CLARO Energy - Solar Powered Irrigation in Rural India

CLARO's first solar irrigation system in Gopalganj, Bihar.  Source: CLARO Energy

A few weeks ago, I had the pleasure of sitting down with the Director of CLARO Energy. CLARO installs solar powered irrigation for rural farmers in India.  My interest in solar power and water resources combined to make it an especially enjoyable conversation! (On a water resources tangent - here are some pictures of a sewage treatment plant in Delhi.)

Claro Energy was founded by Kartik Wahi and Soumitra Mishra after completing their MBA at Kellogg School of Management. They were later joined by Gaurav Kumar, who was earlier working with the infrastructure firm Punj Lloyd. They decided to use their business experience to solve some of the most pressing problems in India. After surveying the renewable energy landscape, they spotted an underserved market in solar powered irrigation with enormous market potential.

To get an idea of on how big that opportunity is consider that groundwater irrigation consumes about 15% of all electricity in India. [1] Since India is still an agricultural economy, 73% of Indians working directly or indirectly in agriculture. [2] Given India consumed 775 TWh in 2012, a whopping 115 TWh went to irrigation, which is about all the electricity consumed in Norway. [3][4]

CLARO's second project. A 7.5 HP tubewell pump in Patna, Bihar.  Source: CLARO Energy

System Profile

A large system consists of a 7.5 HP pump with around 7.92 KWp of PV modules. The well can be 30 m deep or more depending on the water table and the deeper the well, the more power is needed. The 7.5 HP tubewell can pump about 56,000 liters per hour (1,500 gph) and can meet the needs of about 13 farmers over 40 hectares (100 acres). The electrical demands of the irrigation pump during the day are well matched to the supply of power from the panels, so no battery is needed to store energy.

Maintenance Strategy

The solar powered irrigation pumps are almost by definition serving remote locations with limited infrastructure. This makes maintaining the systems a challenge. To reduce maintenance cost and manage downtime, CLARO installs pumps in localized clusters and has a few maintenance staff permanently located near the clusters.  The company aims to keep downtime to below 48 hours when a systems fails.

To try to meet and improve upon the 48-hour goal, CLARO has started piloting remote monitoring technology. When a system malfunctions, the maintenance operator located in their headquarters can use the real-time pump flow rate, solar system current and voltage, and any other indicators to pinpoint the malfunction. Since cell phone penetration is around 98% in India, the farmers can use their phone to call the service line. The operator can ask the farmer questions to gain additional system information and then instruct the farmers on how to fix the system. Remote monitoring is currently being tested on around 35-40 systems with promising results.

Business Channels

CLARO has three primary customer categories: government, business, and farmers. The government commissions about 5,000 pumps per year that developers bid on through a reverse auction. These government projects make up the largest share of CLARO's annual projects, but CLARO expects government project to make a smaller percentage as the other two segments grow.

The business segment is made up of corporations like ABC that buy agricultural products from local farmers. The corporations will lease a solar powered irrigation pump to their suppliers and receive benefits in four ways. 1) They receive 80% accelerated deprecation on the system in the first year. 2) They can list the system as an asset on their books. 3) The supply of agriculture products becomes more dependable and of a higher quality. 4) They receive lease payments from the farmers. The lease payments are often received through a discount on the agricultural purchases, so if a corporation buys 3000 rupees worth of potatoes, they would only pay 2,900 rupees if the lease payment was 100 rupees. CLARO expects this segment to become the main source of their business.

The last project segment are irrigation systems sold directly to farmers. Since many farmers don't have the resources to pay for the irrigation system, about 30-80% cost is covered by the government (MNRE, state nodal agencies and other government agencies). Contribution from government varies  depending on state and government schemes. Big farmers have no problem paying for the solar powered irrigation systems outright, but small farmers need financing. Like in most solar markets, banks are hesitant to lend to farmers because they are uncertain of the salvage value of the irrigation system if the borrower defaults. This lack of financial makes it difficult for smaller farmers to buy solar powered irrigation systems.

Since 2011 CLARO has installed a total of 500 pumps.  Source: CLARO Energy

Future Business Models

To help small farmers obtain solar power irrigation systems, new business models need to be developed. As the director said during our meeting, "The technology is well developed. The creativity comes in the business model." As I learned during the meeting, most farms don't need a continuous supply of water. Instead, their water needs come at key times in the crops’ growth cycle.  CLARO is currently working on a mobile irrigation system that could be utilized by multiples farmers staggering their watering cycles.

CLARO's first mobile solar irrigation system.  Source: CLARO Energy

The challenge with the staggering water cycles is the organization of the farmers to properly align the cycles. Currently, the government-owned pumps utilized by multiple farmers have water cooperatives with committees that assign the rotation of the mobile pump. Any business model for a private pump with shared ownership would need some organizational entity to arrange the rotation.

There is also potential for a pay-as-you-go service much like the business model that has been successfully implemented by Azuri in rural parts of Africa. Here again the technology isn't the problem as the platform would be fairly easy to develop and implement. The problems comes from payment collections, managing default rates, and the cost of repossessing and salvaging systems when defaults occur. 

Since starting out in 2011 CLARO has won multiple awards for their work. Their specialization in solar-powered irrigation and large market potential makes CLARO’s future prospects particularly bright. I am excited to see what new business models they roll out in the future!