Powering villages with renewable energy co-ops

The power sector in India has grown significantly over the years, but it still cannot meet the ever-increasing demands of the population.

India accounts for a third of the world’s population that does not have access to electricity. A recent study from Bihar suggests that a critical determinant of electricity access in rural India is proximity to the Central power grid.

This essentially suggests that remote villages in rural India would be deprived of access to power.

Hence, it is imperative that rural India develops and adopts self-sustaining community-managed local generation, storage and grid-connected electricity models (popularly termed microgrids).

Success stories

Take the case of Grossbardorf in Germany. This village runs a successful microgrid rural cooperative model that generates four times the electricity needed to power individual businesses and homes of the community.

Excess power is fed back to the main electricity grid through a feed-in tariff system, and the revenue generated is shared equally among the various stakeholders.

While Germany is well-known for its proactive collective renewable energy initiatives, a good number of success stories are emerging from different parts of India.

A biomass-based rural cooperative in Tumkur district of Karnataka owes its success to institutional aspects like well-defined property rights in ownership, institutionalised markets and decentralised environmental governance.

The biomass is derived through tree-based farming, which provides employment to 30 households.

In this cooperative, the farmers manage the supply of biomass, the Panchayat owns and operates the plant and, through a power purchase agreement, the excess power is given back to the Central grid. The profits are proportionally shared.

Capital requirement

A pine needle-based gasifier plant in Pithoragarh district of Uttarakhand draws its strength from the high social capital among the villagers, who take turns collecting pine needles which ensures that all households incur equal cost.

The removal of pine needles enables better ground water recharge, and reduction of forest fires thereby also helping achieve environmental sustainability.

However, renewable energy-based rural cooperative models across India require high levels of initial seed capital.

Banks, governments and international agencies such as the United Nations may not help in achieving the scale of financing required.

So, it is imperative that private players such as big industrial houses and high net-worth philanthropic individuals take the lead in establishing rural energy cooperatives. The need of the hour is a private-cooperative partnership.

Forging partnerships

Such a partnership model can be either a corporate social responsibility initiative or a model that intends to develop local industry (primarily small-scale industries) in the villages, which provide processed raw material inputs to the industries (conceptual model below).

The large-scale implementation of such a cooperative model will ensure overall development of the community on the lines of crucial social indicators and, more importantly, propel India’s economy to achieve double-digit growth rate.

Authored by Sreevas Sahasranamam (Doctoral student), Soumyarup Dasgupta, Abhinav Asati, Reetika Singh and Arkaprabha Debnath (PGP Students) at IIM Kozhikode

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