Approximately 360 million people in India lack adequate access to grid-electricity and another 20 million households receive less than four hours of electricity per day. To help close this gap, the Government of India has set a target of generating 100 gigawatts of renewable energy by 2022.
But while grid connectivity is expected to improve over the next 10 years, at the current rate of grid expansion, urbanization and population growth, 70-75 million households will still lack access to grid electricity by 2024.
This unmet demand for electricity presents a huge opportunity for off-grid renewable energy solutions, in particular solar home systems (SHS), and decentralized renewable energy (DRE) systems.
The Climate Group, in partnership with Goldman Sachs Center for Environmental Markets, has published a flagship study to identify promising off-grid energy business models in India with the greatest potential for scale-up.
Our report highlights the technologies available, key companies, future growth forecasts and potential for social and environmental impact. Key observations include:
- Market size of the DRE sector will be US$150 million by 2018 largely driven by B2B revenues, and we conservatively estimate the market size for SHSs to grow 60% per year to reach a market size of US$200-250 million by 2018.
- With financing support, we estimate 7.2 million under-electrified households will be able to afford a solar home system by 2018.
- DRE companies are exploring new types of technology to increase operational efficiency. For commercial viability, it is crucial that DRE enterprises have substantial cash flows that can recover high upfront installation costs.
- Along with governmental policy focus, there is a clear need for greater private sector involvement in renewables in the off-grid space – and investment is already growing.
This flagship study aims to boost entrepreneurial activity and increase private sector investment in the renewable off-grid energy sector.