So, what can we expect in the future from Husk Power Systems? Currently, there are four rice husk processing units installed in India. According to Ransler, Husk Power Systems intends to install 15 to 20 more units in villages this year and the company plans on installing 100 in 2009 and 2,500 by 2013. The lack of reliable electricity is one of the biggest obstacles to small business growth in rural India, so providing villages with rice-husk power can enable dozens of other small business ventures, Ransler explains.

Taking on Challenges
Although Sinha and Pandey were able to self-fund much of their business, Husk Power Systems must amass significantly more capital to expand its business. “We have gotten requests from different regions in India to expand [our business],” Sinha says. “We’re not limited by customer demand. We are mostly limited by the funds we have. Once we get sufficient funds, we will be able to expand very quickly.”

To showcase their business to American academia, Ransler and Sinha entered several prestigious college-level business competitions this year. In April, the two picked up a $10,000 check for winning Darden’s annual business plan competition, and they were selected as one of 10 finalist teams among 245 entries from 23 countries in the Global Social Venture Competition hosted by the University of California, Berkeley. In May, Husk Power Systems won second prize at the 2008 Ignite Clean Energy competition at the Massachusetts Institute of Technology, where Ransler and Sinha competed for the $125,000 grand prize. Later that month, they took home $50,000 in prize money after topping the prestigious Social Innovation Competition at the University of Texas.

According to Ransler, with more research and feedback from the competitions, the team learned that the silica byproduct produced by burning the rice husks could be converted into a valuable ingredient for cement production. “We’ve actually spoken with a number of U.S. companies that are doing business in India, to be able to provide that to them,” Ransler says. “Some of those things are already shored up, but we hope to get the rest of the supply chain aspects down these next few months.”

In addition to power generation and the silica byproduct produced by burning the rice husks, the processing units could potentially be paid for by reducing carbon emissions through a trading program established by the Kyoto Protocol. “One of the big steps is getting certified, and we’ve already started that so we’re ahead of the game there,” he says. “It probably doesn’t make much sense until we’re in more villages, but we hope to have that done by the end of next year.” With conservative electricity consumption, revenue from
the three sources—electricity generation, silica and carbon credits—each rice husk generator could be paid for in about two and a half years, Ransler says.

Finding funds hasn’t been the only challenge the entrepreneurs have faced. They have had to address logistical issues, such as how to get the electricity to its various destinations, irrigation and water purification issues and competing with other local business to name a few. “It’s tough doing this in India because it’s a completely different ballgame with regard to laws, restrictions and the politics associated with it,” Ransler says. “It’s definitely intimidating, but we’re figuring it out.”

Previous electrification projects in India have generally provided villages with intermittent power—often only an hour per day. The power comes from distant coal-fired power plants and travels through miles of wire to reach small villages, where average personal incomes are less than $20 per month. In many cases, Indian villagers would illegally tap into the main power lines for free electricity, which is often referred to as defaulting, and sometimes large sections of power lines have been cut and sold as scrap metal.

Husk Power Systems has developed a strategy to circumvent those kinds of problems by requiring pre-payment for all electricity sold and using double-insulated wire that is more difficult to tap into than standard wire.

The company has also tried to be a low-cost electricity supplier. Instead of paying $10 to $15 for an electrical meter for every household, Husk Power Systems uses a $1 circuit breaker to distribute electricity to a branch line serving four or five households. The company also uses locally-based employees to operate and maintain the rice husk processing units, Sinha says.

“It takes a lot of convincing to change the mindset and charge them money for the services they are getting from us,” he says. “It’s not their fault. Politicians use the electricity for things to their advantage there. The only thing is they don’t get it. Even if there is a public grid, the power would only be available for a few hours every week, let alone every day.”

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