VZCZCXRO4197
RR RUEHAST RUEHBI RUEHDBU RUEHLH RUEHNEH RUEHPW
DE RUEHCI #0291/01 3030415
ZNR UUUUU ZZH
R 300415Z OCT 09
FM AMCONSUL KOLKATA
TO RUEHC/SECSTATE WASHDC 2489
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHCI/AMCONSUL KOLKATA 3094

UNCLAS SECTION 01 OF 02 KOLKATA 000291 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/INSB, EEB/ESC, S/SECC, OES 
DEPT OF ENERGY (SANDALOW/OCONNOR/GINSBERG/CUTLER) 
DEPT OF COMMERCE FOR ITA/MAC/OSA (DROKER/STERN/RUDD) 
DEPT PASS TO USTR (CLILIENFELD/AADLER/CHINCKLEY) 
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA (NUGENT) 
DEPT PASS TO OPIC (TABERNACKI) 
TREASURY PASS TO FRB/SAN FRANCISCO (CURRAN) 
 
E.O. 12958: N/A 
TAGS: ENRG SENV EAGR EINV KGHG IN
SUBJECT: U.S. RENEWABLE ENERGY COMPANY LIGHTS INDIA'S VILLAGE OF 
DARKNESS 
 
REF: 08 New Delhi 2943 
 
KOLKATA 00000291  001.2 OF 002 
 
 
¶1. (SBU) Summary: Since 2007 Husk Power Systems (HPS) has lit 
remote, un-electrified villages in Bihar, one of the poorest 
states in India.  HPS uses widely-available rice husk to 
generate and sell electricity to rural villagers, who would 
otherwise be without power.  A privately-held U.S. renewable 
energy startup, HPS is profitable without the GoI's renewable 
energy subsidy.  HPS plans to double production capacity by the 
end of the year and has tapped venture capital and an OPIC loan 
for financing.  As the GoI addresses the twin challenges of 
energizing the nation and conserving the environment, it is 
worth considering what role U.S. and Indian entrepreneurs, such 
as HPS, can play and how the USG can best support them.  HPS 
co-founder informed PolOFF that the White House had invited HPS 
to attend a social entrepreneurial event in January 2010. 
 
 
 
¶2. (SBU) PolOFF and EconFSN visited the mini-power plants and 
villages in early September with HPS co-founder Ratnesh Yadav. 
In late September PolOFF and USAIDOFF met with HPS founders at 
Embassy New Delhi. 
 
 
 
Targeting Areas Outside of GoI's Rural Electrification Programs 
 
 
 
¶3. (SBU)          In 2007 three Indians from Bihar, along with 
an American from Virginia, founded Husk Power Systems. 
Headquartered in Virginia, HPS currently owns and operates ten 
35 - 50 kiloWatt (kW), off-grid mini-power plants in Bihar's 
West Champaran district, approximately 210 kilometers from the 
state capital.  HPS initially selected villages that were 
without power and not a part of the GoI's rural electrification 
program.  By December 2009, HPS plans to have a total of twenty 
power plants online (total production capacity of 640 kW) and an 
additional thirty plants by the end of 2010.  While HPS will not 
address the huge deficits in rural power supply, it will reach 
remote villages which are beyond the boundaries of national and 
state rural electrification programs. 
 
 
 
Running Rice-husk Biomass Gasifiers without Operating Subsidies 
 
 
 
¶4. (SBU)          Unlike other biomass projects that use both 
rice husk and diesel, HPS power plants run exclusively on rice 
husk.  Rice husk biomass electricity generation is effectively 
carbon neutral over its lifecycle - as it absorbs carbon when 
growing and releases it upon gasification and combustion.  HPS 
plants are also profitable without government operating subsidy. 
 While the federal Ministry of New and Renewable Energy provides 
a one-time subsidy of Rs 15,000 (approx USD 300) per kW of 
installed capacity, according to HPS co-founder Ratnesh Yadav 
the plants have a positive return on investment without the 
capital subsidy. 
 
 
 
Bringing Light to the Village of Darkness 
 
 
 
¶5. (SBU)          HPS's commissioned its first mini-power plant 
on India's Independence Day, August 15, 2008 in the West 
Champaran village of Tampuha.  Tampuha, literally translated, 
means "village of darkness".  Before HPS, people used kerosene 
lamps or diesel generators to power electric bulbs.  Today, 
approximately 2000 households in this village are connected to 
the HPS power plant and distribution network.  Households pay 
Rs. 40 (approximately USD 0.80) per month for two CFL lamps for 
six hours every evening.  Commercial establishments are charged 
more: Rs. 60 (approximately USD 1.20).  To promote energy 
efficiency, HPS mandates CFL as opposed to incandescent bulbs. 
Payment is collected in advance and circuit breakers are 
installed to prevent excess power consumption.  HPS is 
 
KOLKATA 00000291  002.2 OF 002 
 
 
investigating the possibility of using pre-paid electricity 
meters, but is deterred by the relatively high cost.  Yadav 
estimated that each plant yields a monthly operating profit of 
approximately Rs. 25,000 (USD 500).   According to him, the 
company is not subject to government regulation or operational 
interference as it has limited its operations to rural areas, 
outside of regulated municipalities.  HPS currently employs and 
has trained 60 local residents to operate and maintain the 
plant, which has encouraged community ownership. 
 
 
 
Funding Ambitious Expansion Plans 
 
 
 
¶6. (SBU) HPS plans to double production capacity by the end of 
the year.  It raised USD 3 million from venture capitalists and 
was approved for an OPIC loan of USD 750,000.  HPS won several 
business plan competitions: in 2009 from Draper Fisher Jurvetson 
and Cisco, and in 2008 from two of the co-founders' alma mater, 
the Darden School of Business.  The Shell Foundation has also 
provided seed capital for HPS's expansion and assisted with 
technology and personnel. 
 
 
 
Challenges on the Horizon: Reliable Rice Husk Supply, Reduced 
Costs, Growth Pains 
 
 
 
¶7. (SBU)          While Bihar is rich in rice, a reliable supply 
of dry rice husk is essential to this renewable energy business. 
 Operations are adversely affected by drought (decreased rice 
production) or heavy rains (less efficient gasification).  Rice 
husk is an agriculture byproduct and had little commercial value 
before it was discovered as an effective source of biomass gas. 
HPS is constantly looking to improve the profitability of the 
business by reducing component costs (generators or pre-paid 
meters) or improved equipment maintenance training.  As a 
startup, HPS is also faced with the challenges of growth: 
introducing senior and mid-level management to the company. 
 
 
 
Comment 
 
 
 
¶8. (SBU)          Post suggests further examination of HPS 
operations as one way to promote U.S. - India cooperation in 
clean energy.  The cooperation may take the form of generating 
public awareness about the business, extending funds, technology 
consultancy or building up their professional management 
expertise.  The company is open and willing to working with the 
USG to grow the business and light more villages of darkness, 
albeit in an environment friendly manner.  As the GoI addresses 
the twin challenges of energizing the nation and conserving the 
environment, it is worth considering what role U.S. and Indian 
entrepreneurs, such as HPS, can play and how the USG can best 
support them.  India's energy mix will be just that - a mix of 
thermal and renewable, on- and off-grid, public and private, big 
and small - and HPS has found what appears to be its profitable 
market niche.  HPS' model of small, off-grid, low-tech 
decentralized power production may be applicable in rice 
producing regions, not only in India, but also in other 
countries in the region struggling to electrify and develop 
their remote villages, such as Afghanistan. 
ROWLAND