Tata Power bets on microgrids for rural power supply in India

Manoj Gupta has spent the past two years bouncing along the dusty roads of rural India, staring at solar panels.

The 107-year-old veteran of Tata Power, one of India’s oldest and largest power distributors, is tasked with perfecting a type of solar power installation called a micro-grid. Although microgrids are usually used in philanthropic projects, as managing director of newly established subsidiary Tata Power Microgrid (TPMG), Gupta’s mandate is to build a business venture.

“Many would think this can only be a corporate social responsibility project,” Gupta said. He added that his boss, Tata Power chief executive Praveer Sinha, had “stuck his neck”.

As India races to meet ambitious energy transition targets, including generating 500 GW of renewable energy by 2030, business empires Adani Group and Reliance Industries are investing billions in huge projects of renewable energy – from factories to make green hydrogen to massive solar power parks.

There is a long way to go. India depends on coal for 70% of its electricity generation, and the disruption of coal supply caused power outages in parts of India during a recent heat wave, underlining the need for renewable energy to increase India’s electricity supply.

Tata Power also has utility-scale solar projects, but its bet on microgrids sets it apart from its competitors. He plans to go from 200 to 10,000 microgrids. Gupta said the two microgrids seen by the FT cost 5 million rupees ($65,000) to build, but Tata Power said costs were subject to change and declined to give specific figures on the investment total.

Abhishek Jain, a member of the New Delhi-based Council for Energy, Environment and Water (CEEW), said Tata was “certainly on a much larger scale” than previous initiatives and was breaking new ground by focusing “more on productive applications in rural areas”. rather than households. Nevertheless, “it won’t be the most lucrative investment you can make.”

“The intention is not to have a for-profit but a sustainable organization,” Gupta said. “So we need money to operate on our own, not to make a lot of money.”

While most Indian villages are connected to the power grid, not all receive constant power – a CEEW study found that rural households received an average of 19.9 hours a day, but this varied greatly from state to state. the other. Uttar Pradesh and Bihar, where TPMG has so far built microgrids, are among the worst.

Access to electricity “should be our basic right, like food, water and other basic things,” said 30-year-old Uttar Pradesh resident Neetu Awasthi. “Electricity is such a big concern for us that if we have electricity here, we feel like it’s someone’s nicest act.”

Constant electric power varies in India from state to state

Tata Power sees this underserved rural market as an opportunity, Gupta said. “And with that idea, we moved on to this new concept of microgrid. We believe there is a huge opportunity to serve these customer segments due to a power shortage. »

TPMG spends three years experimenting before major deployment. “We learned from failures,” Gupta said. The most dramatic setback came when floods in Bihar nearly drowned five microgrids – Gupta commandeered a boat to save valuable batteries. Raised platforms were incorporated into later designs.

The micro-grids are installations of nearly 100 solar panels arranged in a field next to the village they power, with a diesel generator cell and a shack containing storage batteries and automated monitoring and control systems at distance. These smart monitors manage power from panels, batteries and generator, to households and businesses.

Customers can pay their bills through an app, and Tata has local employees to look after equipment and make sales. Gupta and his team have installed video surveillance to make the microgrids more resistant to theft, and if more customers want to sign up, TPMG can add panels to increase supply.

Neetu Awasthi, left, with his sister-in-law Kalpana
Neetu Awasthi, left, with his sister-in-law. “Power is such a big concern for us that if we have electricity here we feel like it’s the nicest act of someone,” says Awasthi © Chloe Cornish/FT

Thanks to the batteries and the diesel generator, which Gupta wants to replace with a biomass alternative, Tata’s microgrids can provide up to 24/7 electricity. The challenge is to convince locals to spend 100-750 rupees (£1-7.50) per month.

In Uttar Pradesh, many potential customers said they were happy to stick with erratic state-provided electricity, as it is a fraction of Tata’s price. Prabhunath Gupta, 22, described the government as “very good” for 10 to 12 hours of electricity.

“It’s a mindset that needs to be changed,” Gupta said. Per capita electricity consumption in India is about a third of the world average, and Gupta noted that while city dwellers tend to use 300-500 units per month, rural dwellers tend to use 10-30 units. with basic lighting and a fan.

Small business owners, like baker Shahban Ali, are Tata’s target market. The walls of his bakery are black from the diesel generator he used to run when there was no reliable electricity. Not only were the polluting generators expensive in fuel, but “people were getting very sick”. He is now paying Rs15,000-Rs18,000 for Tata power 24/7, and he says his profits have doubled.

For its next microgrids, Gupta says it is looking for sites with high economic activity. But TPMG is also trying to steer small businesses toward using electrical appliances, such as blenders, which it can offer on an installment plan. The more money these companies generate, the more willing they will be to buy electricity, Gupta explained. As income levels rise, so do aspirations for electronic items like televisions.

Awasthi’s family, who also installed their own small solar panel, decided to pay for electricity from Tata. They use it sparingly because of the cost, but now Awasthi children can study in the evenings.

“Perhaps the rich nations have mainly caused [global warming], but if better energy is available now, our country should choose that,” Awasthi said. “I hope things improve, change for the better.”