Husk Power Systems: Lighting up the

Indian Rural Lives

“I can guarantee that the pleasure and happiness you will get when you see a
village light up every evening is literally “priceless”. No amount of Wall Street
bonuses or Hedge Fund’s profit sharing can bring you that level of satisfaction,
happiness, and of course recognition.”1
– Manoj Sinha, Co-founder, Husk Power Systems, in September 2011.

In June 2011, Husk Power Systems (HPS), a social enterprise based in Bihar, Eastern India, won
the prestigious Ashden Award for Sustainable Energy2, considered as the ‘Green Oscar’. The
international award carried prize money of £3120,000. On this occasion, Gyanesh Pandey4
(Pandey), Co-Founder and Chief Executive Officer (CEO) of HPS, said, “Winning the Ashden
awards is a big achievement for Husk Power Systems. Almost a third of India's population has no
access to electricity and the role of energy is vital in catalyzing the economic development in
India”5. Jacqueline Novogratz, CEO, Acumen Fund6 said, “Companies like HPS are working to
impact positively not only the environment, but to ensure that someday everyone, including the
poorest of the poor in rural India, will have access to clean and affordable electricity.”7
Even as of 2012, Electricity and electrification remained a major problem in India, especially rural
hinterlands. Around 125,0008 villages in the country do not have any kind of electricity
connection. This situation was worse in Bihar, third most populous state in the country. In Bihar,
per capita consumption of electricity was just 117.489 kilowatt hour (kWh) in 2009-10 whereas the
average per capita consumption in India as a whole was 570.910 kWh.11 Due to lack of electricity
89.3% (94.5% in rural areas and 39.9%12 in urban areas) of the households in Bihar use kerosene13

1
“SOCAP11 Social Entrepreneur Spotlight: Manoj Sinha, Husk Power Systems (India),”
http://socialcapitalmarkets.net, September 3, 2011.
2
Started in 2001, Ashden Awards for Sustainable Energy is the internationally recognized annual awards
in the field of green energy.
3
£ = British pounds sterling. As of September 2012, US$1 was approximately equal to £ 0.6279.
4
Gyanesh Pandey is a native of Bihar. He did his B.Tech in Electrical Engineering from Benaras Hindu
University before moving to the US for his Master’s degree in Electric Power and Power Electronics
Engineering from Rensselaer Polytechnic Institute. He worked in the Power Management Semiconductor
industry before HPS.
5
Pranava K Chaudhary, “Husk Wins Intl Award for Clean Energy,”
http://articles.timesofindia.indiatimes.com, June 18, 2011.
6
Acumen Fund is a non-profit global venture fund started in April 1, 2001
7
“Acumen Fund to Invest $375,000 in Bihar based Husk Power System,” www.siliconindia.com, March
24, 2010.
8
Pranava K Chaudhary, “Husk Wins Intl Award for Clean Energy,”
http://articles.timesofindia.indiatimes.com, June 18, 2011.
9
“Per Capita Power Consumption,” http://pib.nic.in, May 18, 2012.
10
“Data - Electric Power Consumption (kWh Per Capita),” http://data.worldbank.org.
11
On the other hand, in the UK and the US average per capita consumption in 2008 was 6067 kWh and
13,647 kWh respectively.
12
“Chapter III - Households using Kerosene for Lighting,” www.tcpomud.gov.in.
13
Kerosene is thin liquid blue colour fuel. It mostly use by households for lighting and heating purpose.

1
to light up their houses after sunset. Raghunath Prasad Chauhan (Chauhan), a farmer in Tamkuha,
Bihar, describing the situation, said, “It was dark and because of that there were so many
problems. There used to be a lot of thefts and snakes and dogs would bite. There was the problem
to go out in night. My children could not study at night.”14 The slow economic development,
political corruption, and red tape were the root causes for absence of electrification in Bihar
according to analysts.
However, things changed after HPS set up its first power plant in Tamkua, Bihar, on August 15,
2007. HPS was the brainchild of Pandey and his friend Ratnesh Yadav15 (Yadav). Later, Pandey’s
friend Manoj Sinha16 (Sinha) and Sinha’s friend Charles W. (Chip) Ransler, IV17 (Ransler) joined
them. The plant generated power using rice husk18 which was abundantly available in Bihar.
As of September 2011, HPS made impact on the lives of almost 250,000 people in the rural and
remote areas of India. Moreover, HPS had plans to become a global provider of off-gird
electrification and to reach out to millions of people in the underdeveloped countries.
Experts stated that the HPS model was the cheapest in the world as it was able to generate and
distribute electricity for capital expenditure less than US$ 1 per watt19. However, some experts
expressed doubts over HPS’s ability to generate cheap electricity in the long run due to rising input
costs.

ELECTRICITY CRISIS IN INDIA

As on September 30, 2012, India had the fifth largest20 power generation capacity in the world
with installed capacity of 207,876.0421 Mega Watt (MW). However, the per capita electricity
power consumption in India was just 570.9 kWh significantly lower than the global consumption
of 2,806.9 kWh in 2009.22 According to experts, around 400 million people, living primarily in
rural areas, did not have access to power. It was necessary to add 160,000 MW of capacity by
2018 to satisfy the needs of the second fastest growing economy in the world.
Experts stated that almost all the cities in the country including the Mega cities experienced at least
360 hours of power cut per year. Tier II and Tier III cities had almost 1,000 hours of power cut per
year. The situation was worse in the small towns and villages. Many of them were not electrified
and those which did have electricity got on an average only 2,500 hours of electricity per year. The
variation in the consumption of power differed across the country. Dadra & Nagar Haveli, a Union

14
“Bringing Sustainable Light to Communities off the Grid,” www.youtube.com.
15
Ratnesh Yadav is the co-founder of HPS. He is a native of Bihar. He has a Bachelor of Arts degree from
Delhi University. He has experience in bio-diesel (Jatropha plantation), fisheries, and floriculture. He
founded a nonprofit organization - Samta Samriddhi Foundation — before he founded HPS with Pandey
and the others.
16
Manoj Sinha is a co-founder of HPS. He did his B.Tech in Electronics Engineering with honors from
Benaras Hindu University in 1999. He did his MS in Electrical & Computer Engineering from the
University of Massachusetts Amherst He also has a Master’s in Business Administration (MBA) from
Darden Graduate School of Business associated with the University of Virginia.
17
Charles W. (Chip) Ransler, IV (Ransler) is a co-founder of HPS. He holds a bachelor’s degree and an
MBA degree from the University of Virginia and Darden Graduate School of Business Administration
associated with the University of Virginia, respectively.
18
Rice husk or rice hull is the yellowish color outermost layer of paddy grain. It separated from rice when
rice is milled in rice mill.
19
“Rural Electrification using Biomass,” www.oasyssouthasia.info, February 2, 2011.
20
After the US, Japan, China, and Russia.
21
“Highlights of Power Sector,” www.cea.nic.in, September, 2012.
22
“Data - Electric Power Consumption (kWh Per Capita),” http://data.worldbank.org.

2
Territory, had the highest per capita power consumption at 11,708.59 kWh in 2009-10 (11,567.67
kWh in 2005-06) whereas Bihar had the lowest at 117.48 kWh (85.86 kWh in 2005-06) in the
same period.23 24
According to the official website of energy department of the Bihar government, out of 45,103
villages in the state, only 18,217 villages25 (40.38% of total villages) in the state were electrified.
The state electricity board had only 2.18 million consumers (out of around 100 million population
in the state) across eight transmission circles in the state as of in March 200926.
It was this shortage and unavailability of power which eventually became a driver for
entrepreneurs like Pandey and Yadav, to develop a sustainable business model around this need.

IDEA BEHIND HUSK POWER SYSTEMS

Pandey and Yadav, childhood friends, had faced the problem of non-availability of electricity as
both hailed from rural Bihar. Even after they moved to different cities– Pandey was in Los
Angeles, US, and Yadav was in New Delhi, India – the electricity problem that they faced during
their growing up years in Bihar, remained a point of discussion between them. They wanted to
supply electricity to the rural areas at a low price as conventional electricity system was unable to
deliver power to everybody especially in remote, and undeveloped areas, and to people in the
Bottom of the Pyramid segment who earned less than US$ 2 per day.
The duo came to the conclusion that there was a need for a cheap, village-based non-conventional
system to produce & supply electricity in place of the power grid system which required huge
investment and a trained manpower. They realized that only a non-conventional system would be
able to produce electricity in the least possible cost without much capital investment and without
educated and skilled workers. Pandey said, “The conventional technologies and grids had failed to
deliver for the pervasive energy starvation in the country and I wanted to find an environmental-
friendly non-conventional source and low cost of energy.”27
Initially they tried installing solar-power lights and generating electricity through Jatropha seeds28.
However, very soon they realized that these would not work out when the goal was to serve a large
rural population which mostly lived below the poverty line. In their search for an alternative, they
met with Krishna Murari (Murari), a salesman of a gasifier system29. Murari told them about a
decades-old biomass gasification system that rice millers powered their mills with, which used rice
husk as input. Pandey and Yadav learned that the millers used diesel engines to power their mills
but did not use 100% diesel to run these engines. They used the ‘duel-fuel’ mode of operation in
which they used only 30-35% of the actual required diesel in conjunction with the ‘Producer
Gas’30 generated by the gasification system to run the engines. This helped the millers save around
50-60% on diesel costs.

23
“Per Capita Power Consumption,” http://pib.nic.in, May 18, 2012.
24
“Per Capita Power Consumption – Rajyasabha,” http://pib.nic.in, August 20, 2007.
25
“Important Indicators,” http://energy.bih.nic.in.
26
“Bihar, November 2010,” www.ibef.org, November, 2010.
27
“Rice Husk Power to Light up Villages,” www.hindu.com, July 26, 2010.
28
Jatropha is a species of flowering plant belonging to the spurge family. The jatropha seed contains oil
which can be processed to produce high quality biodiesel fuel.
29
The gasifier system is a system in which the husk burns in a controlled manner to generate gases (smoke).
These gases are further filtered and fed into an engine that drives an alternator to generate electricity.
The process of generating gas from the gasifier system is known as gasification.
30
Producer Gas is a low-grade fuel gas. It has different gases including nitrogen, methane, carbon
monoxide, hydrogen etc.

3
The duo thought that the gasifier system could be used for electrification of rural and remotes areas
as rice husk was easily available in these areas. As per an estimate, Bihar alone produced
1.8 billion31 kgs of rice husk every year. Experts, however, pointed out that having to use 30-35%
diesel would make it unviable for rural people because it would increase the cost of the electricity
produced. Pandey and Yadav learnt that using only rice husk as a fuel to produce electricity was
not viable, as it produced gas with high tar content.
Here, Pandey’s educational background and experience in power management semiconductor
industry helped. He did not see much of a problem in using the gasifier system with single fuel.
According to him, a dirty (polluted) gas could clog up the engine but if the engine was cleaned
before it became clogged, then such a problem would not arise. His reasoning convinced S.K.
Singh (Singh), Scientist, Ministry of New and Renewable Energy32 (MNRE), Government of
India. Though Pandey and Yadav did not have any experience in biomass gasification, they took it
up as a challenge with Singh’s assistance in the form of accepting the idea eligible for government
subsidy.
They developed their gasifier at a local workshop, arranged for a cheap CNG engine from a small
dealer, and customized it to produce electricity. Though there were some initial hiccups, they
succeeded in producing electricity from the gasifier system using rice husk under the single-fuel
mode. At last, on August 15, 2007, on the occasion of India’s 60th Independence Day, the
commercial operation of the HPS started at Tamkuha a remote village in the Dhanaha region of
West Champaran district in Bihar, with electricity generated using HPS’s proprietary, cost-
effective technology. On the occasion, Rambalak Yadav, a local teacher, commented, “After sixty
independent33 years, we have found freedom from darkness”34.
However, just having the right technology was not enough to ensure successful business model.
Neither Pandey nor Yadav had the experience to know how to go further, and to expand and run
business, nor had they studied business management. It was at this juncture that Pandey’s friend
Sinha stepped in to help. At that time, Sinha was studying business at Darden Graduate School of
Business associated with University of Virginia in the US. Sinha and his friend Ransler put their
experience to good use and presented their business plan for the project at various business plan
competitions and forums (Refer Exhibit I for various award and recognition to HPS) in 2008.
Their idea was highly appreciated and they won several of those competitions.
This success fetched recognition and the much needed funds (they won US$ 96,000 in prize
money from various competitions) and also attracted investors (Refer to Table I for various
investors of HPS). The prize money helped HPS to expand and it started three more power plants
in the same year.
In 2009, HPS won the Global Business Plan competition and received an investment of US$
250,000 from Draper Fisher Jurvetson35 (DFJ) and Cisco TelePresence36 (Cisco) (Refer to Table I
for various investors of HPS). By the end of December, 2009, HPS had Installed 19 power plants.
By August 2010, the number of installed plants had increased to 50. As of mid-2011, the company
had 80 installed power plants in operation (Refer to Exhibit II for time line of HPS growth).

31
“An Electric Idea,” http://articles.timesofindia.indiatimes.com, July 20, 2012.
32
Before October 2006, Ministry of New and Renewable Energy was known as a Ministry of Non-
Conventional Energy Sources.
33
India got independence on August 15, 1947, from the British.
34
“Husk Power System- Background,” www.huskpowersystems.com.
35
Draper Fisher Jurvetson (DFJ) was California, US-based venture capital firm.
36
Cisco TelePresence is a product of Cisco Systems, Inc. which was launched in October 2006. It helps in
face to face collaboration.

4
Table I
Investors of Husk Power Systems
Investors Investment of
Acumen Funds US$ 375,000
Bamboo Finance (Oasis Capital) US$ 375,000
Draper Fisher Jurvetson (DFJ) and CISCO US$ 250,000
International Finance Corporation (IFC), Member of the World Bank Group US$ 1.5 million
LGT Venture Philanthropy US$ 300,000
Royal Dutch Shell’s Foundation US$ 75,000
The Ministry of New and Renewable Energy (MNRE), Govt. of India N.A.
U.S. government’s Overseas Private Investment Corp (OPIC) US$ 750,000
Source: “Investors,” www.huskpowersystems.com; “Acumen Fund to invest $375,000 in Bihar based Husk
Power System,” www.siliconindia.com, March 24, 2010; Terrence Murray, “Cornerstone Conversation:
Manoj Sinha, Co-Founder, Husk Power Systems,” www.greenenergyreporter.com, June 2, 2010.
These plants provided around eight to 10 hours37 of electricity in the evenings to around
25,000 households and covered around 200 thousand people in more than 300 villages and
hamlets. HPS had trained and provided employment to more than 300 rural people. The company
was growing by two to three plants per week and this was expected to further increase to five
plants per week in 2012. According to analysts, since its inception, HPS had shown enormous
growth thanks to the huge demand for reliable and cheap electricity in rural areas and the
abundance of raw material (rice husk). Efficient management team, the government support, the
business model built around the 3Rs – Reliable, Renewable and Rural along with the passion of
the founders also played a major role in the growth of the company (Refer Exhibit III for
management team of HPS).

OPERATING HUSK POWER SYSTEMS

A typical husk power plant required around 5000-600038 sq ft of land to be set up. According to
Pandey, “Each plant takes about 3 months to get started. This can go up to 5 months depending on
how many houses need to be connected. We have hired local people and trained them to run these
plants. We have also set up an HPS University curriculum to train these workers”39
The main part of the power plant was the biomass gasifier which was around 10 to 12 feet high. A
husk loader fed the rice husk into the biomass gasifier from the top. The biomass gasifier
generated producer gas. The producer gas was then transferred to coolers which cooled the gas
with the help of water and sent it to the filters to be cleaned. The producer gas passed through a
total of three-four filters which cleaned the tar and dust from the gas. The gas finally reached an
engine that drove an alternator to generate electricity (Refer to Figure 1 to understand the basic
model of electricity generation and distribution by HPS plant).The generated electricity was then

37
Pranava K Chaudhary, “Pandey of HPS Gets Real Heroes Award,”
http://articles.timesofindia.indiatimes.com, August 20, 2011.
38
Grace Boyle, “How to Make Electricity from Rice Husk,” http://blogs.independent.co.uk, December 10,
2010.
39
“He is Lighting up Villages With Rice Husk!,” www.rediff.com, July 6, 2010.

5
sent to a mini distribution grid which distributed power to customers within a range of
2 to 3 kilometers (km) with the help of low-voltage insulated wiring. The mini distribution grid
could not supply beyond 2-3 km due to a drop in voltage after this range. After burning, the husk
was converted into waste black ash which was nothing but a kind of solid waste. A husk plant also
needed 150 cubic feet of water which is around 4,200 liter and needed to be changed every two
weeks.
Figure I

Basic Model of Electricity Generation and Distribution by HPS Plant

Compiled by the author from various sources.

DEVELOPING SUSTAINABLE BUSINESS MODEL

The objective of HPS was to provide a comparatively cheaper, eco friendly, reliable power system
for the poor living in the rural and remote areas of Bihar (initially), while making sufficient profit
to ensure that the business model could function smoothly in the long run. Pandey said, “Our goal
is to have our model help to deliver rural electrification to India’s villages and eventually to rural
areas around the world.”40
To achieve its objectives, HPS carried out a detailed study before setting up the husk power plant.
It first tried to understand the types of electricity, existing source of energy, and the per kWh
(kilowatt hour) cost to the target customers. After understanding the target customers and their
energy needs, HPS did a feasibility study of the potential for using a husk power plant in the target
area. It tried to understand the target locality’s access to biomass and the total energy need of the
target locality, the availability of rice mills in nearby areas, the size and operation period of the
rice mills, what the different uses of rice husk in the target locality were, and the use of diesel
generators, specifically for providing electricity, cost of diesel, , and the cost of electricity
provided by diesel generators per kWh (Refer to Exhibit IV for detailed questionnaire used to
assess the feasibility of HPS plants).
HPS followed two business models. The first was the Build, Own, Operate, Maintain (BOOM)
model while the second was the Build, Transfer, Maintain (BTM) model. If the BOOM model was
used, then a detailed study was conducted by HPS. Otherwise, the interested parties conducted the
study.

40
“Acumen Fund to Invest $375,000 in Bihar Based Husk Power System,” www.siliconindia.com, March
24, 2010.

6
BOOM was the primary model that HPS had followed since inception. The company later adopted
the BTM model to fuel its expansion plans, especially into other territories. Under the BOOM
model, HPS developed, operated, maintained, and owned the power plant. Under this model, the
major source of revenue was electricity sale, followed by the sale of Rice Husk Ash41 (RHA). In
addition, HPS also earned revenue by selling the products of partner corporations. Carbon credit
created another stream of revenue for the company as husk plant reduced the use of kerosene and
diesel.
Under the BOOM model, HPS generated revenue by selling electricity to households and business
customers. Household customers needed to pay Rs. 42 80 per month in advance and they got around
50W of electricity per day for 6–8 hours, which was sufficient to light up two 15W Compact
Fluorescent Lamps (CFL) and to recharge their mobile phones. While explaining the pricing of
HPS, Yadav said, “The baseline price is Rs. 80 per month for two CFLs + mobile charging [approx
50W] per month. Users get discount if they purchase more than 100W. The idea is to slash the cost
of the alternative (kerosene lamps etc) by at least half.”43
Business customers used more electricity — around 60-75W — and had to pay around
Rs. 145-164 per month in advance. Customers with different electric appliances had to take
additional electricity if they wanted to run their appliances. They could do so by paying Rs. 40 per
month for every additional 15W of power. Industry experts stated that HPS was providing the
cheapest lighting that was reliable, safe, and environment friendly compared to other available
sources like candles, kerosene lamps, and Light Emitting Diode (LED) lanterns which fulfilled
only lighting needs.
Under the BTM model, HPS built and transferred the plant to partnering agencies in exchange for
a lump sum amount44. These partnering agencies were independent owners and operators of the
plant. They were liable for all costs and entitled to all the revenue of the plant. After transferring
the plant, HPS generated revenue for itself providing fee-based maintenance and repair of the
plant. HPS also generated revenue by assisting the independent owner in product channeling
(channelization), selling of by-products, and in obtaining carbon credit in exchange for a certain
percentage of additional revenue generated. In the BTM model, HPS also helped the partnering
agencies in getting an MNRE subsidy.
On the capital expenditure side, Pandey said, “Each plant costs less than Rs. 15 lakh (Rs. 1.5
million) for generation as well as for the distribution grid, and generates about 32 kilowatts of
electricity.”45 The major running costs of HPS came from what it spent on rice husk followed by
workers’ salaries. According to a company source, a plant required around 300 kg of husk to
produce 32 kilowatt of energy, sufficient to supply about 6 hours of electricity per day to around
500 households. Husk was available at the rate of Rs. 1-2 per kg. Where the second major cost —
salaries — was concerned, each plant required four employees – one operator, one husk loader,
one collector, and one electrician. The average cost of four employees was Rs. 12,000 per month.
However, HPS reduced the number of employees to 3 or 2 with the help of process and technology
improvement, which would help the HPS to reduce costs and to increase the salary of employees
to some extent. Other costs were maintenance and repair, management overheads, and land rent.

41
It is sold to cement companies and others.
42
Rs. = Indian rupees. As of September 2012, US$1 was approximately equal to Rs. 55.57.
43
“Rice Husk Power to Light up Villages,” www.hindu.com, July 26, 2010.
44
According to HPS source, a minimum investment required by the interested parties (independent owner
and operator) was Rs. 10 million which was sufficient to developed 6+ plants.
45
“He is Lighting Up Villages With Rice Husk!,” www.rediff.com, July 6, 2010.

7
According to an International Finance Corporation46, typically, it took two to three months for a
plant to reach operational profitability, and three to four years to recoup capital expenditures,
depending on whether (and how much) government subsidy was received47. According to experts,
HPS was able to manage a short pay-back period48 mainly due its ability to maintain an above
normal net profit margin. The ability to keep non-payment and other losses under 5%, where
national average was around 30%, was another reason for the better margin.
A very conservative estimate showed that HPS was able to run its power plants at 35% to 51% net
margins49 (Refer to Exhibit V for approx revenue and cost of husk power plant). While
commenting on profitability and breakeven point, Pandey said, “This is definitely a very profitable
business. We are working on a margin of 46 per cent at the unit level, which is considerably good.
We will start generating profits by the end of this year (2010).”50 Large net margins and a short
payback period helped HPS to generate the funds needed for expansion without any major
difficulties.

SOCIAL AND ENVIRONMENTAL IMPACT

Each HPS plant served around 400 households and helped save on approximately 42,000 liters of
kerosene and 18,000 liters of diesel per year which was used to generate electricity. This
contributed to, reduced home pollution, and improved the lives as well as health of the villagers,
especially the women and children who used to huddle around the kerosene lamps after sunset to
work and study. According to a company source, it had already saved 9,244,800 liters of kerosene
by August 2012. (Refer to Exhibit VI for social and environmental impact of HPS).
With HPS plants, the villages had a far better lighting system in the form of CFL lamps which
gave out bright white light which helped the children to study and helped women to do their
household work better without having to face the problems associated with using kerosene lamps
and diesel generators. As Chauhan said, “We did not have electricity before the power plant. It has
helped a lot toward people’s happiness, and the local economy. I want my children to study and
find a good job somewhere. I want my son to be an engineer. Since the electricity came, my
children can study even after the sun goes down. It is also good for business. I used to live in
darkness and now I live in a world full of light. It makes me feel very happy from the bottom of
my heart. What other big power plants could not do, this one did. It has gone from dark to light.”51
HPS helped to generate direct as well as indirect employment for the local youth of the villages. In
addition, it brought about a lot of tangible savings to the households and businesses. Earlier, each
household spent around Rs. 150 per month on kerosene. This went down to Rs. 80-100 per month,
a saving of at least 33%. Besides, kerosene lamps met fulfilled the lighting needs of the people.
Now, they could charge their mobile phones, run other electrical appliances. Earlier, the villagers
had to travel around 10 to 15 kilometers and spend up to Rs. 20 to charge their mobiles. As Garak
Yadav, a liquor store owner, said, “I used to pay 5 rupees each day to have my mobile phone

46
The International Finance Corporation is a member of the World Bank group. It provides financing and
advisory services to private social ventures and projects in developing countries.
47
“Husk Power Systems,” www.ifc.org, 2011.
48
A period in which cost of the investment is recovered is known as ‘Pay-back period’. It is calculated by
dividing the cost of project by annual cash flows.
49
A net margin is the ratio between net profit and revenue. Entrepreneurs always try to increase net margin
as a higher net margin is better than a lower one. If any company has 10% net margin than it means that it
earned net profit of Rs. 10 on every Rs. 100 sale.
50
“He is Lighting up Villages With Rice Husk!,” www.rediff.com, July 6, 2010.
51
“Bringing Sustainable Light to Communities off the Grid,”
www.youtube.com/watch?feature=player_embedded&v=6MpTmckocYQ.

8
charged, now I can just charge it in my shop.”52 According to a company source, by August 2010,
HPS had saved US$ 1.25 million in cash for all the households served by it53. This figure went up
continuously with each new husk power plant coming into existence.
In the same way, HPS saved money for farmers as irrigation costs reduced by 45%54. Various
other businesses also benefited. Anush Kumar, is a businessman running a hostel for schoolboys in
Sariswa, had a grid connection through which he got electricity only once or twice a month. He
therefore, had to pay Rs. 1700 to run a diesel generator to get three hours of electricity between
6 pm and 9 pm. However, after taking electricity connection from HPS, he got electricity from
6 pm to 1 am and that too, for a monthly payment of only Rs. 1,200. According to experts, it was
not only existing businesses that benefited from the cheap and reliable power connection and
extended business hours. Some new business such as a photocopier shop also profited from it.
Lighting also reduced the fear of snakes and dogs bites and small crimes. Sinha said, “Poisonous
snakes typically kill up to two villagers every year. But we have been told that in villages where
our plants operate, the death-toll is down to zero. We don’t have a clear explanation, although we
suspect that snakes fear the white light from the electric light bulbs.”55
HPS not only lighted up the lives of the villagers, it also lighted up the lives of the village children
by providing them with education support. HPS helped around 250 students as part of its corporate
social responsibility through the Samta Samriddhi Foundation. It took care of the educational
expenses of these students. Haresh Kumar Yadav, a 14-year-old, was one such student. The boy
used to work in the fields in the evenings to earn enough to pay his school fees and studied under
the yellow light of a kerosene lamp in the night till he was 11 years old. However, HPS changed
his life completely. He said in delight, “I can study late into the night (under the white CFL light)
and the (Husk) power plant pays my school fees of Rs. 50 a month.”56 HPS planned to train local
primary school teachers and set up an internet facility and a radio station to improve the quality of
education.
HPS also worked toward women empowerment. It developed a method to produce incense sticks
using a char57 and a binder. This not only opened up a new revenue stream for the company but
also provided a source of income to the women. An article in the Economics Times58 described the
simple model that HPS used. HPS brought the bamboo sticks and the women made them into
incense sticks using the char and the binder. The company bought the incense sticks and added
extras like color, perfume, and packaging. 59 HPS trained around 200 women in incense stick
making in 2010. These women were able to earn around Rs. 60 per day. HPS also developed a
machine to make incense sticks which increased production (output of sticks) and improved the
quality of the sticks. On the incense stick maker, Rajini said, “We’ve been trying out the new way
to make agarbattis (incense stick) and it seems to be working out. I am earning Rs. 60 to Rs. 80 per
day.”60

52
“Case Study Summary Husk Power Systems India,” www.ashdenawards.org, April, 2011.
53
“Home,” www.huskpowersystems.com/index.php.
54
“2008 Dell Social Innovation Challenge Winner: Husk Power Systems,” http://content.dell.com.
55
Terrence Murray, “Cornerstone Conversation: Manoj Sinha, Co-Founder, Husk Power Systems,”
www.greenenergyreporter.com, June 2, 2010.
56
Ahona Ghosh, “The New Colours of Venture Capital,’’ http://business.outlookindia.com, March 6, 2010.
57
Char is the burned husk and by-product of gasification process.
58
The Economics Times is one of the leading business newspapers in India.
59
Pranava K Chaudhary, “Incense Sticks Empower Women, Courtesy HPS,”
http://articles.timesofindia.indiatimes.com, September 25, 2011.
60
Preeti Mehra, “Whiff of a New Livelihood,” www.thehindu.com, February 28, 2012.

9
CHALLENGES IN THE WAY

Social entrepreneurs are responsible not only to their shareholders but also to the government
(which provides a subsidy) as well as to society (which is impacted positively or negatively by the
act of the social entrepreneur). Commenting on the challenges faced by this project, Pandey said,
“The biggest challenge always is to get the right people for the right job. Besides, convincing
villagers about the need to bring about a change in their lives was tough. We need a continuous
supply of machines and manpower to effectively implant our plans.”61
Early on, when HPS started buying rice husk for their power plant, rice millers began to realize
that there was money to be made from the husk. They started hoarding the husk, which
consequently became dearer. To tackle this challenge, HPS came up with a unique solution. It set
up its own rice mill and offered to dehusk farmers’ rice free of cost in exchange for keeping the
rice husk. As a result, the other rice millers who had been charging a price for the dehusking, soon
went out of business. However, running a rice mill had never been HPS’s objective. At the end, it
entered into a contract with the rice millers. Under the contract, HPS gave a guarantee to the rice
millers that it would buy rice husk from them for six to eight years at an affordable price. In return,
it would stop the free dehusking.
In the early days, HPS also faced regulatory hurdles. Under the Indian Electricity Act, 2003,
anyone generating and distributing electricity in rural areas did not require a license. According to
the act, “A person intends to generate and distribute electricity in a rural area to be notified by the
State Government, such person shall not require any licence for such generation and distribution of
electricity.”62 However, when HPS had 25 power plants, an official of the MNRE pointed out that
state government had not defined what constituted the rural areas. In such a situation, HPS would
have had to close down all its plants. However, a clause of the Electricity Rules, 2005, saved the
day for HPS. Pandey said, “We would have had to shut down, but we found the clause of a 2005
ruling that all areas governed by panchayats63 are rural areas. Some luck, some good people have
helped us.”64
According to analysts, financing would have been another big challenge for HPS if it had not won
business plan competitions in the early stage as banks and other financial institutions would have
hesitated to fund the project, especially in a state like Bihar which did not attract many businesses
or industries. According to experts, getting the right mix of capital was a challenge for any
business including social enterprises like HPS. It also needed the right kind of capital mix.
Sinha said, “One major challenge was to tap the right mix of capital from sources that enabled it to
stay true to its mission of bringing renewable and affordable electricity to people in underserved
villages in India, while also allowing it to make the necessary investment.”65
Getting suitable human resources was another challenge for HPS. It was really tough to find the
right kind of educated and trained persons in the villages where literacy rates were negligible and
those who were literate had migrated to other places in search of better opportunities. HPS planned
to scale up its business by starting 5 power plants per week. Each plant needed 3 to 4 persons. At
this rate, HPS would require around 2,340 trained persons over the following three years
(Refer to Table II for man power required by HPS). There was no government or private
infrastructure which could train the rural people in the required skills. Understanding this

61
“He is Lighting up Villages With Rice Husk!,” www.rediff.com, July 6, 2010.
62
“The Electricity Act, 2003,” http://powermin.gov.in, June 2, 2003.
63
A panchayat is a group of five wise and elder persons. Panchayats settled disputes between individuals
and villages.
64
Usha Rai, “Bihar’s Husk Power,” www.thehindubusinessline.com.
65
“SOCAP11 Social Entrepreneur Spotlight: Manoj Sinha, Husk Power Systems (India),”
http://socialcapitalmarkets.net, September 3, 2011.

10
challenge, HPS started the ‘Husk Power University’ in Bihar, the first of its kind, to train people in
the various skills required for rural electrification. Sinha said, “A power company does not have a
core business to open a university, but it is essential for us to do it.”66
Table II
Estimation of Human Resource Requirement by Husk Power Systems
Scenario I Scenario II
(in numbers)
(four employees per plant) (three employees per plant)
Plant per week (A) 2 3 4 5 2 3 4 5
Employees required per
4 4 4 4 3 3 3 3
plant (B)
Employees required per
8 12 16 20 6 9 12 15
week (C) = (A) × (B)
Employees required per
year (in 52 weeks) (D) 416 624 832 1,040 312 468 624 780
= (C) × 52 weeks
Employees required
over next three years 1,248 1,872 2,496 3,120 936 1,404 1,872 2,340
(E) = (D) × 3 years
Prepared by the author.
According to experts, communication between members of the management was one of the
challenges for HPS. In villages and remote areas, mobile phones and the internet did not work due
to a poor network. HPS developed its own technology to overcome this challenge. This technology
was a combination of SMS and Wi-Fi technology and it helped the management team to monitor
power plants even without being physically present at each plant each time.
Electricity theft in distribution is the major problem in the India. HPS had also faced such problem.
However, it had developed a smart metering solution for a total landed cost of under US$9/meter
(arguably world’s cheapest smart meter) with the help of IDEO67. This solution would help HPS
expand and keep the total default and/or stealing rate under 5% (as compared to a national average
of ~ 30%).
On the other hand, reducing costs and bringing in efficiency would be an ongoing challenge for
HPS. In May 2012, HPS received a grant of €6890,000 from Alstom Foundation under the Dry
Gasifier project. The grant money was used to upgrade existing power plants by reducing the water
usage by as much as 80% and significantly reducing operational cost.”69
HPS faced challenges from other social enterprises such as SELCO Solar Pvt. Ltd 70, D.Light71, and
Mera Gao Micro-Grid Power72. National Thermal Power Corporation73 (NTPC), a Public Sector

66
Stephanie Hanson, “Energy for the Masses: Husk Power Helps Fuel India,” www.ecomagination.com,
January 9, 2012.
67
IDEO is innovative product designing company.
68
€ = Euro. As of September 2012, US$1 was approximately equal to € 0.7915.
69
Debjoy Sengupta, “Alstom grants Euros 90K to Husk Power Systems Project for a green project,”
http://economictimes.indiatimes.com, May 22, 2012.
70
SELCO Solar Pvt. Ltd is a Bangalore based social enterprise established in 1995. It provides energy
solutions and after sale services to underserved households and businesses by using solar photovoltaic
modules. It also provides financing facilities for purchasing solar lighting and thermal systems.

11
Enterprise, who also played a significant role in the off-grid industry. But according to experts, the
off grid market was huge and could accommodate even more players.

THE ROAD AHEAD

HPS was looking forward to massive expansion based on its award winning business model and
the huge demand for off-grid electricity in its home country as well as in different parts of the
world. The company planned to expand its business into other states in India like Maharashtra,
West Bengal, Uttar Pradesh, and Tamil Nadu. Outside India, it planned to expand into Bangladesh,
Cambodia, Ethiopia, Indonesia Nepal, Tanzania, and Uganda. Pandey said, “We plan to have
2,014 plants by 2014. Besides, electrifying other villages across India, we also plan to make a
foray into countries like Nepal, Indonesia, Cambodia, and Ethiopia in the near future.”74
HPS planned to expand its reach to 6,500 villages by the year 2014. This would create 7,000 local
jobs. The expansion would also help to save 750,000 tons of CO2 and US$ 50 million75 in cash for
more than 5 million people by 2014. But, HPS ability to achieve its massive expansion in India
and other parts of the world would depend upon its ability to successfully attract new funding.
Company still had to prove that its operating model would work effectively in other developing
and underdeveloped nation as it worked in India in order to attract large funding. 76
Familiarity and local knowledge also played an important role in the success of HPS. The founders
of HPS were well versed with Bihar as they grew up there. Whether they can operate successfully
in the countries where they are planning to expand would remain a challenge as they were not
familiar with the local context. 77
Funding would only come if the investors are clear about the cash flow and the source of revenue.
This happens only when there is a demand for the product. There exists a persistent misconception
that people at the bottom of the pyramid are not willing to pay for electricity. It would take quite a
bit for convincing the investors on this. On the success of HPS, Simon Desjardins, Program
Manager at the Shell Foundation78 said, “Bihar is the poorest of the poorest states in India. These
are the bottom of the bottom of the pyramid consumers. These consumers are not only willing but
desperately able to pay for this service.”79

71
d.light was founded in 2007 by Sam Goldman, Ned Tozun, and Sandeep Singhal. It provides lighting and
energy solutions to underserved households and businesses especially in India and Africa. The
company’s vision is to replace every kerosene lantern with clean, safe, and bright light.
72
Mera Gao Micro-Grid Power (MGP) is a for profit company of the VDI Group (Value Development
Initiatives Group). It started working in August 2010 to cater to the energy needs of off-grid rural areas.
73
The National Thermal Power Corporation73 (NTPC) was largest power generator company in India.
74
“He is Lighting Up Villages With Rice Husk!,” www.rediff.com, July 6, 2010.
75
“Husk Power Systems Win Int’l Sustainable Energy Award,” www.business-standard.com, June 17,
2011.
76
Stephanie Hanson, “Energy for the Masses: Husk Power Helps Fuel India,” www.ecomagination.com,
January 9, 2012.
77
Stephanie Hanson, “Energy for the Masses: Husk Power Helps Fuel India,” www.ecomagination.com,
January 9, 2012.
78
Shell foundation was started by Royal Dutch Shell in 1997.
79
Stephanie Hanson, “Energy for the Masses: Husk Power Helps Fuel India,” www.ecomagination.com,
January 9, 2012.

12
The company was confident about the funding for such a massive expansion program. Sinha said,
“We’ve seen a tremendous shift in investor expectations and understanding. People are more
willing to invest in social enterprises now.”80 Vandana Gombar, Analyst, Bloomberg New Energy
Finance, was equally positive. She said, “Once the wider investment community sees the
opportunity, you’re going to see more private equity funding.”
A confident HPS planned to expand its scope keeping in mind the needs and wants in the rural
market and play an important role in the development of the country. Pandey said, “In India, our
vision will be rural development with focus on education, healthcare, power, and women's
empowerment. In the coming years, we will implement programs to address the most critical needs
of rural people.”81

80
Ben Edwards, “Rice Husks Follow Solar to Power Indian Towns off Utility Grid,” www.bloomberg.com,
July 26, 2011.
81
“He is Lighting up Villages With Rice Husk!,” www.rediff.com, July 6, 2010.

13
Exhibit I
Award and Recognition to Husk Power System
Position in Prize
When Where Award Details
Competition Money
April 7, Darden's Annual Business Plan US$
US Winner
2008 Competition, University of Virginia 10,000
Global Social Venture Competition,
April, 2008 US Finalist NA
University of California, Berkeley
Social Innovation Competition, US$
May, 2008 US Winner
University of Texas 50,000
People's Choice Award at Social
May, 2008 US Innovation Competition, University of Winner US$ 1,000
Texas
Dell Social Innovation Competition for
May, 2008 US "Most Compelling Idea to Change the NA NA
World"
May 12, Ignite Clean Energy competition, IInd Price US$
US
2008 Massachusetts Institute of Technology winner 35,000
FastCompany recognized HPS as one
December,
US of the Top-10 Social Enterprises of NA NA
2008
2008
Draper Fisher Jurvetson (DFJ) and
June 29,
US Cisco’s Global Business Plan Winner NA
2009
Competition.
Sankalp’s Emerging Enterprise Award
May, 2010 India under the category of Technology for Winner NA
Development
In Changemakers Competition -
Leveraging Business For Social
July, 2010 US Finalist NA
Change: Building The Field Of Social
Business
The Tech Museum under the category
September,
US of BD Biosciences Economic NA NA
2010
Development Award
September,
UK Finalist in the BBC World Challenge Finalist NA
2010
International Ashden Award for
June, 2011 UK Winner £ 120,000
Sustainable Energy
August,
2011 Real Heroes award to Gynesh Pandey
India Winner NA
under the category of Social Welfare

Source: “News & Updates,” www.huskpowersystems.com.

14
Exhibit II
Time Line of Husk Power Systems Growth
Month Year Number of Power Plant
August 2007 First Plant
December 2008 3
December 2009 19
August 2010 50
December 2012 500*
December 2014 2014*
* Number of planned power plant.
Adapted from www.huskpowersystems.com.

Exhibit III
Management Team at Husk Power Systems
HPS Team HPS Board of Directors
Gyanesh Pandey, Co-Founder, CEO/CTO Raj Kundra
Ratnesh Yadav, Co-Founder and COO Eric Berkowitz
Manoj Sinha, Co-Founder Charles W. (Chip) Ransler, IV
S.B. Mishra, Director – Human Resources Gyanesh Pandey
Rama Siva, Senior Director - Training & Technical Ratnesh Yadav
Aggregation
Satish Prasad, Accounts Officer Manoj Sinha
Alok Bhushan, Director - Operations & Projects
Source: http://www.huskpowersystems.com.

15
Exhibit IV
Questions to Assess the Feasibility of HPS Power Plants to Serve the Villages
Understanding the customers and their lighting needs:
1. What kind of electricity uses do your target customers engage in? Is electricity mainly used
for lighting purposes and for running small businesses?
2. What does a community/village or small town look like structurally speaking? Are these
communities comprised of people living in a radius of 4-5 miles?
3. What do households and businesses use for lighting and running small machines? How
much does a household spend on electricity on a monthly basis?
4. What would be the estimated household income on a monthly basis? What are some of the
income generators and jobs available in such communities?
5. What is the current energy source for lighting, irrigation, and other such applications for
electricity?
6. How much do domestic uses of electricity cost on a per kWh (kilowatt hour) basis? Please
include all the costs, that is, taxes, transmission costs, and any other charges that
government or local agencies may levy.
Feasibility study of the potential of using Husk Power Systems’ plants:
Ques. 1: Do communities have plentiful access to biomass such as rice husk, corn cob, wood
chips, etc? How much rice is produced in these areas?
Ques. 2: Do communities engage in local farming? How far does one need to go to procure
rice husk? What are some of the current uses of rice husk?
Ques. 3: Are diesel generators widely used as a source of electricity? What is the cost of diesel
per liter or per gallon?
Ques. 4: In the case of electricity provided by a diesel generator set, what is the total cost of
electricity on a per kWh basis?
Ques. 5: How much would such communities typically need electricity for addressing their
daily energy needs? Is that less than 100kW?
Ques. 6: Are there rice mills close to the communities? What is the size of a typical rice mill
— that is, how many tons of rice do they mill on a monthly basis? Do these rice mills
operate throughout the year?
Financial considerations:
Ques. 1: Are you considering investing money for forming partnership with Husk Power
Systems? What is the minimum and/or maximum amount you are considering?
Ques. 2: What kind of interest rates do local banks charge for commercial long term loans?
Source: http://huskpowersystems.com.

16
Exhibit V
Approximate Monthly Revenue and Cost for 35kW Husk Power Plant
Amount Amount
Particulars
(Scenario I) (Scenario I)
Revenue:
Monthly revenue from electricity sales Rs. 50,000 Rs. 50,000
Monthly revenue from 2 ton of char/month Rs. 15,000 Rs. 45,000
(approx) ( Rs. 15000 – Rs. 45,000) (minimum) (maximum)
Revenue from Product Fulfillment/channeling Not Available Not Available
Revenue from CDM Not Available Not Available
Total Revenue Rs. 65,000 (approx) Rs. 95,000 (approx)
Cost:
Land Rent Rs. 5,000 (approx)
Maintenance and repair Rs. 10,000 (approx)
Management Overhead Rs. 5,000 (approx)
Salary (4 persons) (Rs.
Rs. 12,000 (approx)
3,000 approx × 4)
Approx 10 Ton of
feedstock (at Rs.1.50 Rs. 15,000 (approx)
per Kg approx)
Total Cost Rs. 47,000 (approx) Rs. 47,000 (approx)
Net Profit Rs. 18,000 Rs. 48,000
Net Margin 28% 51%
* Including distribution cables cost up to 5 km length, including training cost and including 3 months’
maintenance. However, it has not included general machine consumables.
Compiled by the author from various sources.
Exhibit VI

Social and Environmental Impact Husk Power Plant

Adapted from www.huskpowersystems.com.

17
References and Additional Readings

1. “Highlights of Power Sector,” www.cea.nic.in, September, 2012.

2. “An Electric Idea,” http://articles.timesofindia.indiatimes.com, July 20, 2012.
3. “Per Capita Power Consumption,” http://pib.nic.in, May 18, 2012
4. Stephanie Hanson, “Energy for the Masses: Husk Power Helps Fuel India,”
www.ecomagination.com, January 9, 2012.
5. Pranava K Chaudhary, “Incense Sticks Empower Women, Courtesy HPS,”
http://articles.timesofindia.indiatimes.com, September 25, 2011.
6. “SOCAP11 Social Entrepreneur Spotlight: Manoj Sinha, Husk Power Systems
(India),” http://socialcapitalmarkets.net, September 3, 2011.
7. Pranava K Chaudhary, “Pandey of HPS Gets Real Heroes Award,”
http://articles.timesofindia.indiatimes.com, August 20, 2011.
8. Ben Edwards, “Rice Husks Follow Solar to Power Indian Towns off Utility Grid,”
www.bloomberg.com, July 26, 2011.
9. Pranava K Chaudhary, “Husk Wins Intl Award for Clean Energy,”
http://articles.timesofindia.indiatimes.com, June 18, 2011.
10. “Husk Power Systems Win Int’l Sustainable Energy Award,” www.business-
standard.com, June 17, 2011.
11. “Case Study Summary Husk Power Systems India,” www.ashdenawards.org, April,
2011.
12. “Rural Electrification using Biomass,” www.oasyssouthasia.info, February 2, 2011.
13. “Husk Power Systems,” www.ifc.org, 2011.
14. Grace Boyle, “How to Make Electricity from Rice Husk,”
http://blogs.independent.co.uk, December 10, 2010.
15. “Bihar, November 2010,” www.ibef.org, November, 2010.
16. “Rice Husk Power to Light up Villages,” www.hindu.com, July 26, 2010.
17. “Bringing Sustainable Light to Communities off the Grid,” www.youtube.com, July 21,
2010.
18. “He is Lighting up Villages With Rice Husk!,” www.rediff.com, July 6, 2010.
19. Terrence Murray, “Cornerstone Conversation: Manoj Sinha, Co-Founder, Husk Power
Systems,” www.greenenergyreporter.com, June 2, 2010.
20. “Acumen Fund to Invest $375,000 in Bihar based Husk Power System,”
www.siliconindia.com, March 24, 2010.
21. Ahona Ghosh, “The New Colours of Venture Capital,’’ http://business.outlookindia.com,
March 6, 2010.
22. Preeti Mehra, “Whiff of a New Livelihood,” www.thehindu.com, February 28, 2012.
23. Usha Rai, “Bihar’s Husk Power,” www.thehindubusinessline.com.
24. “SOCAP11 Social Entrepreneur Spotlight: Manoj Sinha, Husk Power Systems
(India),” http://socialcapitalmarkets.net, September 3, 2011.

18
25. Debjoy Sengupta, “Alstom grants Euros 90K to Husk Power Systems Project for a
green project,” http://economictimes.indiatimes.com, May 22, 2012.
26. “He is Lighting Up Villages With Rice Husk!,” www.rediff.com, July 6, 2010.
27. “Per Capita Power Consumption – Rajyasabha,” http://pib.nic.in, August 20, 2007.
28. “The Electricity Act, 2003,” http://powermin.gov.in, June 2, 2003.
29. “Data - Electric Power Consumption (kWh Per Capita),” http://data.worldbank.org.
30. “Chapter III - Households using Kerosene for Lighting,” www.tcpomud.gov.in.
31. “Data - Electric Power Consumption (kWh Per Capita),” http://data.worldbank.org.
32. “Important Indicators,” http://energy.bih.nic.in.
33. “2008 Dell Social Innovation Challenge Winner: Husk Power Systems,”
http://content.dell.com.
34. “Home,” www.huskpowersystems.com.
35. “Husk Power System- Background,” www.huskpowersystems.com.

19