Rice husk-based electricity generation and supply has been popularized in South Asia by the Husk Power Systems (HPS) and the Decentralised Energy Systems India (DESI), two enterprises that have successfully provided electricity access using this resource. The purpose of this paper is to analyze the conditions under which a small-scale rural power supply business becomes viable and to explore whether larger plants can be used to electrify a cluster of villages. Based on the financial analysis of alternative supply options considering residential and productive demands for electricity under different scenarios, the paper shows that serving low electricity consuming customers alone leads to part capacity utilization of the electricity generation plant and results in a high cost of supply. Higher electricity use improves the financial viability but such consumption behaviour benefits high consuming customers greatly. The integration of rice mill demand, particularly during the off-peak period, with a predominant residential peak demand system improves the viability and brings the levelised cost of supply down. Finally, larger plants bring down the cost significantly to offer a competitive supply. But the higher investment need and the risks related to monopoly supply of husk from the rice mill, organizational challenges of managing a larger distribution area and the risk of plant failure can adversely affect the investor interest. Moreover, the regulatory uncertainties and the potential for grid extension can hinder business activities in this area. (C) 2014 The Author. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/3.0/).