Kerosene to Rice Husks

This a great story on how small scale technology is powering the rice growing villages of India.  Even more important is the back story also described here.  This is very much another development that may be ascribed to the pioneering effort of the microfinance industry.  It has become acceptable to strongly support small scale entrepreneurship everywhere.

This merely one such result.

At the same time the advent of the cell phone right after the light bulb is as telling.  Everyone has figured out that plugging into the global knowledge pool allows you to advance and prosper.

Here we discover that a village power plant using rice husks, which are clearly waste and burned anyway in order to dispose of them, can instead be used to fuel the power plant and deliver power to the villagers at a cost base half of the alternative kerosene.

It may not sound like much, but the economic calculation is always made and always drives adoption.

From kerosene to rice husks: Powering India's rural revolution

Companies focus on affordable, innovative products for the bottom of country's economic pyramid

ANUJ CHOPRA

Special to The Globe and Mail

October 7, 2010

http://v1.theglobeandmail.com/servlet/story/LAC.20101007.RB-INDIA-CHEAPSTUFF-1007/TPStory/

TAMKUHA, INDIA -- The machines clamour and whir from dusk to midnight, transforming heaps of rice husks into electricity and offering respite from darkness in Tamkuha, a humble village in the eastern state of Bihar.

Until three years ago, like many of the 125,000 villages not connected to India's strained electrical grid, life in Tamkuha would come to a staggering halt at sundown. For generations, the residents of this village depended on smoky lanterns lit with kerosene-soaked wicks to do their daily chores at night.

That changed when Husk Power Systems Pvt. Ltd. (HPS), a little-known rural electrification company, introduced Tamkuha to the joys of electricity by utilizing the only resource abundantly available in this impoverished rural landscape: rice.

In India, 350 million people live without electricity, mainly in small villages where farming is the mainstay. These communities harvest nearly 90 million tonnes of rice every year.

HPS uses rice husk pellets - the hard, outer shell of rice grains usually discarded by farmers after harvesting - to power 35 100-kilowatt biomass power plants designed by the company. Theirmachines can be retrofitted to produce electricity with other raw materials, too, like corn husk and wheat husk.

For an average monthly bill of 80 rupees (about $1.80), HPS supplies 30 watts of power to each household, sufficient to light two compact fluorescent lamps and charge multiple cellphones for six hours daily. In comparison, households used to spend more than double that amount to light one kerosene lamp.

"If you drew a map of electricity-starved areas in India and compared it with a map of rice-growing areas, the two would look nearly identical," said Ratnesh Yadav, chief operating officer and co-founder of HPS. "With this technology, all off-grid villages in the rice belt could be electrified in an environment friendly, financially sustainable and, most importantly, an affordable way."

The company has 52 power plants that supply electricity to 200 villages and aims to build 2014 similar plants by the year 2014, Mr. Yadav said.

This ultra-cheap way of generating electricity typifies the Indian concept of jugaad - a colloquial term used to describe an idiosyncratic solution, cobbled together in a resource constrained environment, to fix a vexing problem.

As India's economy continues its torrid growth - with its gross domestic product expected to expand by 8.5 per cent this year - the country is transforming from a low-income to a lower middle-income economy. Per capita income has nearly doubled since 1990, to $1,030, pushing hundreds of millions of Indians, especially in the rural heartland, to the cusp of becoming first-time consumers.

In recent years, several jugaad-style frugal innovations have flooded the Indian market, offering new, affordable options to the population of 1.2 billion. The desire to woo the burgeoning but price-sensitive consumer market has inspired legions of small and large enterprises to innovate a range of low-cost products.

In 2008, India's Tata Motors launched the Nano, a pint-sized sedan, well publicized as the world's cheapest car. With its attractive launch price of $2,500, the Nano helped millions of scooter-riding Indians fulfill their dream to own a car.

In 2009, Tata also launched the Swach water purifier, priced at about $20. It operates without electric power, giving millions of India's poor access to clean drinking water and helping to diminish the scourge of water-borne diseases endemic across much of the country.

Last year, General Electric's Bangalore-based health care laboratory unveiled a hand-held electrocardiogram; it costs about $800, less than half the price of a conventional machine. The new device reduced the cost of a once-expensive ECG test to about $1 per patient.

In July, India's ministry of human resources unveiled the prototype of a computing device, akin to the iPad, which will be available by next year for about $35. The government expects its price to drop to $10 in coming years, offering an attractive alternative to those who cannot afford laptops or personal computers.

These low-cost innovations are not low-performance, knock-off versions of technologies available in developed countries, said Raghunath Anant Mashelkar, former director general of the New Delhi-based Council of Scientific and Industrial Research.

"The drivers of such innovation are focused on designing sophisticated, high-performance technologies that can be afforded by billions of people at the bottom of India's economic pyramid," he said. "In this new paradigm of business, we recognize that the poor will have the same functional and emotional experience as the rich have - but for a fraction of the price."

This trend, some analysts say, is less symptomatic of companies to promote cutting-edge innovation, as much as their desire to tap a large and lucrative consumer market.

"Developing these products is not the same thing as launching a rocket into space," said Anand Nandkumar, a professor of business strategy in the field of innovation and entrepreneurship at the Hyderabad-based Indian School of Business. "This trend is inspired by the recognition of a vast, untapped market opportunity."

Rural India accounts for 25 per cent of Nokia's consumer base. In 2006, India's largest handset brand initiated its "social inclusion" policy to woo low-income consumers in India.

Nokia's foreign and Indian competitors are making similar inroads into this market. With 618 million mobile phone connections, India is the world's largest cellular market after China according to Gartner, a global research firm. India's number is expected to climb to 993 million by 2014 with mobile penetration in the rural market growing at nearly 20 per cent.

To beat competition, Nokia partnered with SKS Microfinance, India's largest microfinance lender, and some other financial institutions to penetrate the rural market. With this partnership, Nokia has enabled rural consumers to buy its mobile handsets for about $2.30 a week.

For many companies, steep and regular price cuts have led to levels of market penetration never imagined before.

Last December, Proctor and Gamble Home Products Ltd. launched a 30-per-cent cheaper variant of its flagship detergent Tide, called Tide Naturals. The company said it was part of "purpose-inspired growth strategy" to reach consumers in the untapped rural market. Within days, the product captured 0.6 per cent of India's $8-billion (U.S.) detergent market and within weeks stores reported short supplies as the product sold out.

"Indian boardroom discussions are increasingly going from 'What is our man-on-the-moon project?' to 'What is our nano project?'" said Dr. Mashelkar. "Companies are realizing that India has both rich and poor people, and catering only to the rich significantly limits their market."

***

A changing country

$425-billion

Value of India's burgeoning rural consumer market, which has doubled in past five years.

742 million

Population of rural India, 22 times the population of Canada.

33%

Increase in Indian car sales in August, buoyed largely by strong demand in rural areas.

50%

Rural India's portion of national sales of motorcycles, televisions and washing machines.

Anuj Chopra