A clutch of entrepreneurs is taking electricity to the country’s remotest parts on a pay-per-use basis. But can they scale up in a sector that’s still trying to find its feet?
Pradeep Singh lives in a village in the Hardoi district of Uttar Pradesh. But that does not mean he lacks resources. He owns a petrol pump and a private college. He has land in the area, and also, he says, “respect”. But there is one thing Singh has barely ever had – electricity.
“All we had known were diesel generators… sometimes one hour, sometimes two,” says Singh. “When electricity came, it was like magic.” When he heard Prime Minister Narendra Modi speak about smart cities, he says he wanted to tell him, “Can you give us 24×7 electricity like Gujarat? If you can, we will become smart.”
Two years ago, Singh rented out about 1,000 sq. m. of land to OMC Power to set up solar panels for a mini-grid – a small solar plant that supplies electricity within a small radius around the plant. He became an OMC customer, using its electricity for his petrol pump. “24/7 power supply raised my earnings by around Rs 40,000 a month. Most of the pumps in the area operate only for a few hours a day because there is no electricity. But I can run up to 16 hours a day,” says Singh.
Around 300 million Indians have never had access to electricity. Which is why entrepreneurs like Rohit Chandra, co-founder of OMC Power, are building sustainable energy businesses based on the idea that demand will soar if electricity is made cheap and reliably available in such areas. Taking critical resources like electricity to neglected areas will also help bridge the ‘India vs. Bharat’ divide between urban prosperity and rural deprivation.
Nonprofit consultancy The Climate Group and investment company Goldman Sachs peg the market for decentralised renewable energy in India to be worth $150 million (Rs 947 crore) by 2018. An investment of $150 billion is needed to serve that market by 2022.
Started in 2010, OMC is one of India’s biggest players in solar energy generation and distribution. It has 30 units of about 100 kilowatt each and hopes to open 70 more by the end of the year. The only information that OMC shares about costs and revenues is that it sells power at a price around 20% less than the main-grid tariff. Recently, it entered into a joint venture with SunEdison to build 5,000 solar plants in the next five years that will allow 10 million people access to electricity. Chandra says his dream is to make OMC the world’s largest rural electrification company.
OMC provides electricity to 3,000 households (a population of around 15,000) across 30 villages in Uttar Pradesh. Along with SunEdison, the company plans to invest $1 billion in the next five years to generate 250 MW.
Chandra, Sushilkumar Jiwarajka, and Anil Raj founded OMC with their own funds. Chandra says he is proud that the company “has never accepted a single dollar of donation or grant money”. A telecom veteran (he worked for 25 years at Ericsson, Aircel, and Telenor), he says OMC is a profitable business – although it doesn’t declare numbers – and is “where the telecom industry used to be in the mid-1990s”.
He is fond of telling a story to illustrate his point. In 1995, many in Ericsson’s Mumbai office were hard-pressed to believe that there would be more than 1,000 mobile phone customers in the city. Today, there are nearly 15 million.
Read the full story in the latest Fortune India Magazine.
Written by Hindol Sengupta for Fortune India Magazine, photos by Bandeep Singh.