Foreign cos add solar power to rural economy

Foreign companies are increasingly trying to grab a hold of rural business opportunities in India. From fast-moving consumer goods and electronics items, to even manufacturing solar water heaters, companies have been trying to enter the country through the rural belt.

In a major initiative to push the use of solar water heaters in rural areas, US-based Suncast Energy Corp would be launching light weight solar (LSW) heaters in the country over the next two months. The product would provide new business opportunities in rural areas, particularly in those 1.25 lakh villages which are yet to get any power connection.

Suncast Energy is the first company to enter a virtually untapped rural solar heating market, which is estimated to be more than $5 billion.

The company, which has already started the distribution of LSW to countries like Mexico and Brazil, would initially source LSWs from the US. The cost of each unit would then be around $250, which the company expects to come down after it sets up manufacturing facilities in the country. The product comes with a warranty for 10 years.

?We are in talks with Haryana and Himachal Pradesh government for setting up a manufacturing facility for LSWs,? Sonny Sharma, chief executive officer, Suncast Energy Corp India told FE.

The company is specifically targetting those rural areas in the country which have a substantially longer spell of winter. ?We want to bring in rural consumers into the water heating market through LSW,? Sharma said. The company also hopes that the government would extend financial incentives for popularising the use of LSW, as were provided by the governments in Brazil and Mexico. Recently, Prime Minister Manmohan Singh has also approved a proposal to promote solar lanterns in rural areas.

Easy to install, LSW can be easily fitted into existing water supply systems, Chris Castillo, president of Suncast

Energy Corp India, said. As per the present arrangement, Suncast would distribute LSWs manufactured by another US-based company, Heilocol, which is the market leader in swimming pool heating systems.

Most of the solar water heating product in the country have been targeted at urban and institutional buyers. States such as Delhi, Haryana and Tamil Nadu have offered a subsidy of upto 50% to consumers using solar water heaters.

Since 1983-84, the government has been providing full or partial financial support for popularising solar water-heating system. Since August 2005, the government is operating a revised interest subsidy scheme, through the Indian Renewable Energy Development Agency (IREDA).

Under this scheme, public sector banks, scheduled co-operative banks and private banks can extend loans at the rate of 2% per annum for domestic users, 3% for institutional users and 5% for industrial and commercial users, for promoting solar water heating system. Interest differences, with respect to 12.5% for the entire loan repayment period, upto a maximum of five years, is being reimbursed, at the discount rate of 6.5% from IREDA.

However, the prices of solar water are still high compared to conventional electricity-run heaters. In Delhi, while a conventional water heater, with a capacity of 10 litres, would cost between Rs 2000 ? Rs 5000, a similar solar water heater would cost close to double the amount.

According the ministry of new & renewable energy, out of the estimated potential for solar water heating systems (140 million square metres of collector area), only 2 million square metres of solar collector area has been installed in the country. Installation of around 2 million square metres collector area has resulted in the saving of around 2 billion units of electricity per year (1000 units electricity being saved per square metre collector area, per year).

For ensuring accelerated growth of installations of solar thermal technologies in the country, the 11th Plan envisages 10 million square metres of solar collector area.