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RESCO (Renewable Energy Service Company) - A good model for India?

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  • Saturday, 17 November 2012
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  • Rajesh, SWHE
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  • Since India is a developing nation, we need to think beyond giving incentives to customers for achieving the growth of renewable energy systems. One model that has worked in the rural areas of other developing countries (like Fiji) is the RESCO (Renewable Energy Service Company) model.

    RESCO model is the extension of ESCO (Energy Service Company) model that we are all familiar with. With ESCO, the Government/Large private organization invests and creates all the infrastructure for centralized energy generation. The power so generated is then distributed to users and the users just pay for the amount of electricity consumed. 

    This recurring payment mechanism will generally pay-back all the capital/running expenditure for the entity that owns and runs the power plants, over a period of time. Some Governments may divert funds from other sources to subsidize the energy so that it is available to everyone at an affordable cost.

    I guess we are familiar with this model. But, if the centralized energy source is replaced by distributed renewable energy source, the ESCO model becomes RESCO model. With RESCO, Government/large private organization still invests in procuring and maintaining power generation equipment and transmission infrastructure. But they are installed in a distributed fashion - over user homes/user premises.

    For example, consider solar panels. RESCO provider invests in solar panels and has an agreement with individual household users for installing them on their rooftops, etc. for an elongated period (like 25 years). Most of the power generated by these solar panels is utilized at the residential premises (hence minimizing transmission losses) and the excess capacity is sent back to the RESCO provider who may allocate it to neighbors/other customers.

    This pay-as-you-go RESCO model is an interesting model to explore because many customers (especially in the rural areas) are not able to afford huge capital investments to procure renewable energy systems for their homes. But, they might be more willing to pay a fixed cost every month for their energy consumption. Also, since the ownership of the power generating equipment is in the hands of RESCO provider, maintenance is also their prerogative. The end users do not have to bother about it.

    This model can be made more effective by Government incentives like soft loans and subsidies to RESCO providers. The Government should involve private participation and encourage them to build decentralized RESCO energy production/distribution businesses.   
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