ONergy's Answer to 'Why New Coal?'

Justin Guay, Sierra Club - India Program Officer

Sierra Club India Environment Post:

I recently had the opportunity to sit down and talk with social entrepreneur Piyush Jaju, cofounder of ONergy (www.onergy.in ) a Renewable Energy Venture providing complete energy solutions to rural India. ONergy is focused on eradicating the use of kerosene and diesel in rural India beginning in West Bengal. The company currently provides a range of services from individual 0.5 W solar lanterns and 75 W solar home systems to larger biomass gasification and solar pv systems for rural electrification.

The company has received backing from some of the social entrepreneurial world’s finest (SELCO and Barefoot Power) and was born out of an NGO exploring the question Why new coal? The result was a journey across the coal belt of India that opened the founders’ eyes to the destruction coal can cause as well as the critical need to bring about clean energy solutions to power India’s development. In the process they have started www.switchon.org.in, and  www.environmentpress.in and are a part of the next generation of Indians who have taken Ghandiji’s words to heart - they are the change they wish to see.

What inspired you?

About three years ago we (Piyush Jaju, Vinay Jaju, and Ekta Kothari Jaju) got interested in how we could make a difference. We started with an NGO focused on climate change and sustainability with an outreach program to schools and colleges to improve people’s awareness and involving them to take action. From there we got the idea to travel by cycle along the coal belt at a grassroots level, write a paper on our experience, and take it to the policy level and see what action could be taken. It’s not an issue that India can stop using coal tomorrow. India needs to meet its energy demands and right now it’s driven by coal. [Decarbonization] will need to be a gradual process.

We then wanted to look at how we could directly address the problem. It’s easy to say we have a climate problem and coal is extremely harmful. But what is the solution? Renewable energy is expensive. And India already has large energy problems. The grid just won’t get to many areas. There are other issues with massive transmission and distribution losses as well.  There are some initiatives being taken - the solar mission and all - but there is a massive challenge and opportunity.

We realized that decentralization of energy is the solution to address the rural energy needs. But we need to promote affordable solutions for rural India. We do so by collaborating with financial institutions. We developed a business model to partner with MFIs and NGOs and set up Renewable Energy Centres or “Shakti Kendras” and mobilize their infrastructure, network and brand to reach out to rural communities. It’s really been a journey over three years.


On Clean Cookstoves…

It’s critical to understand the benefits – including economic. If they [rural villagers] have to pay for the wood there are direct benefits. We are trying a pilot with a few portable cookstoves. We are looking at all rural energy needs starting with the lighting program then moving to cookstoves.  Lighting is a much more critical need in terms of saving money (kerosene and battery).


The toughest part of the job is satisfying our customers

We started by promoting small lanterns ($13 or Rs 600). The market wanted something bigger (i.e. something that could power TVs). We went back to the drawing board to find how we could make affordable larger systems available. We decided that what we really needed to do was widen the range of products available to our customers in order to match demand. But the bigger challenge is really to build an effective distribution channel as well as the after sales service network. And accessibility is a problem – this all needs to be done in a cost effective way by using existing networks, training entrepreneurs etc. Entrepreneurs often come to us they say this is a great product how do we promote it.


On the Broader impacts…

It’s important to think of our direct and indirect impact. When we are looking at going to villages we need to ensure community development, empowering people by building entrepreneurs, helping marginalized people, and working with womens’ self help groups. We need direct economic benefit because they pay a massive price for terrible quality light from kerosene. For basic needs they pay such a large price. How can products directly save money for them?  We also find linkages to livelihoods and community development and we are becoming involved in those areas.


On Coal’s ability to deliver on development…

It could have been an argument in the past but now we have alternatives whose prices are decreasing. Getting on the ground, it’s not feasible for the government to provide electricity to very remote rural areas. They will have to build new lines that will have massive transmission losses. The amount of money they will be spending and then losing would be better spent subsidizing renewable energy for rural areas. It’s a clear solution. India can’t go on exploiting coal, the more social problems come along with this exploitation. When we go along the coal belt people are getting displaced. India is facing a huge problem with Naxalites and Maoists.

In the short run, coal will dominate. But India is understanding the need of promoting renewables. The Solar Mission aims at bundling of solar power and thermal power and supplying it to the grid. Government has imposed an additional duty this year on coal and with that it is setting up a clean energy fund. Other renewable sources have also started getting a policy push.

Right now because of the drop in prices it’s more about how you can get financing in place and make those products affordable so that the rural person doesn’t have to worry about capital expenditure.


On biomass and small hydro…

We truly feel that India has a great potential for biomass. Hydro is limited because it’s only suitable for specific areas. In the area we work the potential is limited. Initially it’s an economic challenge because you require larger capital expenditure for a 20 KW plant. You need financing muscle. We wanted to gain experience prior to getting into that. Our next stage may be biomass gasifiers.  There are challenges with biomass though - it can be slightly unpredictable. There is a great amount of biomass available but it’s not like biomass is getting wasted. It is being utilized for a variety of purposes cooking, cattle, etc. When you look at setting up a plant that requires a supply chain and the price of biomass can increase. It becomes a challenge. It is not financially sustainable. This has been quite a big problem especially in larger plants. We decided to focus on micro power plants, promote the technology that is available in that area.


What about the traditional aid/subsidy approach?

It does not solve a problem if we give something for free. This needs to be market driven. We are working with Rotary International on a project and we had to convince them to stop giving systems for free. The rural person is willing to pay if they see the benefit - in terms of cost and energy provided. In our Rotary project we used their funds to provide a small subsidy instead of subsidizing an entire system. Now we can finance 120 systems instead of 20-30 systems only.


What’s next?

Our ride has been challenging. But in a short span of time we have sold 1,000 lighting systems. Our aim is to impact 1 million lives in the next five years. Initially we will start with lighting, and then move to electrification and cooking.  We have strong partnerships with MFIs and NGOs and have made our business model more robust. KDS (Kotalipara development society) and VSSU are our MFI partners and they combined reach out to over 150,000 women members. They have loan officers pushing energy products for us. It’s tough though, banks want credibility and we are new, they have had to deal with fly by night operators. We need to get to work and prove ourselves to get the trust from the bank. We are strongly supported by SELCO in this regard.


A final message…

Find unconventional solutions that are market driven. Start challenging notions about rural india and what they want. It’s not about giving a simple product – they also value entertainment especially TVs. We can’t say you are really poor and you should be happy with a light. They have their own aspirations. We need to have a more market based approach.

Even on the basis of coal. We have talked so much about climate change. It’s great when everyone talks about it but how are you really helping? It’s not only about switching off lights and doing a little here and there. How can you have a larger impact? That is the real question.

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  • Posted on Oct. 18, 2010. Listed in:

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