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.
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.
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.
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.
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.
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.
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, 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.
Mini-grid operators in India have gained credibility as a more reliable source of electricity than the government grid. A survey conducted by SPI and Initiative for Sustainable Energy Policy (ISEP) showed that more than 80%  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.
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.
A group of private companies is pioneering a new approach to powering the agricultural industry in rural India that could significantly increase productivity of small-holder farmers, by combining mobile and stationary solar-powered mini-grids and linking them to a range of agricultural services, beginning with irrigation. Claro Energy is at the center of the new initiative, piloting an “irrigation-as-a-service” business model in Bihar state that is already being used by dozens of farmers, according to the company’s head of Institutional Business, Sonal Adlakha. Claro, in collaboration with Smart Power India (SPI), an initiative established by The Rockefeller Foundation, is also working with private utilities at about 10 mini-grid sites, including Husk Power Systems and other SPI partner developers, and is experimenting with how irrigation can serve as an “anchor load” for existing or new mini-grids.
Many of India’s small-holder farmers grow crops on less than an acre of land, often on plots that are not connected to one another. In addition, they have traditionally rented expensive diesel pumps for their irrigation needs, reducing profitability and productivity.
Irrigation is just the start for Claro, which has installed or maintains over 8,000 systems in India. The new model is focused on powering a wide range of income-generating uses of electricity in agriculture, such as cold storage, honey processing, milk chilling, oil expelling, rice hulling, water treatment and spice grinding. By delivering reliable, stable power, rural communities can get a much needed boost for micro-enterprises, fostering socio-economic growth in the form of income generation and job creation.
Apart from integrating irrigation and other agro-processing into stationary mini-grids (which have capacity ranging from 17 to 40 kW), Claro has also pioneered a mobile irrigation service, retrofitting e-rickshaws with solar panels that can get to remote villages and provide irrigation on a pay-per-use basis.
Using ‘pay-as-you-go’ RFID cards, cash or micro-finance, the mobile solar trolley is offering affordable, on-demand irrigation without requiring capital investment. In turn, farmers save up to 50% of irrigation costs by displacing diesel, Adlakha said.
“One of the biggest roadblocks to sustainable agriculture in India, especially in the northern belt of India, is poor agriculture yield for farmers. Heavy reliance on diesel for irrigation and small farmer landholding are the primary cause for this,” says Samit Mitra, director, Demand and Innovation, Smart Power India. “This spurred Smart Power India’s Innovation team along with Claro to explore how irrigation can serve as an ‘anchor load’ for mini-grids to provide reliable irrigation to farmers at 30% less cost than diesel-based pumping.”
“It has been a rewarding experience to be able to successfully harness the power from renewable energy-based mini-grids to provide irrigation service to farmers. This has enabled them to increase their irrigation intensity, adopt multi-cropping and substantially drive their income levels. Driven by mini-grids, the irrigation-as-a-service model has the potential to change the irrigation landscape in India,” he adds.
Claro’s IoT and power electronics also allow for remote monitoring of the mini-grids and trolleys, and the company has developed a mobile app allowing farmers to schedule and pay for irrigation from their smartphones. It also provides a toll-free number for farmers for extending continued assistance in booking and using this service.
Besides the new technology and service platform, Claro is also working at the grassroots level to help farmers adopt better practices, and efficiently utilize the electricity generated from solar panels to uncover further opportunities. For example, Claro is advising farmers to incorporate a third crop to their normal rotation of two crops, during previously fallow months. In an emerging economy such as India’s that is largely comprised of rural areas, and heavily dependent on the agricultural sector, such interventions could pave the way to improved livelihoods.
According to a 2017 Bloomberg New Energy Finance report, a total capital expenditure of US$60 billion is required to replace the 20 million currently installed power and diesel irrigation pumps in India with solar. The report also said that annual consumption of diesel by 8 million diesel pumps in India each year was worth US$11 billion.
One of the best ways to bring electric power to millions in the Global South is to invest more in “mini-grids” – small, localized power plants and distribution networks that can cheaply serve remote communities. But for power generation to go small, big changes will be needed.
NAIROBI/NEW DELHI – More than 300 million people in India lack access to electricity, while in Sub-Saharan Africa, twice that many live without power. With population growth forecast to exceed connection rates, “energy poverty” is expected to worsen before it improves. For decades, rural communities in frontier economies have waited in vain for government-supplied electricity to arrive. But today, new technologies – coupled with cheaper solar panels, better batteries, and mobile payment systems – are changing how power is produced and distributed. With so-called “mini-grids” – smaller, localized power utilities – independent producers can electrify remote communities faster and more cheaply than traditional utilities can. The challenge is convincing politicians, financiers, and vested interests of the value in going decentralized. Tackling rural electrification with mini-grids is not a new idea; communities from the United States to Cambodia have long used this approach to weave local infrastructure into regional or national grids. And for energy-starved communities, mini-grids are a potential game changer. According to the International Energy Agency, decentralized solutions such as mini-grids are the most cost-effective option to deliver electricity to more than 70% of the unconnected, provided that projects can attract new sources of capital. With $300 billion in investment and supportive policies, the IEA says, mini-grids could serve 450 million people by 2030.
Commercial mini-grids: To provide electricity access for all by 2030, the International Energy Agency estimates mini-grids will provide power to one-third of the 1.1 billion people without electricity. Powering equipment that can generate income for rural villagers is hailed as one of the most important ways of enhancing rural mini-grid bankability. Rural mini-grid companies today are working with communities to understand what income-generating equipment, called productive uses of electricity, can make viable businesses.
Rural mini-grids offer an opportunity to provide electricity to one-third of the 1.1 billion people currently without access today, based on IEA estimates, and increase overall economic development through income-generating equipment.
A powerful virtuous cycle is created when rural mini-grid developers power equipment that can increase a customer’s income. In an ideal situation, the boost in the customer’s income more than covers the operating cost of the equipment, and the resulting profit allows the customer to afford additional services powered by the mini-grid.
This scenario is more than a rosy-eyed vision. This virtuous cycle is a critical part of the rural mini-grid business model. Benjamin Attia, Solar Analyst at GTM Research who covers energy access markets, explained to pv magazine, “Productive uses of electricity can lower the risk of mini-grid projects by raising revenue, diversifying the loads powered, and boosting overall income in the community which increases repayment.”
However, as Maarten Fonteijn, Business Development Manager of Rafiki Power, a mini-grid company with eight systems in Tanzania, articulated to pv magazine, powering productive-use equipment is not as simple as building the mini-grid and waiting for customers to prosper. “Developing productive uses is one of the main challenges across the sector. Connecting people to the mini-grid and waiting for them to adopt appliances won’t result in a viable business model.”
There can be numerous barriers to the adoption of productive-use equipment. One such challenge is customer’s limited ability to pay for the up-front cost of equipment. Emily Moder, COO of SteamaCo, a mini-grid developer turned technology company, relayed SteamaCo’s differing experiences operating mini-grids across Kenya. “In the wealthiest villages, there was an existing base of appliance ownership. Electricity from the mini-grid reduced the cost of running appliances by a factor of four, and appliance adoption grew very quickly. On the other hand, in poorer villages, it took several years of saving before customers could purchase appliances.” SteamaCo found that financing appliances allowed poorer customers to grow productive energy demand much faster. Today, a growing number of mini-grid companies offer some form of appliance financing to accelerate demand for electricity.
Financing can make appliances and equipment more accessible but financing itself won’t lead to the adoption of equipment. People in rural communities are very risk-averse, and many are hesitant to expand their existing businesses let alone start a new business if the market is unproven. Providing market access for new products or increased production is a critical step for de-risking new business opportunities.
Smart Power India, an organization established by the Rockefeller Foundation that supports the mini-grid industry in India, explained to pv magazine, “The biggest challenge that mini-grid companies face in viably powering productive uses of electricity is the absence of market linkages and efficient rural supply chains. Products produced by the local community also need marketing and branding support to be able to compete in outside markets. Identifying and supporting able rural entrepreneurs and the identification of the right technology are other key challenges.”
To overcome some of these challenges, mini-grid companies are providing business and technical training to microenterprises powered by their mini-grids. In situations where the business challenges are particularly high, some rural mini-grid companies are choosing to take temporary or permanent ownership of the microenterprises.
Vijay Bhaskar, Managing Director for Mlinda, a mini-grid developer operating 13 mini-grids in India, described to pv magazine their approach to fostering microenterprises on their mini-grids, “Mlinda’s involvement varies by the activity. Irrigation pumps are individually owned and require limited technical support. Rice hullers are also owned at a family level but require more business training. Mustard oil expelling, on the other hand, requires larger economies of scale to be viable, so right now, we are doing a large amount of the managerial work in the oil expelling businesses. Across the microenterprises, the villagers do around 10 to 40 percent of the work with Mlinda doing the rest of the work. The goal is to eventually have the enterprises run entirely by the villagers, though right now there is still a need to develop the business model and train villagers in managing the businesses.”
Not all mini-grid companies consider providing microenterprise support a long-term priority. Given the frontier-status of the rural mini-grid market, many mini-grid companies today are providing these support services themselves because few other organizations operate in the villages they serve.
Increasingly, rural mini-grid companies are seeking partnerships with non-governmental organizations and private companies to allow these other organizations to provide the microenterprise support services necessary to promote demand growth.
Fonteijn of Rafiki Power explained, “At this stage, we are still quite strongly involved in supporting the microenterprises on our mini-grids, but over time, we would like to see our partners provide most of these services. We see the development and operation of the mini-grids as our core business. We have had good discussions with organizations in the development space, and they have demonstrated a strong interest in our work. Since we visit our villages frequently and have good connections with village leaders and valuable information on the creditworthiness of our customers, we have a lot to offer potential partners.”
The value that mini-grid companies can provide to other organization was reiterated by Rik Wuts, Co-Founder and Head of Business Development of Powerhive, a technology company turned mini-grid developer in Kenya and Nigeria, “Agricultural trading businesses have expressed a strong interest in partnering with us because the customers they want to reach are already our customers.” Powerhive has partnered with fertilizer companies in pilots to provide productivity-enhancing agricultural inputs like irrigation pumps and fertilizer to their customers.
Attia of GTM Research echoed this sentiment by saying, “Mini-grids can serve as the spearhead of the last-mile development network for many other industries. Mini-grid companies’ presence in these communities gives them an opportunity to become an aggregator and consolidator of the supply chain serving last-mile communities.”
Wuts of Powerhive emphasized the value of their relationship with the customer. “By leveraging our existing customer relationship management (CRM) and billing systems, other companies can more easily reach and interact with our customers.” Through these pilots, Powerhive is increasingly focused on providing services to their customers. “One of our greatest assets is our relationship with our customers. We have spent a lot of time building that trust and it enables us to offer a range of services to the communities which in turn provide them with meaningful ways to improve their quality of life.”
Powerhive has even gone so far as considering letting other companies provide the power for their mini-grid. “We have looked into signing power purchase agreements with other companies so that we can focus solely on our customers. You could call this a capital-light model, though, in this model, we would need to be very careful about the partners we select to power our mini-grids.”
Identifying enterprise opportunities
Even with financing and support services available, there is always a risk that the microenterprises will fail. As Fonteijn of Rafiki Power put it, “It doesn’t do us any good to arrange all of these services if the businesses go bust in a few weeks.”
Identifying microenterprises that can sustainably and consistently generate value is another challenge for fostering productive uses. Eva Lee, Business Development Analyst at Rafiki Power explained to pv magazine, “We have tried to analyze the whole agricultural value chain to identify opportunities for capturing more of the value chain within the local villages.”
Bhaskar of Mlinda described their process for identifying their productive-use enterprises, “Nearly 85% of our mini-grids are in villages that are connected to the government grid, but the grid voltage is too low to power equipment and only provides single-phase power, which means people can’t power equipment from the national grid. We also observed that when the government grid was installed, the distribution lines only ran amongst the houses in the village, but the water sources were around one kilometer from the village. Mlinda built a distribution line to the river to power irrigation pumps and unclogged the government-built pipes that are used to bring water from the river to the fields.”
Wuts of Powerhive divides their productive-use strategy into two categories, “We call the first approach “one-to-many” as the productive uses can be adopted by numerous people in the community. These productive use loads include equipment for breeding chickens, irrigation pumps, and computer tablets with internet connectivity to allow people to complete basic tasks like those on Amazon’s Mechanical Turk. The second approach we call “one-to-one” where only a few appliances can exist in a village given supply chain constraints such as a welder or grain mill.”
Village Infrastructure Angels, a developer of off-grid productive use systems, has collaborated with Project Support Services in Papua New Guinea to develop a range of low-power agricultural equipment from 120 to 1200 watts. These low-power, low-cost machines can make productive-use equipment more attainable for villagers and easier for mini-grid companies to explore and identify new business opportunities.
While in the end, most mini-grid companies are fostering productive uses to demonstrate a viable business model, there is a clear “win-win” quality to the virtuous cycle of productive uses. Through access to productivity-enhancing equipment, villagers can increase and diversify their income, reduce transportation and processing costs, and have more time in the day to devote to other livelihood or leisure activities.
The impact of productive uses can be sometimes hard to imagine. UNICEF, the United Nation’s children organization, estimates that globally women and girls spend 200 million hours (or 22,800 years) each day collecting water. Stewart Craine, Managing Director of Village Infrastructure Angels, described their work with drinking water pumps, “In Vanuatu, we found that water pumps focused primarily on irrigation, but most people wanted pumps for drinking water. There was a hole in the market for low-volume, low-cost pumps, so we found a supplier for such a pump and started deploying pumps for drinking water. Now in the dry season, women don’t have to spend entire days out of their week retrieving water.”
Rafiki Power has also had success with their first drinking water pilot. They reported a doubling of the amount of clean drinking water available to the village after drilling a 180 meter-deep well.
Bhaskar of Mlinda articulated a higher-level description of the effects of their work in rural villages, “As more and more villagers migrate to cities and industrial areas in search of work, we are one of the few forces working against this urbanizing trend by bringing economic opportunities back to rural villages. Capturing more of the value chain in villages provides long-term secure social security and opportunities for people to stay in the places they grew up. This change won’t happen overnight, but we believe in the power of our work and the potential of the people we serve.”
By: Dustin Zubke
The Rockerfeller Foundation has selected Pact, the largest international non-governmental organisation in Myanmar, to establish the Smart Power Myanmar facility in May 2018.
According to the Foundation, Myanmar has one of the lowest electrification rates in Asia, with more than 60% of the population without access to a modern form of electricity, placing constrains on socio-economic development.
The Smart Power facility aims to advance public-private partnerships that significantly accelerate universal rural electrification and improve the lives of all people, including women and ethnic nationalities, by enabling access to productive power that will spur economic development.
The founding Members of the facility—The Rockefeller Foundation, World Bank, USAID, and Yoma Strategic Holdings—will seek to align and coordinate existing and potential future investments in decentralised renewable energy mini-grid systems with the services provided by the Smart Power Myanmar facility.
Specifically, the facility will focus on three priorities:
• project development support and demand (household and productive loads) facilitation for energy service companies (ESCOs) and developers
• investment facilitation and business modeling for last-mile electrification models; and
• policy support and industry coordination.
Underpinning the three priorities will be a powerful data analytics and knowledge function designed to build policy evidence, strengthen the investment case, and better equip developers with world-class capabilities.
“Our work will focus on geographical areas where the private sector, government, and communities have a shared interest in establishing mini-grid projects. It will seek, wherever possible, to advance rural electrification based on integrated plans that identify a clear roadmap for mini-grids and other distribution systems to be rolled out, and in line with the country’s National Electrification Plan,” the Foundation said in a statement.
The Foundation added: “We decided to undertake this work based on the success we’ve experienced in our Smart Power India effort. In India, we’ve incubated several models with private energy service companies to extend electrification through mini-grids that now power more than 120 villages in some of India’s most energy-starved states.
“Fueled by a network of partners, Smart Power India has energised 5,000 enterprises and is transforming the lives of more than 60,000 Indians. And it taught us a valuable lesson in India: People are willing to pay for access to productive, reliable power and their ability to pay is often very reliable. With these lessons and a commitment to bring access to reliable power to millions of poor and vulnerable people, we’ve expanded Smart Power not only to Myanmar but to parts of Sub-Saharan Africa as well.” Read more: Kenya: Developers launch mini-grid innovation lab
In addition to launching the Smart Power initiative in Myanmar, The Rockefeller Foundation’s support for the people of Myanmar is focused on strengthening civil society organizations and governance and facilitating dialogues to promote inclusive development planning and cultural diversity and awareness.
Community managed solar micro-grids have the potential to provide reliable and affordable energy access to remote villages in India
Over one billion people live without access to energy globally, but despite this, the latest World Energy Outlook paints an optimistic picture about the future. Progress towards global universal electrification is accelerating and India’s “colossal achievements” put the country on course to reach universal electrification by 2030.
To date, India’s remarkable progress has been largely driven by the expansion of the central grid, with a rate of electrification that has doubled since the early 2000s.The Indian government has claimed that 100% of villages are now considered electrified as part of the Dindayal Upadhyaya Gram Jyoti Yojana scheme promoted by the Ministry of Power.
Most recently, the Saubhagya scheme aims to extend electricity infrastructure to all households by March 2019. With 46 million rural households still lacking an electricity connection, this will be a challenging task.
Grid connectivity alone cannot be an indicator of development unless usable, affordable and modern supply is ensured. The reliability, quality and duration of the supply from the central grid continues to be a particular problem in the Indian subcontinent, especially in rural areas of the country, which is home to almost 70% of the population. Surveys in some of the most energy poor states highlighted how a large portion of rural electrified households still rely on kerosene lamps as their primary source of illumination, with significant implications on the health and well-being of these communities.
Remote villages are particularly challenging when it comes to provision of reliable and affordable power. By some estimates, the costs of a central grid extension to a remote rural village of around 30 households whose distance from the closest grid line is approximately 5 km could be up to INR 46 (USD 70 cents). This is far higher than the INR 3 (US 4 cent) per unit that an average urban residential consumer pays.
In such remote rural areas, community based solar mini-grids (SMGs) have gained popularity and programmes including Smart Power India promoted by the Rockefeller Foundation plan to install over 1,000 solar grids in rural parts of the country. Sustainability of decentralised energy systems benefit from the active involvement and participation of local communities, as it increases the impact and long term success of installations, empowering rural communities, as they become the owners and managers of the plants.
To better understand the impact of these systems and how they can be successfully replicated and scaled, a recent study looked at 24 community-managed SMG implemented by Gram Oorja, a social enterprise working in Maharashtra, Jharkhand and Karnataka. Gram Oorja works together with local NGOs to install community-based micro-grids for electricity and drinking purposes, involving the local communities at all stages of installation.
Upfront capital costs are provided through donations, whereas recurring operations and maintenance costs are borne by the community. Each household pays a monthly tariff based on metered electricity consumption, collected by a local operator and deposited in a village bank account. The local operator is also in charge of basic troubleshooting of technical issues and a locally elected Village Energy Committee ensures daily operation of the plant, establishing, setting and enforcing rules and penalties.
Ingredients for success
The study provided key insights on the ingredients for long-term sustainability of these systems. Good quality of supply and strong engagement with local communities are both key. The first is achieved through high quality, durable, reliable and affordable power supply. Setting right expectation with the communities on the level of service ensures satisfaction, willingness to pay and system maintenance.
It is also very important that expectations are set up front, and discussed jointly between community members and all other stakeholders. Consultation with the community from the installation phase should be coupled with on-going interaction and capacity building activities to create and strengthen ability to manage systems locally.
Effective institutional capacity at local level doesn’t happen overnight. Local bodies such as the Village Energy Committees are new in these settings and need time to establish and gain legitimacy in the community. The study also revealed that the presence of functioning women’s Self-Help Groups in the village had a marked positive effect, as it leveraged women’s organisational skills, ensuring more rigorous mechanism for money collection and deposits. The systems also provided quantifiable social and environmental benefits in the areas of education, health, safety, well-being, increased time for productive activities, and a less polluted indoor environment.
Barriers and opportunities
Despite these successes, the study also revealed some barriers. Particularly, very low levels of energy consumption and limited engagement in productive and business activities were detected across all sites, even in systems that had been operational for many years.
The evidence that access to reliable electricity does not organically lead to increased productivity and economic engagement is particularly relevant in the current debate that promotes decentralised energy systems as enablers for economic development of rural areas. This result highlights the need for stakeholders and national governments to think of targeted interventions to ensure communities benefit from energy access beyond the purpose of illumination.
The global development agenda set by the Sustainable Development Goals has a comprehensive mandate, looking at the interconnections between energy, livelihood, water, sanitation and gender issues, among others. To achieve these targets, a more comprehensive and holistic approach to development is required, one that goes beyond the mandate of social entrepreneurs to deliver energy solutions to rural communities, establishing approaches where government agencies, the private sector, local NGOs and residents work together to develop integrated strategies for sustainable rural development.
For better policy practice, it is important to start thinking about comprehensive strategies, those that consider the nexus between multiple development issues, particularly water, energy and food, three of the most challenging requirements faced in India’s villages. Such a holistic approach, where clean energy access is integrated in smarter systems assessing multiple needs of the communities, could not only improve the efficiency of energy use but also provide key additional services that contribute to create better environments for sustainable rural living.
In her village of Komalia, the fog swirls so thick at 7 a.m. that Akansha Singh can see no more than 15 meters ahead. But the 20-year-old is already cycling to her workplace, nine kilometers away. Halfway there she stops for two hours at a computer training centre, where she’s learning internet skills. Then she’s off again, and by 10 a.m. reaches the small garment manufacturing plant where she stitches women’s clothing for high-end brands on state-of-the-art electric sewing machines.
Solar energy powers most of her day – the computer training centre and the 25-woman garment factory run on solar mini-grid electricity – and clean power has given her personal choice as well, she said. If the mini-grid system had not been put in place, Singh – a recent college graduate without funds to pursue training as a teacher, the only job open to women in her village – would have had no alternative but to marry, she said. In fact, “I would already be married off,” she told the Thomson Reuters Foundation.
Today, however, she earns 4,500 rupees ($70) a month working on solar-powered sewing machines. She uses part of that to pay 300 rupees ($4.70) a month for her computer education class – and is planning to start a computer training centre closer to home.
Like her, most of the women at the factory earn between 2,500 and 4,500 rupees ($39- $70) a month, which has helped their families eat better, get children to school and pay for healthcare, they said.
“With a month’s earning alone we can buy new bicycles for ourselves and our school-going children,” Bandana Devi, a mother of four, told the Thomson Reuter Foundation, as she looked up from her sewing.
She bought one for her 12-year-old daughter, she said, and her 6-year-old rides pillion with her to the school, 2 km away.
Prime Minister Narendra Modi has announced a $2.5 billion plan to electrify every Indian household by 2019 – a huge task in a country where close to 240 million people still have no access to electrical power.
Solar power – including the use of small local grids – is likely to be a big part of the push, with 60 percent of new connections expected to be to renewable power, according to a report by the International Energy Agency.
STABLE POWER, MORE CONTRACTS
In a clearing in an acacia plantation, the more than 140 solar panels that make up the Kamlapur mini-grid are being cleaned early in the morning.
The 36-kilowatt plant, set up by the for-profit OMC Power Private Ltd.(formerly Omnigrid Micropower Company) in 2015, distributes solar energy over 2.4 kilometres of power lines to 70 households, two telecommunications towers, the clothing manufacturing unit and several other small businesses.
Solar mini-grids usually rely on one or two large users of power – often mobile phone towers – to provide a stable base revenue for the system. But as solar electricity becomes available in areas beyond the traditional grid, power-hungry small businesses are emerging that could become anchor users.
Kamlapur’s garment factory, for instance, consumes 10 kilowatts of power each day – the same as the telecom towers, said Ketan Bhatt, an OMC official in Uttar Pradesh state.
The state in 2016 became India’s first to put in place a mini-grid policy, recognising private solar companies as legitimate players in India’s push to get power to all.
Company owners, in turn, say solar mini-grids – which can be more reliable than the unstable grid power their competitors rely on – is giving them a business advantage.
“Because the power supply is steady, we are regularly able to deliver on contract deadlines, which in turn enhances our reputation to bag more contracts,” said Mohammad Riyaz, who set up the Kamlapur garment unit in 2016.
Rohit Chandra, a co-founder of OMC, said he was seeing many solar power users moving beyond simply buying power for home lighting and appliances. Now, he said, they are harnessing solar energy for profit.
“We see barbers installing televisions and fans in their shops to attract more customers. Carpenters buy electric saws and wood polishers, fruit sellers are adding electric juicers. Health centres and dispensaries are coming up in underserved villages too,” Chandra said in a telephone interview.
“People are now continuously climbing,” he said.
Sangeeta Singh, of the Uttar Pradesh New and Renewable Energy Development Agency, said rural villagers “are willing to pay for assured, customized hours of supply, even at a higher price.”
“The myth that rural consumers will not pay for electricity is now demolished,” added Jaideep Mukherji, the CEO of Smart Power India (SPI). “Over the last two years we’ve discovered not only do rural consumers pay for the electricity, 93 percent pay on time.”
SPI is backed by the the U.S.-based Rockefeller Foundation’s $75 million Smart Power for Rural Development initiative, which aims to get power the “last mile” to users without it in India, Myanmar and sub-Saharan Africa.
SPI works with seven private mini-grid operaters, including OMC, in Uttar Pradesh, Bihar and Jharkhand – some of India’s least electrified states – to boost demand for solar mini-grid power and help develop rural economies.
The aim is both to improve life for poor people in power-hungry regions and help make sure solar mini-grid power is financially feasible for its operators, Mukherji said.
Chandra, of OMC, said that, on average, after supplying reliable power for a year, “we see around 30 micro-enterprises come up in each village”.
Though most are expansions of existing businesses, some are new ventures – such as a new water purifying plant in Kamlapur.
Sanskrit language teacher Aparna Mishra has just invested 400,000 rupees ($6,240) to set up a reverse osmosis water purifier.
Starting later this month, 100 customers – including schools, hotels and homes in the area – will begin receiving 20-litre refillable jars of water, dropped off at their doorstep, the entrepreneur said.
Mishra’s two-year target is to produce 3,000 litres of clean water a day, delivered over a 12 km radius from the 5-kilowatt plant.
“If villagers can understand the link between good health and clean drinking water from my plant, that itself is the biggest return on my investment,” the 26-year-old told the Thomson Reuters Foundation.
An assessment of Smart Power India villages at the end of 2016 found that after two years of access to mini-grid power, small businesses using it had increased their monthly income by 13 percent.
A PRICE TOO HIGH?
While Smart Power India is reaching a growing share of communities without electricity, a 2017 study by the International Center for Research on Women found that large numbers of women and poor families still lack access to clean energy, even in areas where it is available.
For some of them, the cost of private mini-grid power is a deterrent to using it.
Riyaz’s clothing factory, for instance, pays 25 rupees (39 cents) for each kilowatt of the 10 kilowatts of power it uses each day – well above the 11 to 17 rupees that rural users of grid power pay.
“The electricity bill pinches,” the 45-year-old tailor said.
Chandra, of OMC, admitted that “on the face of it, our charges for reliable power might look high”.
But grid power users in Uttar Pradesh must pay a minimum monthly fee of 1,000 rupees, he said. With many small solar businesses – such as phone recharging – using less power, and even larger businesses often saving energy by using efficient machines, solar mini-grid power can come out cheaper, he said.
At a time when the Government of India (GoI) has claimed that 99.4% of the country’s villages have been electrified, but the GoI’s powerful thinktank electrification, Niti Aayog, has pointed out that there are 304 million people who still lack access to electricity in its draft National Energy Policy (NEP), released in mid-2017, top US business interests have begun to see it as an opportunity.
Dr Rajiv J Shah, current president of the Rockefeller Foundation (RF), who served as administrator of the United States Agency for International Development (USAID) from 2010 to 2015, has strongly pitched for “the fundamental role of public-private partnership to lift millions of Indian households out of poverty” by providing them electricity.
Shah was speaking at the India Energy Access Summit in Delhi on February 12, following which, a day later, he met Niti Aayog vice-chairman Rajiv Kumar. At both the spots, he stressed on the need for strong private partnership in India to electrify the country’s rural households, even as suggesting, this has been demonstrated by RF investing nearly $150 million over the last 20 years “to impact the lives of the most vulnerable people in India.”
Regretting that in India a village is deemed electrified even if only 10 percent of homes and a few rural institutions are connected, the top US philanthropic organization, which is running Smart Power India project has “appreciated” that the draft NEP recognizes “a need to redefine the concept of ‘electrification’ with the village being deemed completely electrified if and only if all households of a village have an electricity connection, which witnesses reliable supply of electricity at least for a set number of hours”.
Meanwhile, a writeup published in RF site and published as a blog, which Shah particularly focussed upon, has said, “The hope is that the ‘set hours, will cover daily needs”, adding, “With 23% of India’s population still thirsting for electricity and millions more receiving only poor and unreliable access, it would seem that India needs to rapidly add generation capacity.”
“However”, the RF blog says, “This too presents a contradiction, in that India has significant generation capacity idling, with an aggregate capacity utilization of about 60%. So why not just d https://www.rockefellerfoundation.org/blog/24×7-power-access-not-electrification/ irect the unused capacity to meet rural demand? Problem solved, right?”, it asked.
“Simply put, it is not viable to distribute the access to the people who need it. Rural electricity supply and service costs are prohibitively high, while rural demand density is low and fragmented”, the blog says, adding, “Furthermore, pilferage and losses are high and the tariffs are well below delivered cost. This is a huge disincentive for India’s debt-plagued state-owned distribution companies (DISCOMs).”
“The challenge is so large that a portfolio of approaches needs to be tested and deployed”, the blog opines, adding, “New models of electricity distribution are emerging. In nearly 110 villages across Uttar Pradesh, Bihar and Jharkhand state, more than 40,000 people have access to reliable grid-quality electricity from privately operated renewable energy mini-grids supported by RF’s Smart Power India programme.”
Pointing out that the draft NEP has also stressed the “need to incentivize the mini-grid sector by encouraging independent developers and supporting them to scale”, the blog stresses, “Privatizing electricity distribution has proven successful in some Indian metros in improving quality, reliability, collection and loss reduction.”
It adds, “More private players can be attracted to scale up mini-grid deployment if the government announces a national target for mini-grids along with a package of incentives. More importantly, public-private partnership pilots for rural electrification need to be modeled and tested in partnership with existing state DISCOMs to address the access challenge.”
“Such partnerships forged in rural electrification can unleash on a large scale innovative business models, new technologies and operational efficiencies to make a breakthrough in bridging India’s chronic energy access gap. It could help realize the national goal of “24×7 Power for All” by 2022”, it believes.
In her village of Komalia, the fog swirls so thick at 7 a.m. that Akansha Singh can see no more than 15 meters ahead. But the 20-year-old is already cycling to her workplace, 9 kilometers away. Halfway there she stops for two hours at a computer training center, where she is learning internet skills. Then she is off again, and by 10 a.m. reaches the small garment manufacturing plant where she stitches women’s clothing for high-end brands on state-of-the-art electric sewing machines. Solar energy powers most of her day — the training center and the 25-woman garment factory run on solar minigrid electricity — and clean power has given her personal choice as well, she said.
If the minigrid system had not been put in place, Singh — a recent college graduate without funds to pursue training as a teacher, the only job open to women in her village — would have had no alternative but to marry. “I would already be married off,” she said in an interview.
Today, however, she earns 4,500 rupees ($70) a month working on solar-powered sewing machines. She uses part of that to pay 300 rupees ($4.70) a month for her computer education class — and is planning to start a computer training center closer to home. Like her, most of the women at the factory earn between 2,500 and 4,500 rupees ($39 to $70) a month, which has helped their families eat better, get children to school and pay for health care.
“With a month’s earning alone, we can buy new bicycles for ourselves and our school-going children,” said Bandana Devi, a mother of four, as she looked up from her sewing. She bought one for her 12-year-old daughter, she said, and her 6-year-old rides tandem with her to the school, 2 km away.
Prime Minister Narendra Modi has announced a $2.5 billion plan to electrify every Indian household by 2019 — a huge task in a country where close to 240 million people still have no access to electrical power. Solar power — including the use of small local grids — is likely to be a big part of the push, with 60 percent of new connections expected to be to renewable power, according to a report by the International Energy Agency. In a clearing in an acacia plantation, the more than 140 solar panels that make up the Kamlapur minigrid are being cleaned early in the morning.
The 36-kilowatt plant, set up by the for-profit OMC Power Private Ltd. (formerly Omnigrid Micropower Co.) in 2015, distributes solar energy over 2.4 kilometers of power lines to 70 households, two telecommunications towers, the clothing manufacturing unit and several other small businesses.
Solar minigrids usually rely on one or two large users of power — often mobile phone towers — to provide a stable base revenue for the system. But as solar electricity becomes available in areas beyond the traditional grid, power-hungry small businesses are emerging that could become anchors.
Kamlapur’s garment factory, for instance, consumes 10 kilowatts of power each day — the same as the telecom towers, said Ketan Bhatt, an OMC official in Uttar Pradesh state. The state in 2016 became India’s first to put in place a minigrid policy, recognizing private solar companies as legitimate players in India’s push to get power to all.
Company owners, in turn, say solar minigrids — which can be more reliable than the unstable grid power their competitors rely on — is giving them a business advantage. “Because the power supply is steady, we are regularly able to deliver on contract deadlines, which in turn enhances our reputation to bag more contracts,” said Mohammad Riyaz, who set up the Kamlapur garment unit in 2016.
Rohit Chandra, a co-founder of OMC, said he is seeing many solar-power users moving beyond simply buying power for home-lighting and appliances. Now, he said, they are harnessing solar energy for profit.
“We see barbers installing televisions and fans in their shops to attract more customers. Carpenters buy electric saws and wood-polishers. Fruit-sellers are adding electric juicers. Health centers and dispensaries are coming up in underserved villages too,” Chandra said in a telephone interview. “People are now continuously climbing.”
Sangeeta Singh of the Uttar Pradesh New and Renewable Energy Development Agency said rural villagers “are willing to pay for assured, customized hours of supply, even at a higher price.” “The myth that rural consumers will not pay for electricity is now demolished,” added Jaideep Mukherji, the CEO of Smart Power India (SPI). “Over the last two years we’ve discovered not only do rural consumers pay for the electricity, 93 percent pay on time.”
SPI is backed by the U.S.-based Rockefeller Foundation’s $75 million Smart Power for Rural Development initiative, which aims to get power to the “last mile” of users without it in India, Myanmar and sub-Saharan Africa.
SPI works with seven private minigrid operators, including OMC, in Uttar Pradesh, Bihar and Jharkhand — some of India’s least electrified states — to boost demand for solar minigrid power and help develop rural economies.
The aim is both to improve life for poor people in power-hungry regions and help make sure solar minigrid power is financially feasible for its operators, Mukherji said.
Chandra, of OMC, said that, on average, after supplying reliable power for a year, “we see around 30 microenterprises come up in each village.” Though most are expansions of existing businesses, some are new ventures — such as a new water-purifying plant in Kamlapur. Sanskrit language teacher Aparna Mishra has just invested 400,000 rupees ($6,240) to set up a reverse-osmosis water purifier. Starting later this month, 100 customers — including schools, hotels and homes in the area — will begin receiving refillable 20-liter jars of water, dropped off at their doorstep, the entrepreneur said.
Mishra’s two-year target is to produce 3,000 liters of clean water a day, delivered over a 12-km radius from the 5-kilowatt plant. “If villagers can understand the link between good health and clean drinking water from my plant, that itself is the biggest return on my investment,” the 26-year-old said. An assessment of Smart Power India villages at the end of 2016 found that after two years of access to minigrid power, small businesses using it had increased their monthly income by 13 percent.
While Smart Power India is reaching a growing share of communities without electricity, a 2017 study by the International Center for Research on Women found that large numbers of women and poor families still lack access to clean energy, even in areas where it is available. For some of them, the cost of private minigrid power is a deterrent to using it.
Riyaz’s clothing factory, for instance, pays 25 rupees (39 cents) for each kilowatt of the 10 kilowatts of power it uses each day — well above the 11 to 17 rupees that rural users of grid power pay. “The electricity bill pinches,” the 45-year-old tailor said. Chandra, of OMC, admitted that “on the face of it, our charges for reliable power might look high.”
But grid power users in Uttar Pradesh must pay a minimum monthly fee of 1,000 rupees, he said. With many small solar businesses — such as phone-recharging — using less power, and even larger businesses often saving energy by using efficient machines, solar minigrid power can come out cheaper, he said.