The Business Model and types of Plants

DesiPower has been working on a program for providing electricity and energy services in villages jointly with local partners who establish local small scale industries, businesses and agro-forestry for value addition and job creation. In order to ensure that both the enterprises become self-reliant and profitable within a reasonable time, the "Business Plans" of the Independent Rural Power Producer (IRPP) and the village organisation (which may be the village Panchayat, a company, a co-operative, or a NGO) are evolved jointly and simultaneously. For commercial success, the power plant has to sell as much electricity as it can generate and the villagers have to produce and sell their products profitably.

The IRPP ensures the reliable and affordable supply of electricity and energy services based on locally available renewable energy resources such as agricultural residues and other biomass. The local partner organisation, on its part, ensures the supply of the biomass and the purchase of adequate amounts of electricity at agreed prices. A women's group is encouraged and supported to take charge of the energy service activities such as cooking and lighting for households.

A mutually beneficial partnership is thus created under which reliable power supply and energy services ensure local job creation and income generation, while the assured off-take of power and energy services ensures a profitable operation of the IRPPs.

Click on the links above to see the DESI Power way of promoting and building EmPloyment and Power Partnership Programmes.

DesiPower's Business Models

Decentralised Energy Systems India Private Ltd. (DesiPower) Decentralised Energy Systems India Private Ltd., DesiPower, has been formed to supply electricity and energy services to two distinct decentralised electricity markets:

• Captive power plants for small scale industries which depend upon diesel generators (due to unreliable grid supply).

• Independent Rural Power Producers (IRPPs) for villages and semi-urban areas.

While the technology and the management of the engineering, procurement and construction (EPC) activities will be practically the same for the two business sectors, the business model for each of them has to be tailor made to the specific conditions of the load and financing in each market segment.

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Industry and Institution Based Captive Power Plants

In the last decade, the number of diesel generating plants built in India has shot up to unprecedented numbers. This is largely because of the very sharp deterioration of the power supply situation characterised by frequent planned and unplanned power cuts, and severe voltage and frequency fluctuations. Most of the industrial plants have therefore opted for their own on-site generation, with the small and medium industries opting for diesel generation, resulting in increased imports of oil and increased local pollution.

Operating a diesel engine in the dual fuel mode with biomass gasification has been shown by DesiPower to be always cheaper than diesel generation, with lower pollution and CO2 emissions. The current grid electricity price has also gone up considerably due to the removal of subsidies from industrial and commercial power and DesiPower's supplies are therefore competitive with grid supply in many states. In an industrial plant where an existing diesel set can be used with a newly installed retrofitted gasification plant, the pay back periods in typical cases can be as low as 2 to 3 years.

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DesiPower in Villages and Semi-Urban Areas

DesiPower builds, owns and operates (and later on transfers) decentralised power plants using renewable sources of energy for the generation and the commercial sale of electricity in Indian villages. The plants are planned to be transferred to the village partners whenever they are ready.

For this purpose DesiPower has promoted the concept of Independent Rural Power Producers (IRPPs), which are the social market equivalents of conventional IPPs, the well known pure-market driven instrument being introduced in India and other countries.

DesiPower's business model for Independent Rural Power Producers involves building, operating and later on transferring decentralised power stations to the villagers. The building of IRPPs is integrated with the establishment of profitable local small scale industries, businesses and agro-forestry owned by the villagers. For commercial success, the power plant has to sell as much electricity as it can generate and the villagers have to produce and sell as much of their products as they can in the village and at neighbouring market places. The mutual dependence is further strengthened through, on the one hand, the generation of additional income from the supply of agro-residues and other biomass to the power plant and, on the other, by the continuing extension services and training provided by DesiPower's cluster centre.

Under the co-operation agreement, DESI builds the IRPPs in close partnership with local groups and organisations. The local partners take the responsibility to start micro-enterprises with the technical and managerial support of DesiPower. DesiPower takes the responsibility to supply electricity at a price which can make the micro-enterprises profitable and sells energy services such as cooking fuels and energy efficient stoves for cooking, water supply for irrigation or drinking, lighting for households, etc. The target is to build up a capacity of at least 1 MW in one geographical proximity in order that each cluster generates an adequate financial base to maintain the cluster centre.

The current focus of DesiPower is the installation of small power plants based on the gasification of locally available biomass which includes weeds and agricultural residues. Other renewable sources of energy which will be taken up later on may be wind generators, mini-hydro or solar energy. Biomass, however, will always remain a part of the IRPP activities since modern biomass is the most appropriate source of energy for cooking in most parts of India.

IRPPs thus maximise local value addition, create local jobs directly and indirectly, provide essential energy services and overall promote sustainable local livelihoods and village development. Being based on renewable sources of energy, they either produce no CO2 (solar, wind, hydro) or absorb as much CO2 as they produce (cyclic biomass). Unlike coal, oil and gas based power plants, therefore, they do not contribute to the green house effect, and reduce the risk of climate change.