Manoj Sinha co-founded Husk Power Systems with the vision of giving people in remote areas of Asia and Africa, like the one where he grew up, access to reliable electricity. He quickly came to see that what they were providing at Husk was something more far-reaching than access to a basic utility. They were facilitating wealth creation.
THE ENERGY DISRUPTORS LOOKING TO MOVE THE NEEDLE
In 2008, Manoj Sinha and Gyanesh Pandey, who met as electrical engineering students, co-founded Husk Power Systems. They aimed to provide power via mini-grids, using a biomass gasifier to generate cost-effective electricity from rice husks, a waste product that otherwise in rural India is largely left to rot.
Starting with three mini-grids, the first in India, they initially focused on the state of Bihar in eastern India, where they had both grown up: it was a poor and remote region; 70% of its 110 million inhabitants had no access to electricity; and the two young entrepreneurs of course knew the area and its people well. “Initially our goal was to provide homes with electricity 8-10 hours a day, mostly after dark. At first, people were delighted, with 98% satisfaction levels and people thrilled that their kids could now study later.” Then things changed. Solar home systems started becoming more prevalent, transforming the aspirations of people, who now wanted 24/7 access to power. “We’d not seen it coming,” admits Manoj. But Husk responded quickly and in 2014 pivoted the business model and launched hybrid mini-grid system that uses solar PV, biomass gasification technology and storage (battery) to deliver 24x7x365 days of power. With the change in the business model, Husk started serving Micro, Small & Medium Enterprises (MSME) customers to stabilize the cash flow and increase capacity utilization of the power plant assets. Husk raised Series C round of equity for the amount $25 million and has now expanded the base to 75 hybrid mini-grid sites in India and Tanzania.
“Electricity is our handshake with the customer, but what we want to achieve is wealth creation.”
With round-the-clock access to reliable electricity, the Husk customer now had the same experience as that of any customer connected to traditional utility supplier. “And at that point our role definitively changed. We were now providing a tool that could generate additional sources of income.” Manoj gives three simple examples of the transformative impact that can have on people’s lives:
- In 2016, a man in Bihar decided to buy a refrigerator and open an ice cream parlour. “That first summer he sold about 2,000 ice lollies a day. It was the only parlour in a 5-10km radius and people flocked to it. The business is thriving.”
- A carpenter who invested in some electrical woodcutting tools saw his production increase 10-fold, from 5 to 50 pieces of furniture per month. “The business expanded, also generating additional jobs, for example in sales and marketing.”
- A rural clothing shop that Husk personally helped improve their customer experience by adding better light, an LCD TV screen and ceiling fans, all without increasing wattage. “It delivered more footfall, more sales and more turnover.”
This last example is a good illustration of how much more Husk offers than a traditional utility company. “Electricity is our handshake with the customer, but what we want to achieve is wealth creation.” With domestic customers, too, Husk tries to deepen the relationship. For example, when they see usage spikes after 10pm, they contact customers to remind them that electricity at that time is more expensive.
Manoj is convinced Husk and mini-grids can be genuine gamechangers. “One company can change the world. Look at how Tesla has disrupted Automotive sector by introducing EV and become the sector’s first 100-billion company. No one thought that was possible. It’s our ambition to change the world, too. Any emerging economy government wanting to achieve 100% access to electricity must have mini-grids as a component of their national electrification strategy. It’s cheaper, more reliable, creates local jobs and reduces carbon emissions.” The access Husk gives its customers is also better than that provided by traditional utility companies, even in developed countries. “We guarantee any outages will be fixed within 120 minutes. Even when we’ve experienced flooding and high winds, our plant has always been up again within a day. It took far longer to reconnect customers after recent bad weather in California when over a million people were left in darkness. And with climate change, the number of extreme weather incidents is only going to rise.”
“Any emerging economy government wanting to achieve 100% access to electricity must have mini-grids as a component of their national electrification strategy.”
Anything but normal
Manoj says the single biggest obstacle to making a mini-grid business financially sustainable is regulation, as without the reassurance of a supportive regulatory framework investors will be more reluctant to invest in your business in that market. “Government regulation remains a headwind in many countries. It took eight years to get policymakers in India to pass mini-grid regulations. That’s down to the lobbying power of utility giants wanting to hold back reforms. But the positive is that it did eventually get it passed; and better still, those regulations have been adopted verbatim by Nigeria.” In rural areas, land is also an issue. “Leasing land takes time, energy and lots of negotiating.” Beyond that, Manoj says, it’s all about the cost of generating power and the cost of capital — just like any other utility company. Though in many ways Husk is nothing like other utility companies. “First, we’re extremely nimble. From a technical standpoint, we can leapfrog with cell phone-based technology without being encumbered by an infrastructure legacy of copper wire and landlines. We’re probably the world’s most technically advanced utility company: all our assets are on our own IoT, served by an algorithm that monitors weather patterns, usage spikes, etc; we have dynamic demand-response, and introduced time-of-usage pricing in India in 2016 (3 years before my electricity company in Colorado!). In short, we can customize energy usage and pricing to your needs as a consumer or business.” Another local benefit of Husk’s business model is that they have a local person available to fix problems at each grid. “That means developing a well-trained local workforce, not just technically but in customer-facing aspects too, which is often more difficult. In all, it takes 3-6 months to train someone but then we have a skilled worker who can deal with 80-90% of problems on-the spot. That’s efficient, helps us maintain quality standards, and is great for local employment and positive engagement with our customers.”
“Government regulation remains a headwind in many countries.”
Three targets for 2030
Asked what Husk can contribute to the SDGs by 2030, Manoj lists three things. “First, by then we want to be delivering a high-quality electricity supply to 10 million people in Asia and Africa. But as I said, the real change we want to achieve with that is wealth creation. From the start, my hypothesis has been that energy is the bedrock of socio-economic development. There’s a well-known graph that shows energy per capita and GDP per capita. No OECD country has less than 1000KWh per capita consumption. Our customers generally consume 200-300KWh per capita. Our goal is to bump that up to 1000KWh per capita, so that through productive use of electricity by those 10 million people, we can actually help shift the economic needle.” Secondly, is the way Husk will produce that energy. “To my knowledge, we’re the only mini-grid energy company globally that’s 100% renewable. That means way fewer CO2 emissions than if those people were supplied with conventionally generated electricity.” And lastly, by addressing hunger and poverty. Husk largely operates in agricultural communities and already help local farmers by powering their irrigation systems from the local mini-grid. This means they’re no longer dependent on India and Africa’s fickle local weather conditions, and so their yield increases. “By 2030, we want to be powering the irrigation systems of half a million farmers to create an average 50% increase in yield.” The thing that has surprised Manoj most to date was when he didn’t foresee the change to solar power. He laughs, “We took our eye off the ball for a moment. But it’s OK to make a mistake once, right? So long as you learn from it. And we did. We’re now constantly monitoring our customers’ satisfaction and needs. Since 2016, we’re the only utility company in the world using NPS (Net Promotor Score, a leading marketing and management tool). It’s a key metric on our management team’s dashboard. We’re not going to get caught out again not knowing what our customers want,” says Manoj with a smile. And without any hesitation, you believe him.
“To my knowledge, we’re the only mini-grid energy company globally that’s 100% renewable.”