Turbocharging rural entrepreneurship through distributed renewable energy

A robust distributed renewable energy ecosystem with a strong domestic industry will help provide good-quality, reliable electricity to rural households and enterprises and thus turbocharge green entrepreneurship—paving the way for a self-reliant India.

OCTOBER 20, 2021 JAIDEEP MUKHERJI, CHIEF EXECUTIVE OFFICER, SMART POWER INDIA

India has one of the largest populations of young working citizens in the world and stands at the precipice of an era of economic growth. The government is looking to capitalize on this opportunity with a host of ambitious economic policies. Policies like Aatmanirbhar Bharat (self-reliant India) and the 2030 target for reaching 450 GW of renewable energy capacity are intended to turbocharge the Indian growth story and lift millions more Indians out of poverty.

The success of the government’s plans will be contingent on a confluence of complex factors and will require contributions from different areas and sectors. One such area is rural electrification where the private sector can help build distributed renewable energy (DRE) capacity in rural areas and unlock the productivity of large sections of the country. 

Unleashing the giant

Rural India, the host to around 70% of Indians, contributes around 46% to India’s GDP. Enhancing non-farm economic activity would unlock the potential of this demographic to contribute to India’s growth. 

Last year, a report from the McKinsey Global Institute, titled ‘India’s Turning Point,’ projected that 90 million workers are expected to join non-farm jobs in rural India by 2030 and increase the contributions of this vital sector.

Currently, micro, small and medium enterprises (MSME) account for around 30% of India’s GDP, and 51% of MSMEs are in rural areas. Regardless of the exact distribution of contributions of rural and urban MSMEs, it is undeniable that rural MSMEs have a bearing on India’s GDP, and improving their productivity would accelerate India’s growth. 

The rural bottleneck

One significant constraint on the performance of rural MSMEs is the poor quality of electricity. Though the government electrified 100% of villages a couple of years ago, there are still multiple shortcomings with the state of rural electricity—reliability, quality, and last-mile access are still critical issues. 50% of households experience 8 hours of power cuts a day and agricultural users only receive 7-8 hours of supply in most states. This limited supply is often of little utility to MSMEs as it is provided outside of business hours, and is still frequently interrupted and unreliable. 

As a result, almost 50% of rural enterprises use comparatively more expensive non-grid electricity supply options like diesel-operated generators. They are forced to lower their margins and purchase these increasingly expensive energy sources as it is the only way to maintain a continuous cash flow and run a viable business. 

Providing good quality and reliable electricity would thus increase the productivity of these enterprises not only by reducing overheads but also by giving entrepreneurs the confidence to scale capital.

Rectifying the situation is impossible without first examining why rural electrification is so poor in the first place. The first place to look is one of the vital cogs of the Indian electricity system: state-owned electricity distribution companies (discoms). 

Discoms have historically been plagued by ill health and are often regarded as the weakest link in the electricity value chain. They face a host of issues ranging from low collection rates (often from government departments) and high power purchase costs to inadequate tariffs and poor subsidy disbursement. The biggest factor is cost: there is often a gap between the average cost of supply for electricity (ACS) and the price at which it is distributed (ARR, or average realizable revenue). This ACS-ARR gap is a critical constraint disincentivizing discoms from catering to rural areas.

Distributed renewable energy: the path forward

So what then is the solution? One thing is clear – the worsening effects of climate change mean that any proposal must incorporate renewable energy. One possible option is distributed renewable energy (DRE) sources like rooftop solar panels, micro or mini-grids, and rechargeable batteries. 

DRE has shown promise in securing sustainable and equitable energy access. Solar photovoltaic technology, a popular DRE technology, can reduce costs for businesses in rural India by as much as 80% by replacing existing diesel-run systems which are increasingly expensive. 

DRE can be used as an alternative in areas where the electricity from the grid is not easily available, and in a supplementary role in other areas, covering interruptions from poor quality connections. It is this ability to provide energy security that makes DRE such an attractive option; one 50 kW off-grid system typically offers basic lighting, mobile phone charging, and television to around 500 households. This would enable rural customers to enjoy continuous electricity, especially during peak hours. 

Studies have shown that access to electricity from these mini-grids can increase income and the number of new business opportunities by powering applications like local ‘atta chakki’ (wheat flour mills), rice hulling machines, power looms, sewing machines, pottery wheels, and solar dryers/chillers to name just a few.

The role of the private sector

Unfortunately, DRE adoption has been lagging significantly – the total installed capacity of renewable energy in India currently stands at around 93 GW, of which only 5% is DRE. DRE thus accounts for only 1% of India’s total installed electricity capacity. COVID-19 has only made the situation worse as supply chains were halted and the market for DRE projects shrunk due to the pandemic-caused economic slowdown.

If permitted by regulations, the private sector would help address some of these issues with the DRE sector. Though regulations allowing private players to enter the power sector are slowly being relaxed, electricity distribution remains in the hands of discoms in most states. 

A public-private partnership (PPP) model of power distribution can be a win-win situation for everyone involved. With the necessary regulations and systems in place, a PPP model will create a market-oriented framework to expand DRE that will provide better access to finance and drive improvements in the quality of rural electricity.

This would not only improve the quality of rural electricity but also provide a host of jobs and boost economic activity. Take the recent entry of TP Microgrids, a major global provider of microgrids, into the Indian market. TP Microgrids announced their plan to invest $1 billion by 2026 in India to install up to 10,000 mini-grids providing clean electricity to 5 million households. They commissioned their first 100 microgrids in only 10 months and are aiming to commission the second 100 in less than 4 months.

TP Microgrids’ India investment is projected to support over 100,000 rural enterprises, create 10,000 green jobs, and deliver irrigation to 400,000 farmers. 

Investments in DRE are likely to witness increased returns in the future: solar irrigation alone is estimated to be a US $60 billion opportunity in the near future.

The possibilities

There are tremendous opportunities for entrepreneurs to expand and strengthen rural electrification through DRE. Renewables are the fastest-growing segment in the energy sector and, with the right government support, the Indian renewable energy industry could help drive India’s trajectory in the 21st century. 

Measures like the recently announced production-linked incentive schemes for advanced chemistry batteries are a good start. These measures will be a win-win for governments as they will have the added benefits of boosting local economies with jobs and revenue on top of the knock-on effects they will have on MSMEs. 

Any push for DREs must be accompanied by measures that make people aware of the potential benefits of DRE products and after-sales services. A robust DRE ecosystem with a strong domestic industry will help provide good quality, reliable electricity to rural households and enterprises. This would encourage the inclusive development of communities as well as turbocharge green entrepreneurship and green jobs, paving the way for a self-reliant or Atmanirbhar India.

Powering rural micro-entrepreneurship with reliable energy access

June 4, 2021, 10:07 PM IST Jaideep Mukherjee and Nidhi Sarin in VoicesIndia, TOI

Off-grid clean energy access has vast potential to create a flourishing microcosm for sustainable development in India. For a country with 70 percent of its population living in rural areas, Micro-Entrepreneurship Development (MED) will essentially help it realise its full economic potential.

What’s encouraging is that the unserved rural areas have taken a leap of faith in off-grid energy solutions. Awareness about solar lanterns, solar home systems, and decentralised renewable energy is rising in regions that face economic challenges due to disruption in access to grid electricity. The additional benefit is that the off-grid power has a shorter cycle time to set up accessibility and recover the cost. Non-grid electricity is also considered flexible and resilient as it can offer seamless quality power to consumers as per their evolving energy requirement in the catchment area.

The focus on micro-entrepreneurship development will positively impact local communities and result in livelihood creation and sustainable economic development. More than half of the population lacking reliable energy access lives in Uttar Pradesh, Bihar, Odisha, West Bengal, and Madhya Pradesh. The direct corollary of micro-entrepreneurship development will be an expansion of distributed energy resources, simultaneously contributing to meeting the country’s renewable energy target of 175 GW by 2022 and 450 GW by 2030.

According to the 73rd round of the National Sample Survey (NSS), there are 3.2 crore micro-entrepreneurs in rural India. However, lack of infrastructure and financial support is seen as a hindrance to their robust development. Reliable energy access encourages micro-enterprises to opt for off-grid resources like micro or mini-grids. Despite the higher cost of electricity vis-a-vis centralised grid electricity, these micro-entrepreneurs choose service reliability and customer satisfaction over the perception of affordability.

Last year, a study that involved 10,000 rural households and 2,000 rural enterprises across Bihar, Uttar Pradesh, Odisha, and Rajasthan, highlighted that over 80 per cent of mini-grid users expressed satisfaction with their connections despite citing affordability challenges.

All about rural entrepreneurship

Rural entrepreneurship in the past only referred to agriculture-related activities. Despite the reliable and quality energy access through non-grid resources, the definition of rural micro-enterprises largely remained limited to the retail trade. Although, around two-third of the non-farm enterprises in rural areas still engage in retail trade in grocery, hardware, food or other fast-moving consumer goods. Micro-entrepreneurship in production and manufacturing activities, or service-based or skill-based enterprises has started taking root. Occupations like tailoring, personal beauty care services, blacksmithing, pottery, weaving, carpentry, mobile repairs, cybercafés etc. have started growing.

In a nation with agriculture as the dominant source of livelihood, solar pumps, flour mills, dairy, warehouses, and cold storage etc can be income-generating vocations.

Low demand for off-grid electricity

It has been observed that while the awareness on sourcing of green electricity from non-grid sources is rising, the overall demand for electricity remains low. A significant number of enterprises engaging in activities such as repair services and tailoring choose to remain outside the grid. Despite the proximity to the centralised grid, they remain unserved due to economic constraints. Such enterprises continue to operate at a very small scale and rely on kerosene or solar lanterns.

Tapping latent demand for electricity in rural India

Some businesses, who choose to stay outside the periphery of energy access, meet their energy demand through fossil fuels like diesel and kerosene. In situations when subsidised fuel is unavailable to meet lighting needs or power high wattage motor loads, such enterprises willingly switch over to cleaner electricity sources. Energy service companies need to generate awareness about the benefits of medium to high-power appliances, or weave in affordability, efficiency and convenience factors in customer service and make electricity attractive to consumers and tap the latent demand.

As long as there is continuous innovation there cannot be a dearth of creative solutions to beat the challenges in energy access and tapping the latent demand. Creating integrated energy systems with private sector micro or mini-grids and public sector grid or setting up micro-franchisees can resolve the issue of quality and access and benefit millions in rural areas. One such example is the model distribution zone that Smart Power India set up in association with the Odisha public utility in 2020. The model demonstrated how micro-franchisees can go a long way in creating reliable energy access and improving customer service.

Scaling up sustainable energy solutions

Innovation needs to take centre stage not just in the deployment of energy access but lending scale and size to it. For example, Melinda Foundation, a non-governmental organisation (NGO), has shown how off-grid electricity can not only turn the tide around in energy poverty but result in overall community development. The NGO runs 49 mini-grids and electrifies 50 villages in Jharkhand. As of 2020, it has recorded a 23 per cent increase in household incomes, a 7.3 per cent rise in GDP per capita, and a 28 per cent increase in village enterprise revenue since the deployment of its projects in the region in 2018. GIZ India is also implementing the Indo-German Energy Programme (IGEN) in partnership with local Indian partners and focusing on sustainable and inclusive development solutions that meet local needs.

The immense potential of off-grid solar has even warmed up private capital owners and corporates to the idea of investing in decentralised renewable energy (DRE) projects in rural areas and encouraging entrepreneurship. The partnership between Tata Power and Rockefeller Foundation plans to install 10,000 microgrids by 2026. The ambitious project aims to support 100,000 rural enterprises, create 10,000 and support the irrigation needs of 400,000 farmers.

The symbiotic relationship between energy service companies and enterprises

Off-grid solar players have innovated business models to drive energy demand by handholding and enabling local enterprises to scale up. The business model encourages trust-building between enterprises and energy service companies by understanding their energy needs, and offering reliable solutions for business growth.

As local business owners achieve scale in operations, it results in greater energy demand and increased economic activity in the area. The mentoring by off-grid solar companies helps in modernising and expanding operations by enabling marketing linkages, entrepreneurial skills training. They can even help in accessing credit to adopt advanced technology and shift from manual operations to the motor-run tool or retrofit fossil-fuel run appliances with energy-efficient green appliances.

The mentoring results in many benefits for enterprises such as an uptick in productivity by as much as 50 per cent, expansion in business and rise in household income, and even more, livelihood options for the local community. Then energy companies also reap benefits in terms of securing increased and stable demand for their power.

The need to push microenterprise development in rural India will become a key role in helping the economy recover from the pandemic led economic crisis. The awareness about reliable energy access among rural enterprises and their relationship of trust with off-grid energy service companies need a greater push like never before.

To Improve State of Education in Rural India, Let’s First Provide Reliable Access to Electricity

A device as simple as ceiling fan that provides ventilation on hot days can be the make-or-break decision that keeps a recalcitrant student in school.

AUGUST 28, 2021, 13:14 IST

It is no secret that Indian education is in need of reforms, particularly from an infrastructural standpoint. Many schools run out of dilapidated and inaccessible buildings with rooms that are often too small for class sizes. One limitation that affects students, especially in rural areas, is the lack of access to reliable electricity. And, its ramifications on education are tremendous. Lack of electricity can affect multiple educational parameters, such as attendance, dropout rates and learning outcomes. Electrification efforts thus have the capacity to transform the state of rural education.

The availability of electricity has always been an issue in rural areas. While the government recently reached its target of 100 per cent electrification of villages, this does not paint the full picture. First, the criteria for ‘electrification’ do not cover the extent to which households in any given village have access to electricity. More importantly, the 100 per cent figure does not describe the quality or reliability of the electricity being provided—50 per cent of rural households experience 8 hours of power cuts a day.

EDUCATION AND ELECTRIFICATION

This lack of access to affordable, reliable and high-quality energy in rural areas directly affects education in a variety of ways. Access to electricity means that teachers and students can utilise technology. This does not mean only computers; a device as simple as ceiling fan that provides ventilation on hot days can be the make-or-break decision that keeps a recalcitrant student in school.

Outside the classroom, electricity can extend the studying time of students. Electricity and electrical appliances can also ensure certain household activities are done quickly, which can provide students more time to study. Electrification has other advantages too—it can encourage women and young girls to step out with more confidence, through enabling security measures like street lighting and CCTV cameras. Overall, the cumulative benefits of electricity access tend to spill over into education—after all, a healthy and stress-free child makes for a better and more engaged student.

Further, COVID-19 pandemic has re-emphasised the importance of access to electricity. Due to lockdowns, schools were forced to pivot to remote learning models, which are entirely contingent on access to electricity. Many students, or for that matter, households do not even have access to a digital device and even if they do, it is often a single device shared by multiple people. In such circumstances, it is difficult for students to continue their education, even with access to electricity. Without it, the situation only becomes that much more difficult. This is without getting into the exponential impact seen when teachers do not have access to electricity.

THE PATH FORWARD

However, the situation is not just doom and gloom— there is light around the corner. The Indian government has prioritised building India’s energy capacity as a national goal with a special emphasis on renewable energy. By targeting all stages of electrification, from generation to transmission to distribution, it will be possible to improve access and quality in rural areas as well.

The first priority should be improving the health of state-owned distribution companies (discoms). They act as the final point of delivery for electricity distribution and will be pivotal in serving rural areas. Unfortunately, many of them have been chronically mismanaged for decades and have poor standards of operation and low rates of revenue collection. As such, many of them do not have the health or incentive to service rural areas—fixing discoms would thus benefit rural areas without the complicated task of installing new technologies.

However, new technologies are the future of the energy sector. The doomsday clock is ticking as effects of climate change grow more pronounced each year. Although exact timelines are unclear, it is obvious to most people that usage of fossil fuels has to be replaced with renewables. One application of renewable energy that will be pivotal to rural electrification is Decentralised Renewable Energy (DRE).

DRE technologies like rooftop solar panels, micro- or mini-grids and rechargeable batteries are the ideal solutions to fill the gap. DRE can provide electricity to households that are not even connected to the grid, and could thus serve extremely remote areas that may not be financially viable for discoms. In those areas where electricity is available but power cuts are frequent, it can fill the gap during power cuts.

Just to be clear, electrification will be no panacea for rural education and needs to be accompanied by other measures, like increasing the capacity of schools and improving the quality of teaching. However, it is undeniable that electrification is a necessary foundation for these efforts to take shape, especially when e-learning and blended learning models of teaching are becoming popular. It is vital that this foundation be laid out while India’s population is still young and growing. If achieved, it has the potential to help transform the country. It also certainly doesn’t hurt that electrification can transform other areas like healthcare, industrial performance and work productivity.

Why reliable electricity is key to revitalise pandemic-hit MSMEs and boost Indian economy

As the MSME sector accounts for around 30 percent of India’s GDP, the provision of clean and uninterrupted electricity will provide a huge fillip to micro-entrepreneurs in rural areas

Jaideep MukherjeeJuly 01, 2021 14:51:53 IST

Micro-entrepreneurship has historically been one of the big drivers of economic growth in India in the last five decades. As the country reels from the devastating impact of COVID-19 , from both a public health and economic perspective, all possible measures need to be taken to support this vital sector. Not only will it be critical to India’s economic revival, but the sector also employs millions of people, many of whom would have faced the brunt end of the pandemic.

The provision of reliable electricity has the potential to be a gamechanger for micro-entrepreneurs as the savings and guarantees it brings to cash flows can allow for horizontal and vertical expansion. The provision of clean energy, especially solar energy, is one way to ensure this and would provide a huge fillip to micro-entrepreneurs in rural areas.

It is hard to overstate the importance of micro, small and medium enterprises (MSME) to the growth of India’s economy. The MSME sector accounts for around 30 percent of India’s GDP. According to the 73rd Round of the National Sample Survey in 2015-16, there were as many as 633.88 lakh unincorporated, non-agricultural MSMEs engaged in a variety of activities employing a total of 1,109.89 lakh people.

The MSME sector is also dominated by micro-entrepreneurs — as many as 99 percent of MSMEs were micro-enterprises (630.52 lakh). It is important to recognise that these numbers don’t recognise any MSMEs registered under Indian statutes like the Factories Act, 1948 or the Companies Act (1956 or 2013).

The rural-urban split is fairly equal — 51 percent vs 49 percent respectively — so for the sake of simplicity, it could be argued that any measure targeting rural micro-entrepreneurs has a bearing on 15 percent of India’s GDP. And one significant bearing on operating costs and overall productivity for rural micro-entrepreneurs is electricity. Though India has achieved nearly 100 percent electrification of villages, reliability, quality, and last-mile access remain critical issues. These constraints significantly hamper micro-entrepreneurs who often have to rely on diesel generators to maintain continuous operations, despite the increasing costs of fuel.

Providing clean and reliable energy allows micro-entrepreneurs to first and foremost save on the expensive operating costs of diesel generators. Then, more importantly, the guarantee provided by reliable energy allows them to increase the scale of their operations or expand into other businesses without having to navigate the uncertainties and increases unreliable electricity has on their cash flows. This will be of vital importance to policy goals like Vocal for Local, Make In India and Aatmanirbhar Bharat.

However, in order for this to happen, we need to move towards a more equitable and inclusive definition of energy access. India only achieved its goal of 100 percent electrification of villages because the villages meet the ‘electrification’ criteria if power cables from the grid reach a transformer in the village and supply 10 percent of households as well as schools and health centres. This definition leaves 90 percent or nearly 31 million households without access to electricity and does not materially affect the lives of most villagers. Only 7 percent of villages have 100 percent electrification of all households.

Energy access needs to be thought of in more inclusive terms so that policy measures have a bearing on ground realities. The recent Saubhagya scheme which aims for 100 percent electrification of households is a positive step. But again, the scheme relies on households willing to pay a metered bill for electricity, which is unlikely to prove attractive to many. Furthermore, the scheme only covers households and does not address MSMEs whose electricity requirements drastically differ from households. The only way that true and meaningful change is achieved on this front is if different government departments from the Ministries of Power and MSMEs coordinate to provide a consolidated mechanism to buttress rural electrification efforts for micro-entrepreneurs.

Clean energy will be one of the easiest ways to scale electrification efforts in rural areas. Whether it be through decentralised solutions like solar micro-grids or more centralised options, renewables are the fastest-growing sector in the energy sector. The government will need to support investment in renewables, through measures like the recently announced production-linked incentive scheme for battery manufacturing as well as subsidise rollouts in rural areas. A push towards capacity building will be vital in ensuring that clean and sustainable energy can reach even remote communities. These measures will be a win-win for governments as they will have the added benefits of boosting local economies with jobs and revenue on top of the knock-on effects they will have on MSMEs.

It is also important to recognise the devastating impact COVID-19 has had on MSMEs both rural and urban. The cash crunch resulting from multiple lockdowns has caused many of them to struggle, and it will be vital that the entire ecosystem around micro-entrepreneurs from government departments, banks, micro-finance institutions and the National Rural Livelihood Mission rallies around micro-entrepreneurs to help them through this time. Aside from providing credit, the provision of reliable electricity will go a long way in revitalising this crucial segment of the Indian economy and will help kickstart India’s economic revival as we, and the rest of the world, slowly emerge from the pandemic.

Mini-grids led water treatment units can add up to $600 million annually to the Indian economy

Establishing water treatment units ensures good health and increased contribution to the economy by the rural community and also opens avenues for sustainable livelihood options

ETEnergyWorld July 30, 2021, 20:30 IS

New Delhi: Water Treatment Units (WTUs) that run on electricity from mini-grids can mitigate losses up to $600 million annually and prevent around 2,400 deaths every year caused by drinking contaminated water, Smart Power India (SPI), a subsidiary of Rockefeller Foundation, said in a statement.

SPI provides electricity to rural India primarily through mini-grids and said it has been working with Energy Service Companies for six years in UP, Bihar and Jharkhand to ensure rural communities receive potable water for consumption.

“Water Treatment Units that run on electricity from mini-grids are beneficial to mini-grid developers as they prove to be a considerable load on the grid, with an average monthly energy consumption of 14 per cent of the total mini-grid load, “Jaideep Mukherjee, CEO, SPI said.

Mini grids as an important accelerator for the sustainable development

The energy sector in India is at a pivotal stage, as we stand at the cusp of our sustainable development goal (SGD) deadline. Most parts of India now have access to electricity, the quality and uptake is still suspect. India’s significant achievement of electrifying near 100% households due to the concerted efforts of the government through the Saubhagya Programme has been widely acknowledged. This transition in the past 5 to 7 years has been phenomenal. Every home is now connected to the grid – a milestone that seemed impossible to achieve even a decade ago – where load shedding was common because of inadequate capacity. Moreover, India’s generation capacity is in surplus with an uptake of 55-60 percent annually with significant growth in renewables.

The consumption paradox

Despite surplus generation capacity available and omnipresent grid infrastructure, India’s per capita consumption is only 1/3rd of the global average, a largely acknowledged indicator for economic progress. India’s rural per capita consumption is even lower at 1/10th of the world average. To add perspective, India’s per capita power consumption was 1181 kWh as against the world average at 3,260 kWh. Large chunks of the rural community, especially micro-enterprises, are yet to be reliably serviced by the grid leading to high consumption of diesel and the resulting adverse impact. For instance, 40% of rural C&I customers in low-income states are not connected to the grid. These include UP, Bihar, Jharkhand, who account for 35% of India’s population and rely heavily on diesel as the primary source.  The rest 60% that are connected, have inadequate access 

  • 80% have Tier 1 access (<12 hours of supply, <2kw connected load) and rely on diesel as back-up
  • Only 10% have adequate supply and do not rely on diesel (>18 hours supply with 5Kw+)

Mini-grids offer a viable source of energy, one that is reliable, cost-effective and clean.

How can we resolve this paradox?

Reliable Access to electricity through mini-grids and decentralised renewable energy 

Mini-grids,[1] by virtue of the services they provide, ensure progress towards achieving SDG7, that is, ensuring access to affordable, reliable, sustainable and modern energy. Furthermore, mini-grids act as a means to address SDG13 – taking urgent action to combat climate change and its impacts – as they draw electricity from renewable energy sources as well as SDG8 – promoting inclusive and sustainable economic growth, employment and decent work for all – as electricity access unlocks latent economic potential and livelihoods, and simultaneously enables aspirations for an improved standard of living.

The impact of mini grids can be analysed on the basis of three key aspects.

1.  Energy Access

Despite achieving 100% electrification of households, rural areas continue to struggle with poor quality of electricity services. Significant portions of rural communities, which comprise enterprises and businesses are yet to be serviced with reliable power from the grid and still rely heavily on diesel. Mini-grids offer huge potential to electrify remote rural communities as they provide the most cost effective and reliable option for electricity access, when compared to installing long-distance transmission lines from a central electricity grid, specifically to serve remote rural communities.[2] 

Mini-grid operators in India have gained credibility as a more reliable source of electricity than the government grid[1]. A survey conducted by SPI and Initiative for Sustainable Energy Policy (ISEP) showed that more than 80% [2] of mini-grid users were satisfied or very satisfied with services provided to them, suggesting that mini-grids provide higher customer satisfaction through high-quality and reliable electricity service.

2. Economic Development

Mini-grids lead to improvement of livelihoods in rural communities through emphasis on productive uses of electricity and overall well-being of rural communities, including augmentation of income levels, generation of business opportunities, improvements in health, education and safety standards. Demand generation framework based on a ‘5S’ model has been helpful for practitioners in selecting a micro-enterprise that ensures the sustainability of a solar mini-grid. This ‘5S’ model checks the viability of a micro-enterprise based on (i) site identification and new demand potential, (ii) scalability potential, (iii) support required for managing these micro-enterprise loads, (iv) sustainability and (v)selection of micro-enterprise in alignment with the mini-grid developer’s objectives.

It has been observed that there is a US$ 18.50 per capita increase in the village GDP, a significant measure of economic progress and social benefits for the rural communities. Households in mini-grid villages have increased their power consumption by 25% and micro-enterprises by 460%, primarily due to the reliability factor. This is beneficial to the community as it has been widely accepted that poverty reduction cannot be achieved without an increase in electricity consumption.

3. Energy Transition – Reducing the carbon footprint

Decentralized renewable energies (DRE) offer an affordable, reliable and sustainable solution as evidenced by a report. As per the report, not only are decentralized renewable energy solutions cheaper, they also mitigate climate change, create more local jobs and income generating opportunities for rural populations and enable communities to adapt to climate change effects more efficiently. Mini-grids have the potential to reliably serve small enterprises in rural areas that rely heavily on diesel and kerosene, and do not have access to adequate, high-quality electricity. They reduce emissions by providing microenterprises, the bulk users, with a clean source of energy which is reliable. DRE based mini-grids can replace billions of litres of diesel used by E&I segments in rural areas including MSMEs, agri-processing and irrigation etc. 

In the future, mini-grids can greatly help decarbonize the grid (thermal) through smart grid integration and leverage schemes like KUSUM to decarbonize agri-feeders.

1, 3:46 PM IST Jaideep Mukherji in VoicesIndia, TOI

Beyond access: The future of electricity in India

October 19, 2021, 4:20 PM IST Jaideep Mukherji in VoicesEconomyIndia, TOI

Discussions about electricity in India are frequently dominated by accessibility. This is quite understandable as access to affordable electricity can dramatically improve the quality of life of India’s historically under-served communities. But, at this point, access to electricity is viewed as a basic fundamental right and is a fairly low bar for the success of a country’s energy sector – there are many other important criteria like quality, efficiency, or reliability. India also currently stands at the precipice of a unique moment in history with respect to its energy requirements. 

On the one hand, the worsening effects of climate change require an immediate global response to reduce carbon emissions as the IPCC’s latest report gave humanity a “Code Red”. The only way to reduce emissions is to transition towards renewable energy and green technologies. But, on the other hand, India has ambitious plans for economic development. The window of opportunity for this progress is slowly closing as India’s relatively young population begins to age. 

Any discussion on electricity must ultimately resolve how these two goals can simultaneously be achieved as that will be the key to securing India’s future in the 21st century.

The importance of being electric

It is hard to assess just how important electricity is to humanity today. So many aspects of our lives now depend on electricity like water, sanitation, healthcare, lighting, and education. It is one of the bedrocks on which many developed countries have achieved their success. In today’s world, a lack of electricity is correlated with poor human development indices while access to it can unlock a dramatically higher quality of life. Studies show that access to electricity can lead to better educational and health outcomes, as well as productivity increases. 

The Indian government has made tremendous progress in addressing accessibility as 100% of villages are now electrified. However, the picture warrants a closer examination. There is some debate on the government’s definition of ‘electrified’ and there are still major questions on the quality, affordability, or reliability of the electricity being supplied. Only 66% of households are satisfied with the overall level of service from their state utility providers, while the satisfaction levels for reliability and quality of power are 63% and 55% respectively. This is especially true in rural areas where 50% of households experience 8 hours of power cuts a day and agricultural users only receive 7-8 hours of supply in most states (that too mostly during late hours of the night and with frequent interruptions). 

Electricity is of no use to people who cannot afford it, and reliability is also a huge issue, especially for businesses as it is hard to predict cash flows and manage operations if work is frequently halted by power cuts. Almost 50% of rural enterprises use comparatively more expensive non-grid electricity supply options like diesel fuel to maintain consistency. 

The green convergence  

There is still significant scope for improvement in India’s energy sector whether it is increasing accessibility, quality, or reliability. To achieve these results, it is almost certain that resources will have to be spent on infrastructure and capacity building, amongst other measures. It also happens to be the case that the Indian government has ambitious targets to increase its capacity for renewable energy to 175 gigawatts (GW) by 2022 and 450 GW by 2030. Renewable energy is qualitatively different from electricity generated from fossil fuels and integrating this additional capacity into the grid will also require significant expenditure on infrastructure and capacity building. There is thus a clear convergence of the two goals. Given that there is already a need to improve grid capacity to better serve people, it makes sense to simultaneously optimise the new version of the grid to accommodate renewable energy. 

The number one problem with renewable energy is its intermittence – the sun is not always shining nor the wind blowing. This is drastically different from how electricity is currently generated which is currently on a need basis – power plants try to increase and decrease generation to match peak and low loads respectively. The problem with renewable energy is that period of peak generation do not coincide with periods of peak load – solar panels generate electricity during the day but peak loads are at night. 

There are two major solutions to this issue. The first is to install batteries so that renewable electricity is generated at optimum times and stored to cater to demand that will only spike later. The other is through grid reforms by allowing electricity to be shared between disparate areas and giving the system greater resilience and flexibility. 

An opportunity for equitable progress

Electricity is a driver of progress, but this is equally true of electricity sector reforms. Adapting electrical grids to renewable energy, and improving the quality, affordability, and reliability of the electricity being provided will both require significant investments that will provide jobs to thousands of Indians. Moreover, much of the technology involved is still in its early stages so there is significant scope for Indian companies to invest in R&D and become globally competitive. This research is vital to the growth of green industries as it makes these technologies safer as well as more cost-effective and efficient. 

Take smart meters, advancements in the communication ability of electronic electricity meters have enabled features like bidirectional communication and integrated load limiting switches. With enough smart meters providing sensory inputs and controls, the grid itself can become smart. Artificial intelligence algorithms can optimise the management of the grid to a level that is unmatched by humans, and the advent of 5G would enable micro-changes to occur in real-time. A smart grid enables discoms to increase their efficiency, effectiveness and promptness, all while giving consumers greater agency and control.

It is at this stage that we must go back to the first principles and prioritise access. We must seize this opportunity to drive India’s economic growth by investing in green energy. This is the only way that the country can transition into the 21st century and continue to grow economically. But progress for progress’ sake benefits no one – energy-driven investments must keep accessibility and inclusivity as top priorities both in the provision of electricity and any subsequent reforms. From a more pragmatic perspective, increasing accessibility will increase demand that will, at some point, drive subsequent reforms. But, looking at it holistically, the only reason that we strive for economic growth in the first place is to improve the quality of life for all Indians. Looking forward, the Indian energy sector must move beyond accessibility to make sure that the country is equipped for the rest of the century but keeps it as a guiding light in all subsequent efforts.