Viability of Husk-Based Mini-Grids in South Asia

Date

2014-01-31

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Publisher

Springer

Type

Book chapter

Peer reviewed

Yes

Abstract

As South Asia is a major producer of rice, this chapter analyses the financial viability of rice husk-based power generation in South Asia. The chapter first presents the business models of Husk Power Systems (HPS) and Decentralised Energy Systems India (DESI Power), two enterprises that have successfully provided electricity access by generating power using rice husks. It then presents financial analysis of two alternative supply options, namely a small 20 kW plant serving some 400 consumers under different demand scenarios, and a 20 kW plant serving a rice mill and a rural community of 400 consumers. It then explores the viability of a larger 200 kW plant serving a rice mill and a cluster of rural communities. We show that serving low electricity consuming customers alone leads to part capacity utilisation of the electricity generation plant and results in high cost of supply. But the tariff plan based on contracted capacity (Watts) rather than their electric energy use has so far ensured sufficient revenue generation for HPS to sustain its operations. The financial viability improves as some consumers use more electricity but the declining block tariff used to promote such consumption behaviour benefits high consuming customers at the cost of poor consumers. The integration of rice mill demand, particularly during the off-peak period, with a predominant residential peak demand system improves the viability and brings the levelised cost of supply down. Finally, using larger plant sizes to take advantage of economies of scale brings down the cost significantly and can be quite competitive with alternative sources of supply. But the higher investment need and the risks related to monopoly supply of husk from the rice mill, organisational challenges of managing a larger distribution area and plant operation challenges (or risk of failure) can adversely affect the investor interest. Moreover, the regulatory uncertainties in respect of off-grid electrification in general and the coverage of larger geographical areas in particular can hinder business activities in this area.

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Citation

Bhattacharyya, S.C. (2014) Viability of Husk-Based Mini-Grids in South Asia. In: Bhattacharyya, S.C. and D Palit (eds) Mini-Grids for Rural Electrification of Developing Countries. Green Energy and Technology. Springer, London

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Research Institute

Institute of Energy and Sustainable Development (IESD)