Over the next few years, 25 million people currently living without power in rural India will have electricity. This is an important new chapter for global clean power. Here’s how we did it.
We’ve flipped the switch on a grand plan to bring power to 25 million people in India’s poorest states, making it the largest electrification event the world has ever seen. On November 4, 2019, Tata Power launched a historic partnership with the Rockefeller Foundation and us — the Institute for Transformative Technologies (ITT) — to provide power to 25 million people across 10,000 rural villages in India. The resulting enterprise, TP Renewable Microgrid (TPRM), will roll out decentralized, clean, affordable, renewable energy in the form of smart preassembled solar mini-grid systems to nearly 5 million households and more than 100,000 small enterprises over the next five years.
So what’s our part in this story? For our team, the launch of TPRM means we’ve crossed the finish line of a marathon: years of research, innovation, fieldwork, building partnerships, and above all a deep belief in a unique business model. While we’ve been recognized as the developer of the technology at the heart of the scheme, the real joy was playing a central role in conceiving the idea, bringing the various players to the table, and dragging it over the finish line.
Here’s how it unfolded.
“What are the 50 most important technologies required to solve poverty over the next 20 years?” In 2015, a small group of us had just wrapped up an intense two years answering that very question. Our report, 50 Breakthroughs, presented a comprehensive analysis pinpointing the most important new technologies needed to make massive improvements on the range of issues affecting the global poor: food security, health, education, human rights, gender equity, energy access, digital inclusion, water, and climate change. It also explored realistic paths to scale based on a variety of key factors on the ground: access to finance, the state of infrastructure, maturity of the policy ecosystem, and market dynamics.
Our key takeaway: The most underleveraged path to making a real dent on poverty is engaging local established private companies. Our research showed that there were plenty of cool technologies that never reached any real scale. While they were innovative and built with the best intentions, they relied on social enterprise startups (typically based in the West), which simply were not positioned to scale. To reach scale, we need established companies with deep local roots, and expertise in relevant businesses and economies of scale. While such companies may not exist in many developing countries, they are a feature of emerging economies like India, Kenya, Nigeria, Rwanda, and Ghana–countries that have witnessed significant improvements in their policy ecosystems encouraging private entrepreneurial activity. This has led to marked growth in the number of local companies in a position to offer valuable services to low-income consumers–and still make a profit. To date, though, such companies were too busy growing their existing businesses to worry about lower-income market segments.
Pulling all these pieces together, we established ITT’s breakthrough formula for success. Our model: apply philanthropic funds to early stages of technology development and partner with established emerging-market companies already well equipped to take the technology to local markets. The model derisks new technologies for these companies, and allows them to expand their customer base while doing good. With this formula, the technology in the right hands can reach millions of low-income people.
Our breakthrough formula for success: deploy philanthropic funds to allow early-stage tech development, and partner with established emerging-market companies well equipped to take the proven technologies to the millions who need it. It’s a win-win-win.
Before long, we were given a chance to put this insight to the test — with solar micro-grids. Rockefeller Foundation launched its Smart Power for Rural Development (SPRD) initiative: the world’s first large-scale program to bring clean power to rural communities. Its plan: to electrify 1,000 villages in India with solar mini-grids over the course of three years.
But SPRD immediately ran into two major problems. First, each solar mini-grid took up to 3 months to build; and second, the projected cost per intended customer would end up being twice as expensive as they could afford. So the 1,000 mini-grids would ultimately take close to a decade to complete and cost more than twice the allocated budget.
Rockefeller’s leads on SPRD, having read 50 Breakthroughs, approached ITT to see if we could build the technology we’d described in our report: a technology suite consisting of a “Utility-in-a-Box” of smart, preassembled mini-grid systems that could be dropped into place within two or three days.
So, with funding from Rockefeller, we set about building a team. This included Hasna Khan, a pioneer in the field of electricity access who built the developing worldʼs first solar mini-grid, as well as Indian energy-access veterans Sanjay Khazanchi and Sharad Tiwari. Suddenly, we’d formed a team that had collectively built more solar mini-grids than pretty much anyone else in the world—and had experienced all the pain points involved.
Next, we had to identify our private sector partner. Around that time, we met Praveer Sinha, head of a business division within India’s largest utility, Tata Power. Given my own roots in India, I had come to believe that Tata could be one of the most influential institutions for sustainable development in South Asia and sub-Saharan Africa–given its century-old track record of building India’s industrial infrastructure and operating with integrity and an ethic of service.
In short, Tata perfectly ticks the box of an established local company capable of building large-scale businesses to provide affordable, quality service to low-income customers. They could, in short, provide a true win-win-win: for the government, for the people, and for their business.
Praveer offered his support to this proposition, but with clear conditions: Tata Power would only commit to commercializing the technology suite if we reached strict cost and performance parameters.
Bear in mind that in those days, the least expensive solar mini-grid in India cost about $3.00 per watt – i.e., US$85—90,000 to power a village of 1,000-1,500 people. These systems were rudimentary at best, and of variable quality.
In contrast, Tata’s first parameter for ITT: the cost to the consumer couldn’t exceed $1.50 per watt. Second: the systems should be as reliable as–and smarter than–the most sophisticated systems anywhere in the world.
With those daunting targets, we were off to the races.
Tata Power offered their support, but they’d only commit to commercializing our Utility-in-a-Box solar mini-grid if we could get the cost-per-watt down to $1.50.
How to get from $3.00 to $1.50? Over the course of four years, we iterated a number of architectural redesigns. Where solar mini-grids had previously required building a control room to house the various components, we built the necessary technology into a box and positioned it under the solar panel, reducing the amount of material and the need for real estate. We made the system modular, so that it could be expanded quickly as needed. Meanwhile, preassembly meant installation time fell from months to days, also cutting costs.
It became clear, too, that the system required smart metering so that the end user could accurately budget for energy expenses. The cheapest smart meter on the market cost $60 per household, so we designed a metering system that allocated just one circuit board per cluster of six houses — reducing the cost by four fifths.
We made exciting progress. Each subsequent iteration drove the cost lower. By the end of 2016, we had a reasonably working early prototype of the UiB, which we installed at Tata Power’s Delhi site. By the end of 2017 we’d reached $2.15 per watt. The systems did well in the few villages where we installed them. Our early smart meter and control architecture prototypes were on par with the best solar power systems anywhere in the world.
Suddenly, everything came to a grinding halt. The lack of on-the-ground progress in getting the 1,000 sites built and the seeming indifference of the government led to a wholesale abandonment of the mini-grids paradigm in India. Whereas all the talk about mini-grids in the previous two years had been about India, the conversation suddenly moved to Africa, where Nigeria had launched a thoughtful and ambitious universal electrification policy framework. Major funders lost interest and changed tack. Our money ran out, and we were forced to lay people off one at a time. For those of us who remained, the paychecks stopped coming. Little by little, we began feeling defeated. We were hanging on because we believed we could pull off something historic. And you can’t make history without sacrifice.
In June 2018, just when it looked like it was all over, our field tests at last showed our mini-grids met Tata’s cost and performance parameters. Within days of that breakthrough, Praveer became CEO of Tata Power. I asked if we should build 100 mini-grids to take our systems for a spin. I believe his exact words were: “Let’s add a couple of zeroes to it and make it real.”
“Making it real” took one more year. We pulled together a working group consisting of 20-odd people from ITT, Tata Power, the Rockefeller Foundation, Smart Power India, and MIT. I took the helm. We carefully constructed a business plan, business model and financial model that would pass muster with everyone from the Indian government, to Tata Group management team to potential funders — not to mention the many influential skeptics.
Finally, in November, Tata Power formally launched TPRM, appointing Manoj Gupta from within Tata Power leadership as CEO. Manoj is a meticulous, thoughtful, humble and incredibly hard-working engineer who will lead the initiative to success. In just a few weeks, TPRM has built more mini-grids than the rest of the ecosystem could in the average year. Much remains to be done, but in Tata’s hands, the vision of a clean, affordable decentralized power future is destined to become reality. With Tata’s bet on decentralized power, is it likely that others will follow suit — not just in India and other developing countries, but around the world where decades-old infrastructures are crying out for innovative solutions.
But 25 million is, literally, a rounding error when 1 billion people don’t have power. We’re betting that this becomes the most powerful — if not the default — model for solving the electrification problem for the world’s billion people still living without power. To make that happen, we’ve headed to Nigeria to work on a partnership with an exciting local company–and a uniquely Nigerian solution.
We’ll tell you more about that in a future post.