The market for solar irrigation pumps in India
Solar irrigation pumps in India could be a very attractive market. They could replace diesel powered pumps in many parts of India’s agricultural heartlands, especially in the under-electrified Gangetic plains. They could even increase agricultural output by making more irrigation water available to farmers. However, at the moment, neither the products nor the distribution chains are anywhere near maturity. I recently served as a jury member on a Greenpeace Innovation Challenge to develop a new solar pump. The challenge was initiated by the Greenpeace Innovation Lab and conducted online, across the world and in a collaborative manner. This blog is part one of a three part series, in which I look at the market. The other two parts look at the new pump design and at how online innovation processes can help identify and spread solutions.
- Around 300 million Indians still have no grid power. Another 300 million have only very unreliable grid power. Most of them live in rural areas
- Only 12,000 solar pumps were sold in 2012, indicating that the current product designs find it hard to compete
- The market for diesel pumps in India is ca. 2 million pumps at ca. INR 80bn (USD 1.3bn) per annum
It was my first trip to Patna. The capital of the state of Bihar and formerly of the ancient empire of Magadha, cannot be described as a beautiful city. It offers its 2 million inhabitants barely a village infrastructure. Pollution and noise are at extreme levels. So is population density. I got stuck for an hour in a honking traffic inferno next to a park designed for meditation. Despite its fertile soil, its famously brainy people and the good efforts of a competent government, Bihar is still a desperately poor part of the world.
A two-hour drive out of the city brings me to a small village. The countryside is lush green and the air is clean. Large power transmission lines run over the fields. Bihar used to be a major center for coal mining and is in India’s most resource rich region. However, none of the electricity seems to be intended for the people here. The village we come to has no grid power. There is an old distribution line, so it presumably counts as ‘electrified’, but it is defunct.
It is villages such as this, one of thousands in India, where people need off-grid power solutions. Almost 600m Indians still don’t have reliable grid power supply. A couple of houses in the village have individual solar modules on the roof. They can be bought at the local market and power mobile chargers, light bulbs or fans. Greenpeace wants to set up a solar and biomass fueled micro-grid here, together with the local energy pioneer Husk Power Systems and the microfinance company Basix.
It could also be an ideal place for solar irrigation pumps. Water is currently pumped either manually or using expensive diesel. Land for solar is available. Pumped water is a great ‘storage’ solution for the intermittency of solar. The cost of solar panels has plummeted in the past years. A 10 W solar home system, which can light a bulb and charge a mobile phone, is currently offered in rural India at a price of around INR 3,000 (USD 50), barely more than a goat.
India wide, there are currently around 10 million diesel pumps in operation. The average lifespan of a pump is approximately 5 years. Older models burn diesel to directly run a ground-mounted pump. Newer, more efficient models are submersible and run on electricity from a diesel gen-set. Depending on the depth of the water table, they are rated at between 1 and 10 horsepower (0.7-7 kW). Installation of a diesel pump costs anywhere between INR 20,000-80,000 (USD 300-1,300). If the average price is INR 40,000 (USD 667), this is an INR 80bn (USD 1.3bn) market each year. If the average pump size is 3 kW, the total installed diesel pump capacity in India comes to 30 GW, equivalent to almost 1/6th of the country’s total installed power generation capacity.
Diesel pumps, however, have four disadvantages: their fuel is costly; they deplete the water table more than necessary by pumping heavily at short intervals; they create local pollution and carbon emissions; in addition, diesel is often a hassle to get. Solar based pumping systems would be better on all four accounts. Yet only around 12,000 systems were installed in 2012. That is a market share of less than 1%. Why is that the case?
Solar pumps, so far, typically have the following flaws from a consumer’s perspective: First of all, they are too expensive. This is not so much an issue of the lifetime cost, but rather with liquidity. Diesel is expensive, but cash outs are spread over time, as fuel has the major share of the lifetime cost. Solar has to be paid for upfront. In addition, diesel pumps are a highly standardized, off-the-shelf-product. This reduces cost. Solar pumps are still at an early stage of product maturity. Secondly, diesel pumps are an established product. They have sales channels and consumer finance solutions. Many distributors and banks are still reluctant to bet on a new product like solar as long as the old one is being sold just fine. This point is also important from a customer trust perspective: diesel pumps are proven. Anyone thinking of buying one can see it in operation on a neighbor’s plot. Thirdly, diesel pump sets are portable. Solar pumps are not. Portability is important as it protects the system from theft (can be stored at night) and it makes it easily usable across different locations and users. It can be rented out and it can be easily brought to villages for demonstration purposes.
In order to encourage designs that can overcome these drawbacks and make solar water pumps attractive, Greenpeace started the innovation challenge. In my next blog, I discuss how this challenge was framed and what the resulting solutions were.
Tobias Engelmeier is the Managing Director at BRIDGE TO INDIA.