Sun Shines on Bihar's Renewable Energy Sector, but Lack of Subsidy Creates Hurdle

Motihari/Hajipur, Bihar: Umesh Kumar (37) runs a bakery and ice cream factory at Chakia town in East Champaran district, the northwestern part of Bihar. He employs four others as well. To run the factory, Umesh mainly depends on electricity from the North Bihar Power Distribution Company Limited, a government discom.

Bihar has done good work in the last decade in the field of grid electricity connection and supply. Yet, small business owners need an alternative and reliable energy source so that their work does not halt in case of power disruptions. Umesh has been utilising solar power for almost two years after taking a connection from the mini-grid of Husk Power Systems (HPS) located at Chakia Bazaar.

He purchases a prepaid recharge of Rs 2,500 every month. "Solar power has ended our dependence on diesel generators. Even if there is no electricity for five to ten hours, our work does not stop. Grid electricity is supplied for roughly 20 hours, and my monthly bill for that is between Rs 16,000 and 20,000," he said.

However, the high price of solar power from the mini-grid is a reason for concern. According to Umesh, it is twice as expensive as the government-supplied electricity, so the prices should be slightly reduced.

"After sunset, not enough solar electricity is available, and power trips several times. We then have to talk to the customer care of Husk Power," said Rajeshwar Singh (45), the chief worker at Umesh's factory. Tripping is mainly visible after sunset when the stored electricity is supplied.

Chakia beneficiary Rajeshwar Singh.

Solar power has been beneficial to Kedar Kumar (48), who sells fish at Chakia market. His shop on the footpath does not have a grid electricity connection. He fulfils his power requirement lasting for a few hours through HPS by recharging Rs 375 every month.

Efficient but Costly

HPS provides electricity to small businesses and micro, small and mini enterprises (MSMEs) through its solar mini-grid. It has tariff plans and validity similar to mobile phone plans. HPS assistant service engineer Sonu Kumar Rai told 101Reporters that a 50-watt recharge costs Rs 375 and a 100-watt recharge costs Rs 675 monthly. Using the HPS app, the customer can check the power use. The company also provides offers and coupons to attract customers.

HPS mini-grids are mainly located on town outskirts, from where electricity is transmitted in the same manner as grid power. The company plans to increase its mini-grid fleet to 500 in the next three to four years to serve over 50,000 MSMEs, thus helping them increase income by at least 30%. 

The company has also started an agro-processing hub for turmeric in Champaran and will take up such work in hundreds of locations, helping farmers sell packaged end products rather than raw materials.

Besides Chakia, 101 Reporters visited several farms using Husk Power's electricity in Lalganj town in Vaishali district. Roshan Kumar (21) started a readymade garment brand showroom in Lalganj this year. "Solar power from Husk Power's mini-grid is helpful in my business, but it is more expensive than grid electricity," he said. Other consumers echoed his views. Due to the good supply of grid electricity in Bihar and the high prices of solar mini-grid power, it is only an alternative and not the main source for small businesses.

"Unlike the state grid, our mini-grid power is unsubsidised. So it is more accurate to say that grid power is artificially inexpensive. If we compete on a level playing field, we are more affordable and more reliable... We have developed and rolled out a technology roadmap that uses artificial intelligence to lower the electricity cost of consumers systematically," HPS Chief Executive Officer Manoj Sinha said in a written response to 101Reporters.

He maintained that the cost of grid electricity purchase and distribution costs of discoms were higher. "Do not forget that discoms remain hugely loss-making entities. They do not have the funds to invest in improving their existing challenges, let alone transmission and distribution infrastructure. Solar mini-grids are already 100% sustainable as our portfolio of hundreds of mini-grids run profitably and our customer retention rate remains above 92% year-over-year. Consumers should add solar PV to their energy mix if they have the capital," Sinha said.

"Although the average supply of electricity in Bihar has improved, the improvement in uptime does not address the ongoing dissatisfaction of customers. For example, voltage drop and frequency fluctuation. Lows continue to be a major hindrance in operations and a threat to machinery, forcing most MSMEs to depend on diesel generators to operate their businesses reliably. Husk mini-grid solves these issues and significantly reduces diesel emissions," the HPS CEO added.

Regarding troubleshooting, he claimed, "Can you imagine a day when a discom can resolve a customer's complaint in less than 120 minutes? Husk resolves a customer's complaint in less than 90 minutes on average."

Two discoms — North Bihar Power Distribution Company Limited and South Bihar Power Distribution Company Limited — currently function in Bihar. Tata Power is another player in the micro and mini-grid sector, but its contribution is miniscule. It entered the field by launching a 5kW biogas generation plant in Muzaffarpur district in December 2020. Efforts to contact the company via email proved futile.

Greenpeace had worked with village panchayats on solar electrification projects in the past. "We successfully electrified Dharnai village in Jehanabad district. But we are not working in the renewable energy sector there right now," Greenpeace campaign manager Avinash Chanchal told 101Reporters.

Energy Policy and Government Action

According to Bihar's Renewable Energy Policy, 2017, a decentralised solution such as a mini-grid will play an important role in providing electricity to all households; local businesses, khadi and rural industries can benefit from it. It said a mini-grid of 500 MW capacity based on solar, biomass, wind and hybrid can be established and that the Bihar government will encourage investments by creating a favourable environment.

Husk's mini grid, based in Kia, has about 40 customers. The service engineer is Sonu Kumar Rai (Photo - Rahul Singh, 101Reporters).

A senior official of the Bihar Renewable Energy Development Agency told 101Reporters on condition of anonymity that private parties were encouraged to provide electricity through mini-grids in the early 2010s as Bihar's electricity system was not good then. Even now, some marshy lands and hilly areas do not have an electricity supply, or it is not good.

"The commercial rates quoted by private companies are not affordable to everyone, hence, there should be a new regulation in this regard. Subsidised power is another good option," the official said. Bihar Electricity Regulation Commission made regulations in 2010 and 2016 regarding the supply of electricity through mini and micro-grids. "No new regulation has come up after 2016," he admitted.

According to the September 2023 report of the Central Electricity Authority, Bihar's installed renewable power capacity is 530.26 MW, whereas coal-based power generation capacity is 7,396.74 MW. In the 2017 policy, the state had set a target of achieving 3,433 MW of renewable energy capacity by 2022, which includes an installed capacity of 2,969 MW of solar, 244 MW of biomass and bagasse, and 220 MW of small hydropower energy. When compared to the target of 2022, Bihar has, up to September this year, achieved only 15.43% of renewable capacity.

According to the Central Electricity Authority's Report on Under-construction Renewable Energy Projects published in July, a 250-MW capacity grid-connected, ground-mounted solar power plant in both Banka and Jamui districts will be ready by next month. No other big solar project is in the works in Bihar. 

Bihar Industrial Investment Promotion Policy, 2016, talks about prioritising solar, biomass, hydel and other renewable energy projects and giving incentives. However, such proposals could not gain much momentum, and the renewable energy sector did not develop then.

According to the Economic Survey of Bihar, 2022-23, agriculture and allied sectors accounted for only 20% of the overall development, despite Bihar being an agrarian state. Solar energy has the potential to provide a much-needed fillip to agriculture. However, HPS is the only main player in the solar sector. 

It seems companies are less interested due to a lack of subsidy for mini-grid electricity. Additionally, the Bihar government does not focus much on solar power due to policy-level issues. At present, its emphasis is on rooftop solar systems.

(Rahul Singh is a Bihar-based freelance journalist and a member of 101Reporters, a pan-India network of grassroots reporters.)