Pioneer avers solar power’s now cheaper than kerosene

It’s a segment one rarely hears about, even in the supercharged discussions about the country’s solar future and clean energy, but distributed solar power seems to have left behind its bigger cousin in the race to achieving business-model sustainability.

As big companies fall over one another to convert the Thar desert into a sea of solar panels with government subsidies, Amit Chugh, the pioneer of distributed solar sector in the country, says he is happy to stand and watch.

Distributed solar refers to power that’s generated from panels that doesn’t go into a grid, but straight to the user.

“Please do not subsidise this in an unsustainable manner,” says Chugh, who was chronicled in 2007 by Time magazine for abandoning a cushy job with a multinational in Malaysia and starting out on a journey to sell solar panels and lamps to the tens of millions of Indians still untouched by electricity.

Among the hue and cry of industry demanding higher and higher subsidies to roll out solar projects, Chugh strikes a diffident pose, calling subsidies a ‘market spoiler’. While it may appear to be superficial bravado at first, a look at Chugh’s achievements forces one to rethink.

As a founder of Cosmic Ignite along with Stanford University alumni Matt Scott, the finance-professional turned green energy entrepreneur is responsible for bringing solar power to more than one lakh families in the most backward of India’s districts. “Yes, we manage to make a profit,” he said.

The Mighty Light, a solar light that also powers a radio and can charge a cellphone, sells for just Rs1,000. It includes a small solar panel that is kept outside the home/hut during the day.
Some nifty innovation and steadily declining solar module prices has meant Mighty Light sells for half the price it used to three years back.

Unlike big solar farms, which have to be subsidised to the extent of nearly 75%, Chugh says the technology for ‘distributed solar’ is here and now.

“Our product costs Rs1,000 and gives 24 hours of light on one charge. It is actually cheaper than kerosene when you spread it over the full lifetime,” Chugh said. “The solution, technologically, is there.. If 700 million people can buy a mobile phone that costs Rs3,000 or more, they can surely spend Rs1,000 for energy,” he said.

What is missing, Chugh points out, are market ‘enablers’. In other words, while it may indeed be cheaper than a kerosene in the long run, how does one convince the ‘bottom of the Indian pyramid’ to save up and shell out Rs1,000 at one go?   

“Most of them don’t even have land to give as collateral,” Chugh said.

Having attacked the bottom of the pyramid for more than three years, he is wary of marketing evangelists.

“The fortune is not there now, don’t believe it,” he said, having seen some of his earlier products fail to attract his target customers. “There’s this big bubble of the so-called fortune at the  bottom of the pyramid,” said Chugh, while attending the TIE Entrepreneur Summit in New Delhi last week.

Chugh is currently attacking the problem by tying up with microfinance players, instead of trying to take advantage of some of the old government schemes that provide small subsidies to families that buy solar lanterns.

“We stayed away from the government because you get sucked into the dependency syndrome. You become like an NGO and all your time goes in just walking those corridors. We don’t get a single rupee of subsidy today,” he said.

Because of the way government works, he said, most of the money meant for solar lanterns have failed to reach the intended beneficiaries.

Chugh, however, believes the government should come up with plans for distributed solar firms as well under the ongoing National Solar Mission, instead of just for firms vying to put up large solar farms.

Unlike coal and hydro, solar lends itself to being produced where it is consumed. As a result, solar power does not have the handicap of losing 35% in transmission as in the case of traditional power that is carried from a big plant in one corner of the country to another where consumers exist.

However, under the Centre’s Solar Mission, out of the 1,300 mw of capacity to be built in three years, 1,000 mw is to be in centralised plants called solar farms. But for the remaining 300 mw, the government is yet to announce any incentive scheme or programme.

Chugh believes it is a temporary setback for the distributed segment and expects a master plan from the government on this segment in 2011.

“For 60 years, centralised generation is so deeply ingrained in everybody’s mind and the Planning Commission that every policy that comes out has a focus on centralised (generation) first,” he said.

For now, Cosmic Ignite is focused on expanding sustainably, if not at the fastest pace.

The path blazed by Chugh and Scott has already seen many others jump in with similar all-in-one products, including some with deeper pockets and more aggressive expansion plans than Cosmic.

But Chugh is happy where he is. “We have invested less than $1 million in the venture.. There are firms that are investing millions of investor money. But we believe it is important to be profitable even as we grow,” he said.