar has now become cheaper and DESI is looking at hybrid solutions involving solar, wind, and hydro.
  • Fuel:
    • The plant runs primarily on rice husks and a weed known as daincha, but is designed to run on multiple fuel sources to insulate DESI from price fluctuations.
    • DESI also did not choose a pure rice husk gasifier because it cannot run 24 hours per day, and therefore is unfeasible for some of DESI’s potential power customers, such as mobile phone companies
    • DESI will source feedstock for its plants from village-based biomass plantations to ensure the security of feedstock supply and keep prices down.

Distribution

  • DESI Power seeks to use its power plants as a catalyst for growth by not only supplying power, but unlocking latent demand for that power.
    • Therefore it specifically chooses sites for its plants where there is potential for power to be used profitably (i.e. nearby mobile phone towers, large population in need of lighting, nearby agribusiness).
  • All plants are managed by a village cooperative which is responsible for maintenance.
  • Lighting is delivered to villagers either through home wiring systems connected to the plant, or lanterns recharged at a central station, both sold by DESI.

Human Resources

  • DESI estimates that 10% of the cost of any installation is training and capacity building.
    • This is a major challenge, as having enough people at village level who can run the plants is not easy.
    • DESI has created a management training program called DESI Mantra for this purpose, which trains women to run the power plants and start enterprises.
    • DESI Mantra specifically trains women because they are more likely to remain in the village rather than take their training elsewhere.

Revenue & Affordability

  • DESI funds the building of plants as an investment which will be paid back through the sale of power.
  • To cover capital and operating costs DESI estimates it needs to generate and sell 65% of a plant’s 100kW power capacity.
  • Until enterprises are developed, villagers use plant energy mainly for lighting, but this is generally not enough to buy 65% of the plant’s power, so other income streams are needed- the most viable one being mobile phone towers.
    • There are 150,000 off-grid mobile towers currently operating in India.  They run on diesel generators, and the telecom industry is the 2nd largest user of diesel after the Indian Railways.  This diesel currently costs 4 times as much as DESI Power’s fuel.
    • DESI is currently partnering with the Rockefeller Foundation in a project to cover 40% of the costs of plants by powering nearby mobile towers, which become the plant’s anchor customer.
  • Other plant income sources are large-scale farmers needing powered irrigation, and buyers of cooking fuel generated from biomass residues.
  • Another affordability challenge is the up-front cost of lighting products.
    • While villagers can easily pay the monthly costs of charging a lantern or powering their home (as it is generally cheaper than the kerosene they are replacing), buying a lantern or connecting their home to the plant is often too expensive for them, so DESI seeks donor subsidies for these products or offers them through a financing scheme.

Financing

  • DESI’s installations typically cost $200,000, 60% of which pays for the plant, 30% for enterprise development, and 10% for capacity building and training.
  • DESI has found it much easier to raise investor money for the plant than for the enterprises and especially for the training, so it seeks grant money for the latter.
  • DESI’s optimal investment structure is a 50% equity base, a 10% subsidy it automatically receives from the Indian government for delivering renewable energy, and a 40% loan which is paid back over 7 years.
  • Plant revenue increases as the load ramps up from 20-30% in Y1 to 50-60% in Y2 to 65% from Y3 on.
  • The amount of power that can be sold depends how many cell towers are in the area.
  • DESI Power has also signed an MOU with SBI Bank to enable villagers to borrow money directly to start their own small enterprises and businesses.
    • Under the MOU, DESI has agreed to train the borrower to run the business profitably and service the loan.
  • DESI has to date raised and spent US$5m, which has been partly equity with no dividends, partly equity with dividends, and partly grants.  DESI has spoken with equity and venture investors in the US, but have not received much interest yet.

Scaling

  • DESI has often faced challenges being compared to other organizations that have scaled more quickly and cheaply, but possibly less sustainably.
  • DESI’s choice to take responsibility for bringing jobs as well as power makes it grow more slowly, but it may have a larger impact on those it reaches.

More Resources

Online Resources

Contact Information

139/B, 10th Main, RMV Extension,
Bangalore 560080, India

* hari.sharan@bluewin.ch