With crude oil touching $70 a barrel and no sign of relief in the foreseeable future, the world is restless for alternative energy. India's own oil consumption, currently at an annual 115 million tonnes, is projected to soar in line with prosperity. While the government mulls its policies on non-conventional energy sources, private and foreign players are already off the mark.

Catch the sun

On Sunday, there was frenzied excitement in the otherwise sleepy village of Nathwana in Bikaner. Football fans watched their favourite player Ronaldinho in action, as Brazil put Australia two goals under in their World Cup tie. The television set, however, was no ordinary one. It was running on solar batteries.

A marvel that drew villagers from neighbouring Arjunsar, Badrasar, Khichiya and Jamsar, all delighted to see the set deliver the action sans the messy tangle of crackling wires that passes for electric infrastructure in these parts. There are 300-400 hamlets in Bikaner where the only source of energy is solar, and the figure is bound to rise.

Electric energy is in big rural demand. In West Bengal, even as the government works on the feasibility of extending a high-tension transmission line to villages in the southern Sunderbans, over two lakh people are already using solar photo voltaic (Solar PV) electricity. And there are several other examples.

The Energy and Resources Institute (TERI), which has worked with partners like the British High Commission in Rajasthan, the state government and NGOs in West Bengal and Swedish Development Corporation in Uttaranchal, is keen to see local entrepreneurs take up the challenge of popularising solar home lighting systems.

In Sunderbans, women dependent on betel-leaf sales now have an additional income from solar energy services that include installing and maintaining solar home systems, renting out solar lanterns, and designing and assembling small electric items.

In Bikaner and Uttaranchal, 60 dealers of home lighting systems are working on the supply, maintenance and repair of energy kits across several villages. Bikaner district boasts of 9,500 solar home installations, and Uttranchal over 4,000.

TERI has learnt from its mistakes with its Uttam Urja project, which stumbled on poor maintenance. This made the need for a local service network evident.

"So we started involving electric item businessmen with good networking capabilities, and rode piggyback on them," says Ibrahim Hafeezur Rehman, associate director, Action Programme, TERI. Pricing was rejigged too.

Today, solar systems can be installed for as little as Rs 600, going up to Rs 1,800 with a backup system, and Rs 2,000 with a switch panel. The usage is simple: solar torches for men to carry to the fields, and solar mathnis (butter churners) for women, the stuff of farm-life bliss.

In Karnataka, meanwhile, the United Nations Environment Programme (UNEP) has given a fillip to solar energy with its microcredit programme, kicked off in association with major banks in 2003.

Solar home systems were made available on easy loans (low upfront payment, and instalments phased over extended periods). By the end of 2005, some 15,000 solar home systems had been installed this way.

Other global organisations are in the fray too. America's National Renewable Energy Laboratory, for example, has sponsored Kalpataru in the Sunderbans, which grew out of the abovementioned pilot project and acts as an anchor for solar enterprises.

The unit helps them procure equipment, even as it encourages the creation of local self-help groups (SHGs) that pool savings to make capital purchases by rotation, thus taking care of the low-cash-in-purse problem.

Back in urban centres, equipment production is on an incline, with over 25 organised sector companies making solar panels, batteries and related equipment. Despite all that, solar panels on rooftops remain a rare sight in India. Is the scale of the effort large enough?

"Well," says an expert in the field, "the Solar Energy Centre of the Ministry of Non Conventional Energy Sources has been there since 1982, and we see no major headway. But private sector participation has been good."

The national picture is bleak. India still has 80,000 villages (15 per cent of all) with no power lines whatsoever. The Rural Electrification Corporation has identified 25,000 villages and hamlets which cannot be wired to the national grid. There are happier statistics too.

According to officials in the Ministry of Non Conventional Energy Sources, 4,500 solar projects have been sanctioned since the Rural Village Electrification Programme began in 2001-02.

They also confirm that work is underway in 1,800 villages on hybrid projects (that combine solar and biomass energy). Private suppliers are also ready with equipment for these projects. But public-private partnerships need to display a greater sense of urgency.

Jatro-tull

The next time you travel to Pune and board a Pune Municipal Transport (PMT) bus, take a deep breath of satisfaction. Your lungs would appreciate it.

Starting 1 July, 2006, PMT will be running over 100 buses on bio-diesel, thanks to the cultivation of jatropha and its conversion into bio-diesel in Maharashtra.

Of course, if a municipal bus is not quite your style, you could still savour the experience of a clean fuel ride in the luxury of a Mercedes C-class car.

Surprised? The world's leading automobile makers are thinking alternatives these days. DaimlerChrysler is now in the second phase of its bio-diesel project, and it is working on the consistency and sustainability of jatropha as a form of bio-diesel.

"We have an agreement to procure 80,000 litres of bio-diesel from the Council for Scientific and Industrial Research (CSIR) in the second phase -- spread over 2006-07. We are running Daimler's fleet of cars on bio-diesel produced from jatropha," says Suhas Kadlaskar, director, corporate affairs and finance, DaimlerChrysler Bio-diesel Project.

And what is the advantage of a car running on bio-diesel? Going by Daimler's test runs last year (on such difficult terrain as Leh), jatropha oil has a much higher "flashpoint" -- it can withstand temperatures of up to 150 degrees celsius, unlike fossil fuels which have a flashpoint of only 50 degrees. This tolerance translates into safety. The fuel's "cetane number" is also high, which makes for quick ignition and a smoother drive.

The company, along with its partners, is currently working on a co-operative model village in Gujarat that will sustain itself on jatropha. The sums involved are not large. With a project cost of Rs 7.5 crore (Rs 75 million) for the second phase, Daimler is contributing Rs 4 crore (Rs 40 million), the rest being funded by Germany's DEG.

But don't dismiss it as just another alternative fuel bluff. The fuel opens up new possibilities -- which is why Daimler is not the only motoring company looking at bio-diesel. Mahindra & Mahindra and Tata Motors [Get Quote] are also on to it. Reliance Industries [Get Quote], an oil player itself, has made a beginning too, by getting into jatropha cultivation in Andhra Pradesh.

The plant has its attractions. It flourishes in tropical wastelands where little else might grow of any value. This suits India just fine, with 130 million hectares of estimated wasteland. According to CSMCRI, an affiliate of CSIR, some 10 million of that is perfect for jatropha.

The rest of the world seems to have noticed. Paul Bennett, fuels policy advisor, fuels management group, BP Technology Centre, is based in the UK, but his heart lies in India nowadays.

Since February, he has been making increased trips to India -- all for alternative fuels. The company has committed a sum of $9.4 million over five years to the initative; BP is eyeing 8,000 hectares in Andhra Pradesh.

"BP is working on the possibility of sourcing bio-diesel out of India," says Bennett, "and this money will be spent on research, marketing and creating a supply chain for BP, and we expect this project to become self financing after five years."

Another UK-based company, D1 Oils, is looking at jatropha as a feedstock for fuel, and India as the biggest hub for its supply. Its business model: contract-farming.

"D1 provides farmers the technological support, ensures buyback of produce, and help in tie-ups with banks for financial support," says Sarju Singh, chairman, D1 Oils India, which hopes to cover around 20,000 hectares in Tamil Nadu, Andhra Pradesh and Madhya Pradesh.

Hyderabad-based Nandan Biomatrix also runs a contract-farming model. It sources jatropha, and proposes to use four production centres to supply oil to government refineries.

"We are aiming to develop large catchment areas spread over 2.5 lakh (250,000) acres for both pongemia and jatropha," says C S Jadhav, director, marketing, Nandan Biomatrix.

But is bio-diesel something the government is keen on? For its part, it has announced a bio-diesel purchase policy of Rs 25 a litre. But industry players are not entirely sure if the fuel will prove commercially viable.

Jatropha cultivation has its supporters in the government, all the same, which is running a funding programme of Rs 75 lakh (Rs 7.5 million) per district, managed by district collectors. One can sell pongemia saplings at Rs 8-10 per plant and jatropha at Rs 5-6 per plant to the programme, says Jadhav. Energy strategems are all very useful, it'd seem, but not at the cost of the Indian farmer's security.

Sugar candy

Why envy Brazil? Simple. The country started in 1973, the year of the first oil crisis, what India is considering only now: a large-scale conversion of the petrol-guzzlers on its streets to ethanol-guzzlers.

With oil prices ruling high, ethanol, made from sugarcane and/or other such organic sources, can work out cheaper than hydrocarbon equivalents like petrol. To be fair, Brazil's experiment with ethanol started in the 1920s, though the project went full-throttle after 1973. Today, that country runs vehicles both on ethanol and gasohol, which is petrol blended with ethanol.

The Indian gasohol proposal, as it were, involves only a modest fraction of ethanol being used to "dope" regular fuel. According to Sameer Maithel, director, Energy Environment Technology Division, TERI, ethanol is a viable option. Extracted typically from molasses in India, the yield is higher than that from sugarcane directly, and the quality is good too. So what explains the modesty?

On the face of it, very little. Ethanol in not in short supply. Sugar major Bajaj Hindusthan produces 3.2 lakh litres of alcohol per day, and plans to more than double it. Balrampur Chinni is another big player.

Plus, there are at least 120 other plants across India, over 70 of them in Maharashtra alone, that can together produce upto 1,200 million litres of ethanol every year. On current consumption, India's oil marketing companies need only 400-500 million litres a year to meet the government's mandate of a 5-per cent ethanol blend with petrol.

There's enough ethanol in India to make a beginning, for sure. But yet, private players worry that the government's policies on ethanol remain too vague . They say the government made a half-hearted attempt at 5 per cent ethanol doping with petrol in 2003, but for real impact, something big must be done.

Says Ravi Gupta, president, sugar and alcohol business, Bajaj Hindusthan. "Alcohol is in surplus," he says, "This is despite the fact that this is a sugar deficit year. We are exporting alcohol because domestic demand is low. Next year, production is expected to rise further by 450 million litres. The fuel ethanol program requires only 500 million litres. In fact, with cane and sugar availability expected to increase, we can raise ethanol blending to 10 per cent."

It all depends on the signals sent by the government, says the ethanol industry. Ethanol's procurement price, at Rs 18.75, is a sticky issue. Suppliers want more. "Ethanol has commercial viability even at Rs 32 per litre," says an industry observer, adding that sugarcane prices have risen since the time the price was set.

What the ethanol industry wants is some fiscal support. "Ethanol is recognized as a better alternative fuel the world over," says Gupta, adding that the government had offered a subsidy to start the programme, but the idea got muddled along the way. If ethanol is not used soon for doping, he warns, "We shall not have any other option but to export to other countries."

Sugarcane, of course, is not the only source of ethanol. Matrix, an R&D laboratory of Pune-based Praj Industries [Get Quote], is working on a dozen-odd feedstock options -- ranging from wheat and corn to baggasse and rice straw -- from which ethanol can be extracted at low cost.

Pramod Chaudhari, founder chairman of Praj, says the company is experimenting with sugar, starch and cellulosic biomass-based blocks. Praj's sweet sorghum solution, for example, claims a 30 per cent higher annualised yield than sugarcane. Since it takes half the time to grow, and with half the input costs, it could prove just the source India is looking for in the long term.

The long term? The planning here must take into account many more variables. Agricultural products take a long while to gain acreage in response to price signals. Sugar prices have a role to play too, since sugarcane is used mostly for sugar -- and this is unlikely to change so long as ethanol is seen as a stopgap fuel.

Even the US, which has a policy of keeping sugar farms solvent, treats ethanol as a last-resort fuel. This is because on cost analysis (instead of price), gasohol is a bad option: the extracted cost of crude oil, at its lowest, is barely $4 per barrel, which is very attractive. Pipelined gas is cheap too. Only a sustained oil-and-gas choke, then, would motivate a shift that requires a major redeployment of resources. And this decision would depend on outcomes of the geopolitical game.