Learnings From India’s Off-Grid Energy Market

Earlier this month, I was lucky to be able to attend the first “India Distributed Energy Forum and Expo” (IDEF) held in New Delhi. IDEF explored India’s off-grid energy sector and was organized by some of the most influential global leaders in the space — such as GOGLA (the voice of the Global Off-Grid Energy Community), Ashden Energy Collective and IFC Lighting Asia along with several innovative sponsors such as d.Light and Greenlight Planet. The conference also brought together the entire ecosystem involved in building this sector (from policy makers and financiers to entrepreneurs) and showcased an extremely diverse set of voices.

As someone who has been captivated by the off-grid energy industry in India for a long time (especially since I started “Jal Jyoti “ in 2013 — a social initiative aimed at providing affordable and sustainable lighting solutions in slum areas), this conference was a tremendous learning opportunity for me. More so because my current work at AMS (Advanced Microgrid Solutions, an energy platform company in San Francisco) is at the opposite end of the energy spectrum —we build complex software to manage advanced energy storage systems in developed wholesale energy markets.

Before we delve into what I learnt at the conference though — here’s a shocking statistic that will (hopefully) make you sit up and pay more attention to what’s happening in the energy landscape in India. According to bp’s energy outlook for 2019, India’s primary energy consumption is expected to grow by 156% in 2040 — marking it the largest source of energy demand growth in the world*. What’s even more terrifying is that 58% of this is expected to come from coal — ie, even if overall carbon intensity of India’s electricity grid declines, it’s still going to be well above the global average. This is exactly what makes India such a relevant and exciting energy market — because of the tremendous impact it will have on the entire world.

India is often seen as an anomaly in the off grid solar space — there are millions of homes that lack access to reliable electricity, which in other markets often translates into the perfect opportunity for the private sector to step it. However, India’s electricity market is notorious for a high amount of government intervention and policies that promise a 100% electrification — but don’t always deliver. In fact, on paper India has pretty much almost achieved a 100% electrification — but the issue of intermittent access and extremely poor energy quality is still one that plagues thousands of villages, towns and industries alike — both hampering the economy and decreasing quality of life. The private sector and government haven’t always had the best track record of working together when it comes to providing universal access — but it’s conferences like IDEF that allow several stakeholders to come together and create a healthy ecosystem and a thriving industry. Some key takeaways :

India is set to be a world leader in the stand-alone solar appliance domain :

India might have missed the bus when it came to being the leader in solar panel manufacturing — but manufacturing of efficient hybrid appliances is where the country can truly shine, especially given it’s vast manufacturing capabilities, cheap labor and the fact that is’ already established itself as a hub for innovation.

However, it’s imperative for public and private sector to work together to achieve this. The government needs to provide an enabling environment through policy (which can include innovative financing, special loan schemes and improved taxation to begin with) and allow the private sector to thrive in this domain and bring India to the main stage.

India is also going to be one of the largest consumers of the Global Off-Grid Product Market :

India represents 33% of the global off grid product market — and the market is set to grow by more than 2.5x by 2023 to be $323 million — according to a report released by GOGLA at IDEF. This statistic includes solar lanterns, pump sets and other home appliances. This market share is broken up; attributing 75% of this growth to government deployment and schemes and 25% to the private sector.

One of the first stand-alone solar appliances to really kick off in India will be Solar Water Pumps through the KUSUM scheme (1.75 million off-grid solar pumps to be installed by 2022) initiated by the government.

PAYG hasn’t quite taken off yet, but has an extremely strong future, given the right government interventions :

Pay-as-you-go (PAYG) for solar has truly been a game-changer and market enabling mechanism for several countries around the globe — especially in Eastern Africa. However, to date this type of payment mechanism has not yet taken off in India due to lack of adoption of mobile money (M-Pesa did a lot to develop this market in Africa). But the payment landscape in India is forever changing and an increasing number of Indians are becoming “banked” as well as coming online. While there’s still a lot to be done in terms of creating awareness, education and logistics around PAYG in India, it’s still a very exciting space and one that has tremendous potential.

This, however, is yet another space that will require a lot of co-operation from the government — especially since payment collection schemes often undergo intense policy scrutiny by the RBI (Reserve Bank of India). An interesting company to watch out for in this space is Simpa networks (now majority owned by Engie).

Additional thoughts/takeaways:

  • Rural customers still care about quality and will not settle for sub-standard products; once they are aware of product offerings they will be willing to pay a little bit more for higher quality products.
  • Supply chain still continues to be a big part of the electrification challenge and often end-point sales are driven more by the strength of relationships rather than actual need/demand.

All things considered, IDEF 2019 was a high-quality and well put-together event (I especially appreciated that they went out of their way to ensure that there was a woman on every single panel) that brought together key stakeholders from across the industry.

As always, please feel free to leave your thoughts/feedback in the comments section — and share! I’m still new to this space and I’m constantly looking to connect with more people and learn more!