Hamara Grid – Challenges in installation & operation of solar mini-grids in remote, rural areas (India)
Description
- Type of system: 30 kWp to 45 kWp solar mini-grids to power the entire energy needs of the village
- Location of project: Mon district, Nagaland, India
- Completion date: Ongoing project
The Company
Powering Development, Empowering Communities
Hamara Grid Private Limited was set up in July 2020 with the objective of providing services in the rural mini-grids space including design, EPC, O&M, training, increasing utilisation, incubating and running micro-enterprises, and triggering rural economic development. Our primary objective is to scale sustainable mini-grid solutions in emerging markets, in partnership with key stakeholders, to maximise local impact.
The company is based in Kolkata, West Bengal, India. The team consists of core members who have worked in the mini-grids sector for over eight years. This team has worked extensively and effectively in Gumla District, Jharkhand, India, to design, install, commission and operate 40 solar powered mini grids with an installed base of 1,000 kWp.
Hamara Grid has worked with top Energy Service Companies in India and Myanmar to build technical optimisation of solar mini-grids, growth of local productive loads, increase grid utilisation, strengthen commercial viability of mini-grids and create impact at grassroots by engaging deeply with local communities and markets. All this was in addition to achieving over 20% growth in farm incomes year-on-year!
Presently, Hamara grid is working on rural development of Mon District powered through solar mini-grids. 6 mini-grids are already operational on the ground and 10 more are under installation.
The Challenge
Background
The people of Nagaland, called the Nagas, are an Indo-Asiatic people, and consist of over 20 tribes and numerous sub-tribes. Each tribe has a specific geographic distribution. Though they share many cultural traits, the tribes maintain a high degree of isolation. The Konyaks are the largest tribe, followed by the Aos, Tangkhuls, Semas and the Angamis. They speak 60 dialects.
Nagaland State was carved out of the State of Greater Assam in 1963 and has experienced insurgency and conflict since the 1950s. This has limited its economic development.
When India became independent in 1947, the Nagas wanted the right to be a separate nation and made a demand for an independent Nagaland (Greater Nagolim – to include Naga areas in neighbouring Myanmar, Arunachal Pradesh and Manipur). This demand could not be acceded to by the Indian government. Rebel groups fought the government, with some of them based across the border in Myanmar. A ceasefire was declared and negotiations continue. Elections to the State Assembly were held peacefully in March 2023. The rebel groups and the government are close to a cohesive solution that works for all.
Meanwhile mobile phone connectivity, access to internet, migration for jobs have brought about an increased awareness of the benefits of development. The present and future generations have a lesser stake in continuing the insurgency. Though the disquiet is likely to simmer for a year or two, the State is hungry for development. The situation is ripe for a development intervention of the sort that Hamara Grid is rolling out.
Issues at stake
India as a nation, connected close to 100% of its willing households to the national grid in 2019. This achievement was the result of ambitious and consistent efforts from Central and State Governments to drive rural electrification via public and private distribution companies (DISCOMs). In the North-eastern State of Nagaland, all villages (barring a few newly developed villages and hamlets) are connected to the national grid. However, as is the situation in most parts of Northeast India, the reliability and quality of electricity by the national grid is found wanting. In rural and remote parts of Nagaland, the average supply from the national grid is only available for a few hours a day, and that too intermittently. The voltage is low and fluctuates and hence electrical appliances are unable to serve the purpose of their intended use. It is not possible to run heavy agri-processing machinery and village based micro-enterprises on poor quality electricity. Remote areas of Nagaland even witness long power outages of one to two weeks during monsoon months and bad weather conditions. The existing supply situation with frequent blackouts cannot power livelihoods and becomes a dampener for tourism as well. To overcome the lack of high-quality power, households resort to all possible alternate sources of electricity including small solar panels rigged to batteries, inverters, solar lamps and candles.
Renewable Solution
Possible solution
The core team of Hamara Grid has worked in the DRE space for the last ten years in West Bengal and Jharkhand States of India on a low carbon rural development model. The work culminated in a 40 mini-grids project that delivered the desired impact in terms of economic growth, personal incomes, entrepreneurs’ income growth, jobs creation and reduction in GHG emissions. The missing pieces in achieving holistic development in the Jharkhand project was that health, education and public infrastructure could not be effectively integrated into the DRE matrix. This requires a PPPP model (Public-Private-People’s-Partnership) in which the government, the private sector developer and the community work together from the outset in order to integrate all aspects of development. Hamara Grid was requested by the government authorities in the State of Nagaland to put together a PPPP model of rural development based on energy access through DRE mini-grids.
It is necessary to evolve a holistic model for rural development based on low carbon growth as hundreds of villages in South and South-East Asia, Africa and Latin America are underdeveloped and rely on expensive, and polluting diesel-based electricity. A solution is vital from the point of view of a just, equitable, sustainable, and democratic access to energy and economic growth.
Aim of the mini-grid intervention in remote, rural areas
The aim is to innovate a sustainable and holistic model of rural economic development based on DRE mini-grids that can be scaled to 1,000 villages in varied geographies. The solution intends to bring in rapid and sustainable socio-economic development through DRE based interventions that integrate clean, high quality, and reliable energy with livelihoods, agriculture, health, education, and public infrastructure.
What makes this approach different?
The approach entailed getting the government and community buy-in from the outset and partner with them to build an ecosystem approach that can be scaled quickly to one thousand villages.
Hamara Grid worked on this from April 2021 and discussed with the village councils, met with elected representatives of the District, discussed with the regional government, district administration and village communities and brought them on the same page on the project and its objectives. The village communities agreed to participate with a contribution of EUR 30 per family (approximately EUR 7,000 per village) as an upfront fee to be connected with the mini-grid. This is a very encouraging development and is an indication of the acute need for economic development and sense of ownership on part of the village communities.
The contract for building the mini-grid is given to the village to foster a deep sense of ownership and enables the village community to earn EUR 4,000 in installation payments. One village youth with technical aptitude is identified and trained to be the mini-grid operator.
The Shell Foundation-Hamara Grid Initiative
The initiative focuses on 132 villages in the district of Mon in Nagaland, India with 50,000 households and 350,000 people with a PPPP model – the District Administration of Mon, the people represented by the Village Councils and the private entity is Hamara Grid supported by the partners such as SF.
The community participates with:
- Each village is contributing EUR 7,000 for the project
- Assisting in identifying land and land lease
- Providing right-of-way for poles and cables
- Help in identifying potential operators
- Contribute labour and skilled tradesmen for construction of the mini-grid
- Guarantee safety and security of assets
Project Financing and Costs
The financing for the project is a mix of grants, debt and equity. The initial funds for the first three mini-grids was from a mix of Hamara Grid equity and a grant from Smart Power India. Subsequent villages were supported through concessional debt from Shell Foundation. Caterpillar Inc and Assist International supported with a consulting agreement. The Doen Foundation provided funds for building internal capacities of Hamara Grid. A concessional debt from a philanthropic organisation is in the pipeline and will help take the portfolio size to 50 villages.
The project size is EUR 12M, of which Hamara Grid has raised EUR 5.5M.
Project Outcome
Six mini-grids were commissioned in Mon District, Nagaland from Feb 2022 to August 2023 and are operational. Work is on to install four more mini-grids by March 2024. Investment has been confirmed to set-up 50 mini-grids by June 2025.
The learnings from the project thus far:
- Capital structure. A blended finance structure is adopted for the first 50 mini-grids with a mix of grants, debt and equity. With scale we will be able to take on commercial debt.
- Utilisation of energy. It normally takes 18-24 months to get a village to fully utilise the energy produced in a mini-grid. It is possible to make this happen quicker with incubation of a large number of energy-based livelihoods and linking them to markets.
- High CAPEX is still a problem. We need scale and better negotiation with vendors and suppliers to this. This is an aspect we shall be collaborating with other players in the sector.
- Adapt to better technology. We will need to adapt to more sophisticated technology especially in storage, remote monitoring and technical optimisation. We are working with various partners to achieve this.
- Village size. The larger villages (with over 250 households) will be covered first as they are able to utilize mini-grid energy faster and have more numbers of potential entrepreneurs. The smaller villages should be addressed subsequently for the project to reach commercial viability faster.
- Building a clean energy powered ecosystem. In the last 18 months Hamara Grid has managed to incubate over 150 entrepreneurs in the three villages. These include agri-processors, grain milling, silk spinning, corn pulverising, processing of non-timber forest produce (NTFP) such as banana fibre, bio-floc technology-based home fisheries rearing, metal fabrication, air compressors and carpentry. More micro-businesses are being explored such as home stays for eco-tourism, drying of king chillies and spices, pellet machines for livestock feed, cold chain and handicrafts. Building the ecosystem involves identifying the right technology, improving ergonomics to make machined gender friendly, providing accessible finance, establishing a repair and maintenance system and linking to markets.
- Hamara Grid has signed agreements with export houses such as Heirloom Naga, Cane Concepts, Urra Enterprises and Runway Enterprises for export of handicrafts based on bamboo, banana fibre, metal inlaid woodwork and other handicrafts. The export houses provide training and product design and assured market volumes.
- All public infrastructure such as street lights, health centres, schools, pre-school day care centres (anganwadis), public buildings, sports infrastructure have been connected to the mini-grid on a paygo / prepay model.
Next Steps
The next step for the project is to scale up to 50 villages in Mon district, Nagaland by 2025 in partnership with Mon district administration, local communities, partner investors and other key stakeholders.