Yet, players are apprehensive about entering this segment due to the high risk factors
By Richa Chakravarty
Monday, April 07, 2014: The penetration of solar off-grid products has been minimal in rural India, despite the fact that India has entered into the second phase of the National Solar Mission (NSM) and there are 50,000 villages in the country that are still without electricity. According to industry experts, not even 5 per cent of the villages in India have access to off-grid solar PV products like lanterns, water pumps, etc. This means that a big market for solar off-grid products remains untapped.
Informs Ashish Agarwal, head, solar division, Hero Future Energies Ltd, “Currently, the rural solar market is worth around Rs 5000 million a year, but with very few players exploiting the opportunities available, only Rs 600-700 million worth of business is being transacted in this space.”
Subsidy driven
Despite such a lucrative market waiting to be tapped, solar players are apprehensive about entering it due to high risk factors. “For example, the solar DC pump is one of the most popular and fast-selling products in the rural market. Despite its benefits and long life, we cannot expect a farmer to afford a pump worth Rs 0.3 million. Hence, the rural segment is subsidy driven, with the government providing up to 33 per cent financial support to farmers,” says Agarwal.
Big players eyeing rural market
However, big players are eyeing the rural market, and the current trend is to enter the solar pump market. ABB India Ltd is planning to penetrate this market with its solar pump drive. The company has installed 200 solar pumps in Gujarat, Rajasthan, Madhya Pradesh and Tamil Nadu to date.
Big players like Schneider Electric, Toshiba, Mahindra Group, etc are also engaged in the solar water pump business. The Mahindra Group has recently entered the solar equipment business with its new division Ekosol, which offers a range of solar products like solar lanterns, solar water pumping systems, etc. SunEdison also offers customised solar water pumps for the Indian rural market. Waaree Group also offers solar off-grid products.
Ways to penetrate rural segment
As most of these companies are aware of the potential of the rural market, they are putting their best foot forward to explore it. Selco Solar has forged partnerships with numerous regional rural banks, commercial banks, NGOs and farmers’ cooperatives to develop financial solutions for its rural clients.
Hero Future Energies is also planning to set up solar-run tube wells for drinking water in the villages of Rajasthan. “We are still in talks with the village panchayat for land allocation as this project will be established on community owned land. At the moment, it is a CSR (corporate social responsibility) initiative, which we hope to convert into a unique business model,” states Agarwal.
Panasonic has partnered with six NGOs to distribute a total of 4000 solar lanterns in Bihar, Andhra Pradesh, Orissa, West Bengal and Haryana.
Oorja Solar is also trying to explore the rural market through a CSR initiative and has joined hands with the American Society of Heating, Refrigerating and Air-conditioning Engineers (ASHRAE) India Chapter (an NGO), which has adopted Mali Gabini village in Chamoli district, Uttarakhand. “We are distributing solar lanterns in the village to make the villagers realise the importance of the product vis-a-vis a kerosene or diesel-run lantern,” shares D K Varshnei, director, Oorja Solar.
Varshnei feels that it is not easy to enter the rural market as players have to first convince the panchayat about the product or project, its reliability, cost structure, mode of payment, etc. “By partnering with NGOs, one can avoid such lengthy processes,” he adds.
Players also have to plan for a payment structure that suits the rural market. Hence, they provide products at easy instalments to villagers.
