Small Steps, Big Impact: Empowering MSMEs to Business Sustainability through Renewable Energy
The micro, small, and medium enterprises (MSMEs) which are scattered across remote regions, contribute to almost 30% of the country\\'s economic growth. However, the lack of reliable and accessible energy sources hampers their growth and potential. This is where the renewable energy sector has provided sustainable and affordable energy solutions.
In this article, we will understand how harnessing the abundance of natural resources at their disposal, such as sunlight, the 60 million MSMEs of India can rewrite the rules of business sustainability.
In a country where energy access remains a pressing challenge, OMC Power India\'s mission is to bring change by leveraging?renewable energy sources , focusing primarily on solar power.
Challenges of Rural MSMEs
There are around 60 million MSMEs in India and are growing constantly. The government has placed a lot of emphasis on developing these enterprises which contribute to almost 30% of the country’s economy. Most of these businesses are in agriculture, agro-processing, handicrafts, textiles, etc and there is a need for them to adopt sustainable business practices.
However, they face a multitude of challenges in terms of energy dependence and business profitability, which are multi-faceted. These are as follows:
1. Limited Access to Reliable Energy
Rural MSMEs often struggle with inadequate and unreliable energy supply. They face frequent power outages or limited access to electricity, hindering their production processes and overall productivity.
2. High Energy Costs
Rural MSMEs often rely on expensive energy sources such as diesel generators or grid electricity with high transmission and distribution losses. These high energy costs can eat into their profit margins and make it difficult to maintain competitiveness.
3. Lack of Awareness and Technical Expertise
Rural MSMEs have limited awareness about the benefits and availability of renewable energy solutions. Additionally, they lack the technical expertise to adopt and integrate renewable energy technologies into their operations effectively.
4. Financial Constraints
Rural MSMEs also face financial constraints that hinder their ability to invest in energy-efficient equipment or renewable energy systems. Limited access to capital, lack of affordable financing options, and the perceived high upfront costs of renewable energy installations pose significant challenges.
Addressing these challenges requires a multi-dimensional approach involving improved energy infrastructure and tailored financing options that promote renewable energy adoption among rural MSMEs.
In the next section, we will understand how rural MSMEs can enhance their energy independence, reduce costs, and achieve greater business sustainability in the long run.
Unleashing the power of renewable energy for rural MSMEs
For Micro, Small, and Medium Enterprises (MSMEs) in India, profitability and business sustainability have long been the primary challenges. Limited access to resources, volatile market conditions, and rising operational cost of their energy requirements have posed significant hurdles to their growth and survival.
However, renewable energy has emerged as a beacon of hope for MSMEs, offering a transformative solution that not only addresses their profitability concerns but also fosters long-term business sustainability.
1. Lowering Operational expenses
Renewable energy presents a unique opportunity for MSMEs to reduce their energy costs significantly. Traditional energy sources, such as fossil fuels, are subject to price volatility and ever-increasing tariffs.
By embracing renewable energy technologies like solar panels, MSMEs can generate their own clean electricity and reduce reliance on costly grid power. This not only leads to immediate savings in energy bills but also shields businesses from unpredictable fluctuations in fuel prices, ensuring long-term cost stability.
2. Reducing the dependence on traditional energy sources
Traditionally, MSMEs have relied heavily on conventional energy sources such as fossil fuels, which not only come with a hefty price tag but also contribute to pollution and environmental degradation. However, the renewable energy sector has revolutionized the energy landscape by providing accessible and affordable alternatives.
By harnessing the power of solar, wind, and other renewable sources, MSMEs can reduce their dependence on fossil fuels and embrace cleaner, greener solutions.
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Unlike traditional sources, such as coal or oil, which are finite and prone to price fluctuations, renewable energy sources offer a consistent and infinite supply. This stability in supply translates into cost savings for MSMEs, allowing them to allocate their resources more efficiently.
3. Real life examples of renewable energy driving cost savings
This section explores how renewable sources of energy like solar power can assist, for instance, a grinding mill in a rural area and explore the contrasting landscapes of renewable energy alternatives and traditional energy alternatives.
Scenario 1: When the mill takes energy from the Electricity Board
In this scenario, the business owner has to pay fixed charges of Rs. 290 per kW per month and energy charges of Rs 7.30* per kWh based on metered consumption. So, a 15kW connection holder has to shell out an amount over 24 thousand* as his monthly bill, along with the uncertainty of power outage at peak time. He also has to deal with a 10% rise in the prices of electricity periodically.
However, for a?Rooftop Solar system ?of 17 kW, the mill owner can get it installed with an EMI of just over 26 thousand*, which will be recoverable in the next 4 years. After this, his electricity supply becomes totally free.
Assuming an average rise in Electricity Board tariff four times over 25 years, this saving would be around Rs. 2.5* Cr over a period of 25 years i.e.Rs.10 lakh per year.
Scenario 2: The Grinding mill is powered by a diesel engine
The majority of the grinding mills in rural areas are connected with diesel engines. Any diesel engine gives a maximum of 3 kWh per litre. For gaining an equal amount of electricity from a Solar Rooftop System, one requires 610 liters of diesel every month, costing around 55 thousand*.
n this scenario, the mill owner can recover his initial investment in the rooftop system in less than 3 years. Also, assuming a moderate rise in the prices of diesel, he can expect savings of Rs 2 Cr* in the next 25 years.
The cost savings due to renewable energy can be invested back into the enterprise to improve production or help the owner in setting up new enterprises leading to better employment and growth opportunities in the rural areas.
*rates as indicative
4. Mitigate environmental impact from conventional power generation methods
Renewable energy resources ?have emerged as a viable solution, offering MSMEs a chance to reduce dependence on environmentally damaging practices.
Conventional power generation, fueled by fossil fuels like coal and oil, releases harmful greenhouse gases into the atmosphere, contributing to global warming and climate change.
5. Increase productivity
Renewable energy sources offer MSMEs greater energy independence and resilience. By generating their power through solar panels or wind turbines, these enterprises are no longer at the mercy of centralized energy grids or vulnerable to disruptions caused by fuel shortages or price hikes.
This newfound energy autonomy provides MSMEs with a competitive edge, enabling them to operate smoothly and mitigate risks associated with energy fluctuations.
6. Improving the Quality of Life in Rural Areas
Access to reliable and affordable electricity is a fundamental pillar of improved living standards. Traditional energy sources are often expensive to extend to remote rural regions, making electricity unaffordable or completely inaccessible for many households and businesses.
Improved access to electricity through renewable energy resources is a catalyst for social and economic development in rural areas. It enables the establishment of small-scale enterprises, generating income and employment opportunities locally.
Final Thoughts
The challenges faced by rural MSMEs in terms of energy dependence and business sustainability are multi-faceted and require strategic interventions. Limited access to reliable energy, high energy costs, lack of awareness, technical expertise, and financial constraints are some of the key hurdles that these enterprises encounter.
However, renewable energy has emerged as a beacon of hope, offering transformative solutions that address these challenges effectively. By embracing renewable energy, rural MSMEs can drive cost savings, reduce their dependence on traditional energy sources, and focus on business sustainability.
Real-life examples of grinding mills highlight the significant cost savings and operational benefits that renewable energy solutions provide to businesses. Furthermore, renewable energy solutions can also improve the quality of life in rural areas by providing access to reliable and affordable electricity. This leads to social and economic development, generating income and employment opportunities locally.
Attended Indian Institute of Technology, Madras
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