Husk’s finance model shows what success looks like for clean energy enterprise in India
Following Alliance Magazine’s most recent edition (which we also blogged about) Gyanesh Pandey, CEO of Husk Power Systems, Caroline Hartnell, Editor of Alliance Magazine and Simon Desjardins, Programme Manager at the Shell Foundation, met earlier this week to discuss with a small audience the ‘funding ecosystem’ and business approach needed to build successful clean energy enterprises in rural India.
Gyanesh started by emphasising that Husk Power overcame significant social and financial challenges to reach success and in doing so developed something new. Something which Gyanesh hopes “will be a solution for clean energy that the world embraces”.
The social barriers in Bihar are big – the rural workers needed to maintain the equipment and collect fees are not professionally trained - for Husk this meant it had to develop an entire training institution which it calls 'Husk Power University'. Local attitudes can also make it harder to collect fees, however Gyanesh explained, having compassion does not mean losing commercial rigour:
“I am not phased if a customer argues fiercely against paying a 10 rupee fee when it is due because the fees Husk Power charges are significantly lower than the kerosene lighting that it replaces and I know that he has the cash”.
The financial barriers to the business were also major: from the start no local bank lenders would consider funding the business. Husk Power was fortunate, however, that two of its partners were in the USA: they managed to win several business competitions and eventually achieved a valuable mix of finance. From an early stage they had both commercial and philanthropic funders. The commercial stream, including investors like the Acumen Fund, the Omidyar Network, and Bamboo Finance, meant that the need for a profit and return was built in from the beginning. At the same time, Simon explained, the Shell Foundation’s grant support allowed for valuable flexibility to help Husk Power build capacity, experiment with its business model and develop the remote metering that will help it to reach scale.
What is evident from the model that Husk has developed is that scalability has been considered from the outset – even the technology has been designed like Lego so that the biomass gasification systems can be slotted together. Mini grids can be created to reach from a few hundred to tens of thousands of households.
A lot can be learnt from Husk Power’s funding and social approach that can help new energy enterprises enter the field: finding the appropriate tact and philosophy to build a workforce and market from the grassroots and seeking a range of funding streams to stimulate the various sides of business development are worthy points to pick up.
Now Husk Power is poised to go global. It is seeking partners worldwide who realise that access to energy is the basis of achieving most development goals, whilst the business prospects have already caused commercial investors to clamour at their door.
Read a case study on Husk Power.
Watch a film of Husk Power's work.
Listen to Gyanesh's views on decentralised energy using biomass.