By Jaideep Mukherjee
Sustainability for MSMEs: India’s ongoing energy disaster, the worst in six years, has highlighted the ability sector’s dependence on fossil fuels. Compounded by excessive heatwave circumstances and restoration of financial exercise following the pandemic, elevated demand for electrical energy has pushed the federal government to double down on carbon-intensive sources for energy technology. The present power consumption sample is unsustainable, as geopolitical occasions have pushed up costs of fossil fuels, resulting in a scarcity of power. This is obvious from the ability outages throughout India.
These energy cuts are particularly crippling for small industrial & institutional (C&I) clients, for whom diesel (a typical different supply of energy) is 3 times dearer than electrical energy from the native grid. Outages are much more extended in rural areas, the place load shedding has decreased electrical energy provide hours by 16 per cent. This disaster highlights the urgency of shifting to different sources of energy, corresponding to photo voltaic power, that can be utilized to convey down India’s dependence on fossil fuels. C&I clients, particularly in rural and peri-urban India, can profit considerably from dependable and clear power from photo voltaic rooftop installations.
Why Rural C&I
A overwhelming majority of rural C&I clients, that are small in measurement, are underserved by the primary grid. Almost 40 per cent of those clients in UP, Bihar, and Jharkhand will not be linked to the grid and rely closely on alternate sources of electrical energy, primarily diesel. This phase consumes over 1 billion litres of diesel every year. The different 60 per cent of shoppers who’re linked to the grid lack high quality entry and plenty of of those clients proceed to make use of diesel as a backup.
The authorities of India has set an bold goal of putting in 40 GW of rooftop photo voltaic by 2023. However, solely 20 per cent of the rooftop goal has been achieved, and solely 3.1 per cent of the goal for rural India has been put in. There are thousands and thousands of rural C&I clients appropriate for photo voltaic rooftop installations with a possible demand of 16 GW, which might translate right into a market alternative of $11 billion. Currently, solely 5 per cent of those clients are being served, regardless of the cost-saving from photo voltaic rooftop installations.
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Problems and Solutions
Despite the excessive potential of this market, the adoption of rooftop photo voltaic choices by the agricultural C&I market has been sluggish. Some of the important thing challenges embody the dearth of shopper consciousness, low-ticket sizes, fragmented demand, and restricted entry to finance. Over 80 per cent of surveyed enterprise clients weren’t conscious of rooftop options and their advantages. The low-ticket measurement coupled with dispersed demand in rural areas results in a excessive price of buyer acquisition.
Moreover, because of the small measurement of rural C&I clients & their restricted credit score historical past, most builders refuse to enter long-term Power Purchase Agreements (PPAs). Limited credit score histories additionally pose a problem in accessing finance as banks are risk-averse and don’t prolong credit score with out collateral ensures – which small C&I clients are unable to supply. The state-level coverage and regulatory framework for rooftop photo voltaic are additionally ever-changing, and state utilities are reluctant to offer web metering connections to clients.
Solutions for catalyzing the agricultural C&I market need to be checked out by way of geographic clusters (versus particular person enterprises, which work for large-scale industries) as this enables for the aggregation of demand that makes it straightforward to run consciousness campaigns in a focused method. Market actors corresponding to nationwide and native builders and financing companions need to be drawn in to realize operational viability and scale in fragmented rural areas.
Facilitating entry to wholesale capital for retail financiers dietary supplements their liquidity to supply loans for prepared rooftop clients, whereas de-risking their lending danger by means of assure mechanisms. Moreover, numerous Development Finance Institutions (DFIs) have an important function in extending debt and fairness to photo voltaic rooftop builders to finance their enlargement.
Collaborative and strategic partnerships mixed with philanthropic capital can quick monitor the adoption of photo voltaic rooftop installations and put in place options to focus the eye of varied sectoral stakeholders on rooftop photo voltaic, particularly for rural C&I clients, to efficiently allow the federal government to realize its 16 GW goal for non-urban C&I photo voltaic rooftop installations by 2023.
Jaideep Mukherjee is CEO of Smart Power India. Views expressed are the creator’s personal.
Source: www.financialexpress.com”