Enhancing viability of biofuel-based decentralized power projects for rural electrification in India

Decentralized power generation, using locally available biofuels from non-edible oilseeds, is an option for rural electrification in many developing countries. However, due to prevailing high price of non-edible oilseeds, such as Jatropha curcas, the cost of electricity generation is very high. This paper provides detailed financial analysis of straight vegetable oil (SVO)-based decentralized power project and proposes an innovative model for enhancing their financial viability. While for implementing agency operational cost recovery is the key for viability, affordable tariff is crucial for end-users. The paper attempts to estimate minimum desired price of electricity from the stakeholders' (producer and users) perspective using data gathered from selected operational SVO-based power generation projects in India. Analysis carried out in this paper indicates that operating the decentralized power plant at higher capacity utilization factor, by introduction of productive load, and differentiated tariffs for commercial and domestic consumers may not alone be sufficient to achieve the financial viability. The paper proposes an innovative integrated model of using biogas, obtained from the by-product de-oiled cake of non-edible oilseeds, as a feedstock for power generation, instead of using the SVO in engines. This reduces the fuel cost of power generation, thereby helping to bring down the tariff within the paying capacity of rural consumers. The main produce, viz. extracted non-edible oil, which was otherwise used as fuel for generating power, can be sold in local market for earning revenue, thereby enhancing the project's economic viability. This paper sets forth the proposed integrated model as a viable biofuel-based decentralized power project for sustainable rural development in areas with adequate availability of oilseeds.