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1
POSITIONING OF SOLAR ENERGY DEVICES AND CUSTOMER OF RURAL AND URBAN AREAS: A SURVEY
Anuja Zanzad1, Dr. S. U. Gawade2 Research Scholar1, Professor2
Shri Jagdishprasad Jhabarwal Tibrewala University, Vidyanagari, Jhunjhunu-Churu Road, Jhunjhunu, Rajasthan
Abstract - India, a rapidly growing economy with more than 1 billion people, is facing a huge energy demand. The country stands fifth in the world in production and consumption of electricity. The electricity production has expanded over the years but we cannot deny the fact that the population of the country is also expanding. The power produced in the country is mostly from coal (53%) and it is predicted that country‟s coal reserves won‟t last beyond 2040-50. More than 72% population living in villages and half of the villages remain without electricity. India is one of the emerging markets in global economy. Reforms are happening in almost all the sectors. Country has been giving continuous growth in infrastructure, technology, energy, etc. It‟s high time that country should concentrate more on energy efficiency, conservation and renewable energy. To meet this surging demand, solar energy is one of the best forms of energy to fulfill the energy needs of India and bridge the energy demand-supply gap.
1. INTRODUCTION
Renewable energy is generally defined as energy that comes from resources which are naturally replenished on a human timescale such as sunlight, wind, rain, tides, waves and geothermal heat.
Renewable energy replaces conventional fuels in four distinct areas: electricity generation, hot water/space heating, motor fuels, and rural (off-grid) energy services. Simply speaking, energy exists freely in nature. Some of them exist infinitely (never run out, are called RENEWABLE), the rest have finite amounts (they took millions of years to form, and will run out one day, are called NON-RENEWABLE).
Solar Photovoltaic is the fastest growing segments of renewable energy industry. It‟s a technology which converts sunlight directly into electricity. It is already very well established in many countries, and is being considered as one of the key technologies of the 21st century.
1.1 Primary Commercial Energy Resources
India‟s energy use is mostly based on fossil fuels. Although the country has significant coal and hydro resource potential, it is relatively poor in oil and gas resources. As a result it has to depend on imports to meet its energy supplies. Geographical distribution of available primary commercial energy sources in the country is quite skewed
with 77 percent of the hydro potential located in the northern and north eastern region of the country. Similarly, about 70 percent of total coal reserves are located in the eastern region while most of the hydrocarbon reserves lie in the west. In 1995 coal accounted for 63.3 percent of India‟s primary energy production while petroleum 18.6 percent, hydroelectricity 8.9 percent, natural gas 8.2 percent, and nuclear power only 1 percent. Even today this situation has not changed much. At present India‟s electricity is generated overwhelmingly by coal to the tune of 70 percent. Hydroelectricity ranks a distant second that is about 25 percent, followed by natural gas, nuclear power, oil, and renewable sources, which account for the remaining 5 percent. Current fuel mix is expected to change slightly through the forecast period ending in 2010. Coal with 65 percent share is projected to remain roughly the same as in 1995, while hydro with 14 percent and natural gas with 10 percent will have higher shares of total production. Oil production will decline sharply, and contribute only 9 percent share. Overall, India‟s energy production was around 8.8 quadrillion Btu (quads) in 1995. By 2010, India‟s energy output is expected to reach 16.4 quads. In comparison, China‟s total energy production was 11.7 quads in 1970, 35.6 quads in 1995, and is forecast to rise to 64 quads by 2010.
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2 1.2 Solar Energy In India
India has tremendous scope of generating Solar Energy. The geographical location of the country stands to its benefit for generating solar energy. The reason being India is a tropical country and it receives solar radiation almost throughout the year, which amounts to 3,000 hours of sunshine. Almost all parts of India receive 4-7 kWh of solar radiation per sq. meters.
This is equivalent to 2,300–3,200 sunshine hours per year. States like Andhra Pradesh, Bihar, Gujarat, Haryana, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, and West Bengal have great potential for tapping solar energy due to their location. Since majority of the population lives in rural areas, there is much scope for solar energy being promoted in these areas. Use of solar energy can reduce the use of firewood, conventional resources, fossil fuel based system energy, dung cakes and so on by rural household.
There is lot of enthusiasm among the people of India about the use of Solar Energy as a substitute of conventional sources of energy. Solar energy system can be a challenge and most looked forward alternative for locations where diesel generators are being used instead of grid electricity. Also, increasing electricity bills can become a motivating factor for commercial complexes like IT companies, schools, colleges, hospitals etc. to switch to Solar Power System.
1.3 Benefits of Solar Energy in India Some of the advantages of solar energy which make it all the more suitable for India are as follows:
1. This is an inexhaustible source of energy and the best replacement to other non-renewable energies in India.
2. Use of energy is environment friendly. When in use, it does not release CO2 and other gases which pollute the air. Hence it is very suitable for India, India being one of the most polluted countries of the world.
3. Solar energy devices can be used for variety of purposes like household, schools, agricultural fields, streets, which is suitable for the rural areas in India. It can also be used in Railway stations, Airports,
Construction Sites, School/College Campuses, Hospitals, Parking spaces at malls, City Parks and many more such items, just apt for the urban population.
4. Solar Energy which is a prime source of energy is inexhaustible. In energy deficient country like India, where power generation is costly, solar energy is the best alternate means of power generation.You don‟t need a power or gas grid to get solar energy. A solar energy system can be installed anywhere. Solar panels can be easily placed in houses. Hence, it is quite inexpensive compared to other sources of energy.
1.4. Alternative Sources Of Energy 1.4.1 SPV Systems More than 7,00,000 PV systems of capacity over 44 MW for different applications are installed all over India. The market segment and usage is mainly for home lighting, street lighting, solar lanterns and water pumping for irrigation. Over 17 grid interactive solar photovoltaic generating more than 1,400 KW are in operation in 8 states of India.
As the demand for power grows exponentially and conventional fuel based power generating capacity grows arithmetically, SPV based power generation can be an important source to meet the expected shortfall. Especially in rural area where the likelihood of conventional electric lines is remote, SPV power generation is the best alternative.
1.5 Rural Energy Development In India:
A Critique
Recognizing the critical role that energy plays in the development of rural areas, Government of India has taken several initiatives in the past to promote a fuel switch to the use of fossil-based fuels, such as kerosene, by introducing heavy subsidies and setting up extensive rural infrastructure. Likewise, the government has also been active in improving the supply of bio-fuels, and has introduced new and renewable sources of energy, as alternative fuels, to meet demands of the rural populace. Energy for agricultural pump sets has been one of the major programmes of the government in rural areas. This programme was initiated in the early 1950s along with other policy
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3 measures such as the under pricing of power for irrigation. The 1980s saw two significant efforts to address rural energy problem. In 1981 and 1982, the government launched the National Project on Biogas Development (NPBD), and in 1983 the National Programme on Improved Chulhas (NPIC). The NPBD is the largest rural energy programme in terms of investment and the NPIC is the largest in terms of number of devices provided. Additionally, in 1982 the Department of NonConventional Energy Sources (DNES) was set up for research and development, demonstration, and dissemination of renewable and rural energy technologies. In 1987, the Indian Renewable Energy Development Agency (IREDA) was established under the DNES for developing, promoting, and financing commercially viable new and renewable energy alternatives in the country. In 1992, the DNES was upgraded to a full- fledged ministry that is the Ministry for Non-Conventional Energy Sources (MNES). Recognizing an extremely area
specific nature of the rural energy problem and wide variations that exist in the socio-cultural environments in rural areas, an attempt towards decentralized area based energy planning at the block level was made through the Integrated Rural Energy Programme (IREP).
1.6 Current Status Of Solar Energy Technologies And Markets
1.6.1. Technologies and resources Solar energy refers to sources of energy that can be directly attributed to the light of the sun or the heat that sunlight generates (Bradford, 2006). Solar energy technologies can be classified along the following continuum: 1) passive and active; 2) thermal and photovoltaic; and 3) concentrating and non-concentrating.
Passive solar energy technology merely collects the energy without converting the heat or light into other forms. It includes, for example, maximizing the use of day light or heat through building design (Bradford, 2006; Chiras, 2002).
Table 1: Annual technical potential of solar energy and energy demand (Mtoe)
Note: The minimum and maximum reflect different assumptions regarding annual clear sky irradiance, annual average sky clearance, and available land area.
Source: Johansson et al. (2004); IEA (2010) 1.6.2 Solar PV
By December 2010, global installed capacity for PV had reached around 40 GW4 of which 85% grid connected and remaining 15% off-grid (REN21, 2010).
This market is currently dominated by crystalline silicon-based PV cells, which accounted for more than 80% of the market in 2010. The remainder of the
market almost entirely consists of thin film technologies that use cells made by directly depositing a photovoltaic layer on a supporting substrate.
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4 Figure 1. Total Installed Capacity of PV
at the Global Level
(a)Trend of global installed capacity
(b) Country share in the global installation in 2010 Source: REN21, 2011
1.7. The Economics of Solar Energy There is a wide variety of solar energy technologies and they compete in different
energy markets, notably centralized power supply, grid-connected distributed power generation and off-grid or stand-alone applications. For instance, large-scale PV and CSP technologies compete with technologies seeking to serve the centralized grid. On the other hand, small-scale solar energy systems, which are part of distributed energy resource (DER)7 systems, compete with a number of other technologies (e.g., diesel generation sets, off-grid wind power etc.).
The traditional approach for comparing the cost of generating electricity from different technologies relies on the
“levelized cost” method8. The levelized cost (LCOE) of a power plant is calculated as follows:
where OC is the overnight construction cost (or investment without accounting for interest payments during construction);
OMC is the series of annualized operation and maintenance (O&M) costs; FC is the series of annualized fuel costs; CRF is the capital recovery factor; CF is the capacity factor; r is the discount rate and T is the economic life of the plant.
Table 2: Key Data Used in Economic Analysis
Note: * IGCC with carbon capture and storage. ^Supercritical coal.
1.8 Estimated Future Growth of Solar Energy And Barriers To Realizing Growth
Advocates of solar energy claim that it will play a crucial role in meeting future
energy demand through clean energy resources. Existing projections of long- term growth (e.g., until 2050) of solar energy vary widely based on a large number of assumptions. For example,
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5 Arvizu et al. (2011) argue that expansion of solar energy depends on global climate change mitigation scenarios. In the baseline scenario (i.e., in the absence of climate change mitigation policies), the deployment of solar energy in 2050 would vary from 1 to 12 EJ/yr. In the most ambitious scenario for climate change mitigation, where CO2 concentrations remain below 440 ppm by 2100, the contribution of solar energy to primary energy supply could reach 39 EJ/yr by 2050.
EPIA/Greenpeace (2011) produces the most ambitious projections of future PV installation. The study argues that if existing market supports are continued and additional market support mechanisms are provided, a dramatic growth of solar PV would be possible, which will lead to worldwide PV installed capacity rising from around 40 GW in 2010 to 1,845Note: ^Supercritical coal.
GW by 2030. The capacity would reach over 1000 GW in 2030 even with a lower level of political commitment.
1.9 Implementation of Policies To Increase Solar Energy Development 1.9.1. Policy mix
The policy landscape for solar energy is complex with a broad range of policy instruments driving market growth. The rapid market growth of solar energy in Germany and Spain could be attributed to the feed-in-tariff systems that guarantee attractive returns on investment along with the regulatory requirements mandating 100% grid access and power purchase. On the other hand, federal and state incentives, along with regulatory mechanisms such as RPS, get credit for the rapid deployment of solar energy in the United States. In both markets, the policy landscape is in a transitional phase. In Germany, the FiT level is being reduced, whereas in the United States, upfront incentives are being shifted toward performance-based incentives. It is, however, uncertain if the transition will produce expected results. The decrease in the FiT, the primary basis for investors‟
confidence, could drive investors away from solar energy markets.
The rapid growth of the grid- connected PV and CSP market is largely attributed to a policy suite that guarantees attractive returns on investment, along with regulatory requirements such as grid connectivity and power purchase commitments required to motivate investments. While FITs played an instrumental role in Germany and Italy, a mix of policy portfolios that includes federal tax credits, subsidies and rebates, RPS, net metering and renewable energy certificates (REC ) facilitated solar energy market growth in the United States.21 Similarly, New Jersey developed a policy mix that combined a broad range of federal and
state incentives to drive rapid market growth: a policy portfolio consisting of RPS, federal tax credits, grants, drove the rapid growth of the PV market in New Jersey. In the Southwest United States, the combination of excellent solar resources, the 30% federal tax credit, and RPS policies has resulted in a rebirth of solar thermal electric generation. In two of the three states exploring solar thermal electric, the existence of a solar- or distributed generation-specific RPS tier has also played a role in increasing project development.
2 RURAL MARKETING
In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of green revolution, the rural areas have started consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy has emerged which is called rural marketing. The concept of rural marketing in India economy has always played an influential role in the lives of people. Globalization, liberalization and privatization have transformed the Indian economy into a vibrant, rapidly growing consumer market. As a result the markets are flooded with different kinds of goods and services, substantially effecting and changing the purchasing pattern of the consumers. The rural markets, which were earlier ignored by most of the big international market players, are now being seen as a land of great business opportunity. As the disposable income of the masses is growing, more and more corporate houses are entering into the
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6 rural markets with their new goods and products.
Due to this reason, the marketing for rural consumers is becoming more complex. The rural market in India brings in bigger revenues in the country, as the rural regions comprise of the maximum consumers in this country. India„s vast rural market offers a huge potential for a marketer facing stiff competition in the urban markets. The rural market environment is very different from the familiar surroundings of the urban market. Rural consumers have customs and behaviors that the marketers may find difficult to contend with. The rural markets in India have grown size, range and sophistication in recent times. Under the changing Socio-economic scenario, the rural markets have great potentialities in India and offer bright prospects and attraction to the companies. In fact, the rural markets are green pastures for companies today, as they are growing faster as compared to the urban markets.
With their huge size and demand base, they offer great opportunities to the marketers. More than three-fourths of country„s consumers reside in rural areas and more thanhalf of the national income is generated by them. Due to the global economic downturn, the companies are few facing slower urban sales, prompting them to make a rush towards rural India.
2.1 Rural Marketing – Definition
The term rural marketing „has been used widely in both academic and corporate worlds. Business organizations have incorporated the word into their marketing rhetoric. Academics have produced a plethora of textbooks and offered elective courses on rural marketing in various business schools, which bears testimony to the growing importance of the subject in management schools in India. An analysis of the content of a number of textbooks written on the subject reveals that the meaning of rural marketing has changed over the past few decades. According to Thompson:
‗ the study of rural marketing comprises all the operations & the agencies conducting them, involved in the movement of farm produced food, raw materials & their derivatives, such as textiles, form the farm to the final consumers & the effects of such
operations on producers, middlemen and consumers.„
According to Ramkishen. Y: ‗ rural marketing is the process of developing, pricing, promoting, distributing rural- specific goods and services, leading to exchange between urban and rural markets which satisfies consumer demand and also achieves organizational objectives. Thus, rural marketing is a two way marketing process that includes the flow of goods and services from rural to urban areas & the flow of goods &
services from urban to rural areas, as well as the flow of goods & services within rural areas.
2.2 Characteristics of Rural Marketing Some of the important features or characteristics of rural marketing are being listed below:
Large And Scattered Market The rural market is very large in size and mostly scattered. As these markets are of diverse nature, the people living in those rural areas are from diverse cultural, linguistic and religious background. No two markets are alike and it is dispersed across India. Here in India, the rural market consists of over 63 crore consumers from 6, 20,000 villages spread throughout the country. Therefore a large population gives an opportunity for marketing a variety of goods and services.
However income and purchasing power play a major role in determining the demand in rural areas.
Occupation Pattern
Agriculture and related activities continue to be the main occupation for majority of the rural population. Land is the major source of income for about 77% of the population. Others are engaged in business (10%), non-agriculture labour (9%), and salary earners (2%) and not gainfully employed (2%). It is evident that rural prosperity depends upon growth and development of agriculture.
Low Standard Of Living
The consumer in the village area do have a low standard of living because of low literacy levels, low per capita income, social backwardness, low savings, economic backwardness, lack of exposure to the media, etc. In general a rural consumer spends less on non-food items.
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7
Traditional Outlook
The rural consumer values old customs and tradition. They do not prefer changes.
In other words, the adaptability to change is lethargic and hence the problem of marketing of goods is much prevalent.
Diverse Socio-Economic Backwardness
Rural consumers have diverse socio- economic backwardness. This is different in different parts of the country. There exists tremendous variation in culture, life style, tastes, preferences, culture, etc.
of the rural consumers.
2.3 Rural Marketing Environment An environment is that which surrounds an organization. It is sum total of external factors and made up of tangible and intangible factors, both controllable and uncontrollable. Rural marketing is basically focused marketing activity of an organization. The environment includes threats and opportunities in the rural market. The Rural marketing environment is complex and is changing continuously.
The marketing organization should foresee and adopt strategies to change in requirements in the market. One which doesn„t change perishes. An adaptive organization can stand competition or have a modest growth. An organization which makes its effective marketing plans and its own strategies or a creative one will prosper and creates opportunities in the change in environment.
Rural marketing environment changes will be in the area of:-
a) Social changes b) Economic changes c) Ethical changes d) Political changes e) Physical changes f) Technological changes
2.4 Opportunities In Rural Markets Whilst on one hand, there are many challenges in rural marketing, but certainly there also exists infinite opportunities. The rural market is fascinating and challenging at the same time. The marketers have to find out new ways of dealing with the rural customers.
As already mentioned, the urban markets are fully saturated, so the easiest and the simplest option available with the marketer is to look towards the rural
prospects. These rural people are eagerly waiting to be served.
Here are some of the points which the marketers could utilize for marketing their products in rural areas:-
1. Huge untapped Potential – As more than 70% of the total India„s population dwells in rural areas, the huge population itself speaks of its potential. The rural market offers a great chance for different branded goods as well as services for large number of customers. Penetration levels for many products are low in rural areas. The market has been growing at 3-4% per annum adding more than one million new consumers every year.
2. Impact of globalization - Globalization had a great impact on target groups like farmers, youth and women. Farmers, today 'keep in touch' with the latest information and maximize both ends. On youth its impact is on knowledge and information and while on women it still depends on the socio-economic aspect. The marketers who understand the rural consumer and fine tune their strategy are sure to reap benefits.
3. Effectiveness of communication - An important tool to reach out to the rural audience is through effective communication. The rural audience has matured enough to understand the communication developed for the urban markets, especially with reference to FMCG products.
Television has been a major effective communication system for rural mass and, as a result, companies should identify themselves with their advertisements.
4. Rising rural prosperity and purchasing power - The agricultural development programs of the government have helped to increase income in the agricultural sector.
These in turn have created greater purchasing power in rural markets.
Moreover, today rural incomes generate notonly from agricultural section but also from other sections.
There is a sizeable salaried class in rural areas. Rural demand in FMCG products, consumer durables,
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8 automobile and retail is growing at a faster pace than anticipated due to rise in its consumption patterns.
2.5 Development of Indian Rural Markets
Marketing is the pivot of economic development in rural areas. It is a vital component in income and employment generation in farm and non-farm sectors.
Rural marketing in India is often perceived as agricultural marketing and not more. However, rural marketing determines the carrying out of business activities bringing in the flow of goods from urban sectors to the rural regions of the country as well as the marketing of various products manufactured by the agricultural non-agricultural workers from rural to urban areas.With over 1.2 billion people in India, a majority of who stay in the rural areas it just goes to show the potential the rural market possesses and the need for marketing to rural folk.
In the rural areas, due to little or no western influence, way of life there is a very traditional. It is a simple life that the
‗aam-aadmi„or the common man leads.
They are very careful about where they spend their money and use it wisely. They are generally very content and satisfied with what they have. The markets in India have been fully developed since ancient times. But our study is restricted only to the study of development of rural markets that has taken place in the new millennium. Still it would not be fair to mention a brief analysis of the developments of Indian markets.
2.6 Profile of Typical Indian Rural Customer
Rural consumers are fundamentally different from their urban counterparts.
The lower levels of literacy and limited exposure to product and services are well- known, but there are also differences in occupation options, with a direct impact on income levels and income flows, and a high level of inter-dependency affecting the dynamics of rural community behavior. All contribute to make rural consumer behavior starkly distinct from the urban.
India is full of diverse and varied profile of customers, each being different in his buying habits from another. Each of these diverse sections of rural India is
embedded in its customs and traditions, which in turn have a deep impact on the minds of the people. Every aspect of their lives from birth, to education, to marriage, to livelihood is influenced by the deeply imbedded traditions, especially in rural areas of India. Even the level of infrastructure provided in different regions varies a lot. The diversity in terrain adds to the already varied lifestyle and livelihood of people there. Therefore no marketer can follow a uniform marketing strategy throughout India.
Indian rural customer is marred largely by illiteracy and poverty.
2.7 State of Maharashtra
Maharashtra state occupies the western and central part of India and has a long coastline, stretching nearly 720 kilometers along the Arabian Sea.
Maharashtra is the second largest state in India both in terms of population and geographical area (3.08 lakh sq. km.). The State has a population of 11.24 crore (Census 2011) which is 9.3 per cent of the total population of India. The State is highly urbanized with 45.2 percent people residing in urban areas and the rest 54.8 percent in rural parts.The State has 35 districts which are divided into six revenue division viz. Konkan, Pune, Nashik, Aurangabad, Amravati and Nagpur for administrative purposes. The State has a long tradition of having statutory bodies for planning at the district level. For local self-governance in rural areas, there are 33 ZillaParishads, 351 PanchayatSamitis and 27,906 Gram Panchayats. The urban areas are governed through 26 Municipal Corporations, 219 Municipal Councils, 7 Nagar Panchayats and 7 Cantonment Boards.
3 CONCLUSIONS OF THE STUDY
The rationale behind choosing the topic - Study of Rural Marketing Strategies of Consumer Durables in New Millennium with reference to Pune area - for study is that there has been little research done to study the various aspects of rural marketing for Pune area. Hence to critically asses the numerous rural marketing techniques used by the companies, the research work in this field is being undertaken. The present research
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9 is also undertaken to get insights in rural marketing strategies.
The rural consumer of Maharashtra is not much aware about the presence of various brands of consumer durable Solar Products. Moreover, they do not posses all consumer durable Solar Products as compared to their urban counterparts. Not only this, the demand for such Solar Products in rural areas is seasonal one and the consumers are reluctant to switch brands. The retailers on their part promote local made Solar Products because of good margin and also due to the lack of proper support from reputed consumer durable companies.
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