Husk Power raises funds to bring power to rural India

The future of energy in developing countries, where there is no power grid, will be distributed and local. A startup called Husk Power Systems, which has created micro power plants that burn agricultural waste in projects around India, just raised $5 million in equity to continue to expand its reach.

The company designs plants that are small — 25 KW to 100 KW in size — that can burn agricultural waste such  as rice husks and produce electricity. Husk had installed about 80 such power stations in India’s northeastern state of Bihar, when we caught up with the company in the summer of 2011.

The new funding will help the company carry out some big expansion plans. Founded in 2007, Husk Power’s co-founder Manoj Sinha told us previously he wanted to build over 2,000 mini power plants by 2014. That many power plants would light up 1 million homes and replace many kerosene lamps and avoid their carbon monoxide emissions. Scaling up the operation also will be important for the company to deliver returns to its investors.

Engineering power stations that are simple to operate and repair is key to Husk Power’s strategy. Those stations are run by local residents, who aren’t likely to have the engineering backgrounds to fix complex machines. The company also installs the distribution lines for delivering the electricity to homes.

Husk Power is choosing biomass as a fuel because of its availability in farming communities. But while biomass power plants are considered “green” because of their use of farm wastes instead of fossil fuels, they are still combusting the fuel much like how a standard power plant burns coal or gas. That means biomass power stations still emit emissions that aren’t so good for the environment and human health.

Environmental trade-offs are thorny issues to grapple with and not just for rural electrification projects. Even in developed countries, such as the U.S., the building of massive solar power plants and the need by some to use lots of water for power generation and to rely on new transmission lines to bring power to cities are pitting environmental groups against developers and regulators.

Raising private money for social entrepreneurial enterprises can’t be easy — they probably don’t generate the kind of returns that are expected by venture capitalists. Husk’s investors include Draper Fisher Jurvetson as well as the Shell Foundation and Acumen Fund (which was set up with seed money from the Rockefeller Foundation, Cicso Systems Foundation and three philanthropists).

But there will be no shortage of attempts to bring renewable energy to rural areas. Earlier this month, I caught a presentation by the San Francisco startup Rural Electrification with Renewable Energy (REwiRE) at the Cleantech Open’s western regional competition, and the company wants to raise money to build mini hydropower stations in rural Indonesia.