New Delhi: In a bid to encourage reliable access to electricity till the last mile, Smart Power India’s partner Husk Power Systems has recently secured the largest ever debt finance to construct 140 mini-grids in rural India. The amount received is US$4 Million from IREDA.
The IREDA loan to Smart Power India’s partner Husk represents the biggest debt financing for rural mini-grids in India till date. IREDA is a state-owned non-banking financial institution (NBFI) under the administrative control of India’s Ministry of New and Renewable Energy (MNRE). It promotes, develops, and extends financial assistance to renewable energy projects.
Husk Power’s 100th mini-grid was a significant milestone along the path to achieving reliable electricity for all. Smart Power India and Husk Power have notably pioneered the off-grid power generation and distribution model in India. The end-to-end innovative, technology-led energy solutions have the capacity to be replicated and sustained across the globe.
Commenting on the achievement, Jaideep Mukherjee, CEO at Smart Power India said, “Mini-grid services have continued to play an important part in rural India’s social and economic development, I congratulate Husk Power and the team for the commitment and perseverance that they have shown in supporting the sector’s efforts in providing good quality power to the last mile.”
Adding to Jaideep, Manoj Sinha, CEO, and Co-Founder at Husk said “The IREDA financing demonstrates the Government of India’s vision in making mini-grids an integral part of its net-zero goal put forward at COP26, This is a huge validation for Smart Power India and Husk Power’s collaboration for ensuring reliable access to electricity in the rural part of the nation. The IREDA funding will give us a much-needed boost to achieve our target of expanding our microgrid fleet 10x by 2025.”
February 14, 2022, 5:17 PM IST Jaideep Mukherjee and Ashvin Dayal and Joseph Nganga in Voices, India, TOI
At COP26 this past November, governments from more than 200 nations converged in Glasgow to chart a path to a more sustainable and equitable future. The world is watching to see how India, South Africa, and other nations that made major new commitments will deliver on those promises, and what specific steps they will take to reduce emissions and accelerate just energy transitions.
For its part, India announced some significant goals for 2030, including a pledge to reduce its total projected carbon emissions by one billion tons and meet half its energy requirements with renewable fuels. India also declared its ambitious net-zero goal for 2070, as part of its “five elixirs” to combat the global climate crisis. As India and other emerging economies grow, the demand for reliable power will rise significantly, and the next two decades will be key to meeting this demand with a viable, low-carbon pathway.
With the right policies and programs, this pathway can also help tackle another of the world’s most pressing issues: energy poverty. Advances in renewable energy technology have provided us a once-in-a-generation opportunity to bring clean electricity to hundreds of millions of people worldwide who still live without any access, and to power the lives and economic aspirations of 2.8 billion people who lack reliable electricity. With a scaled-up and integrated approach to support distributed renewable energy, grid-based renewables, and fossil fuel transitions, we can respond to the climate emergency without leaving these billions of people behind.
A Green Pathway for Growth and Development
To date, global efforts to combat the climate crisis have largely focused on the reduction of emissions in wealthy, energy-rich economies. There has been minimal attention paid to low-income, energy-poor nations that comprise more than half the world’s population but are collectively responsible for just 8% of its carbon emissions and have received only a small fraction of investments in renewables.
While energy-poor countries bear little responsibility for global emissions to date, if they are left out of global energy transition efforts, their annual emissions could grow to more than 75% of global emissions by 2050. Investing in energy-poor economies today is thus vital from both the perspective of global development and climate action.
In Glasgow, the Indian government made an ask of USD 1 trillion in climate finance from developed countries in order to meet its climate commitments in the decade ahead. Developed countries’ decade-old commitment to mobilize $100 billion in climate finance annually to support emerging economies’ energy transitions is yet to be realized. COP26 demonstrated the need, and the opportunity, to build the kinds of partnerships that can provide the financial and technical assistance developing nations need to support transformational energy programs that provide universal access to clean power.
From Commitment to Action, The Road Ahead
Turning commitments to curb carbon and expand energy access into reality will require a significant scaling up of novel financing mechanisms and urgent, organized action from various stakeholders: policymakers, regulators, financial institutions, the private sector, and civil society. Policymakers and regulators must create a conducive environment – designing favourable regulatory schemes, streamlining licensing and administrative processes, and expanding access to open-source data.
For its part, philanthropy can provide grant capital to de-risk investments, especially at the early stages of project development. Together with investments from development finance institutions, this blended finance can also stimulate larger capital flows from commercial investors.
To offer an example of the power of philanthropic and private sector partnership, Smart Power India, The Rockefeller Foundation and Tata Power’s collaboration led to the establishment of the world’s largest rural solar mini grid venture in 2019, which aims to deploy 10,000 mini-grids that will provide affordable, reliable electricity to millions across rural India. As of January 2022, 175 mini-grids were empowering over 128,200 people as well as 10,000 shops and productive enterprises that have already begun to transform local economies, leading to new jobs and increased incomes.
The success of this venture and similar projects in developing markets worldwide led The Rockefeller Foundation, IKEA Foundation, and Bezos Earth Fund to establish the Global Energy Alliance for People and Planet, which launched with $10 billion in philanthropic capital and aligned investments from development finance institutions at COP26. The Alliance will help catalyse the financing, technical support, and regulatory changes needed to accelerate green energy transitions and expand energy access in partnership with emerging economies around the world.
There is still a lot to be done if the world has a hope of meeting the commitments made six years ago in Paris, commitments that were reinforced last year in Glasgow. But with practical solutions for project delivery and finance, and the right approach to policy and partnership, we can build a world where the transition to renewable energy empowers everyone, everywhere.
Thank you to all participants for joining in on the Azadi ka #AmritMahotsav. We had a very informative and enriching discussion with experts from @HuskPowerSystem, @TataPower, Hamara Grid, @giz_india, our team(SPI) and our customers & field staff.#PowerPeoplePlanet pic.twitter.com/176EDNC0BY— SMART POWER INDIA (@smartpowerorg) August 27, 2021
At COP26, Glasgow, India made a commitment to advance leaps in the transformation of its energy sector with promising targets of reducing emissions and transitioning to clean energy. As the nation gets set for Net Zero, we are seeing a pivotal shift towards collective policy and industry effort, focused on generating equitable economic growth for the people through a green pathway. Accelerating the transition to a renewables-based energy system represents a unique opportunity to meet our climate goals while enabling socio-economic development for the people, creating new employment opportunities, and enhancing human welfare. These learnings have led to innovative models of delivering clean and reliable energy at the last mile, with rising adoption of alternative sources. At this important juncture, it is imperative to address some of the key factors that will direct the course of our journey ahead.
Efforts to protect the planet have excluded the energy needs and economic aspirations of billions of people in the developing and emerging world. A considerable part of this population is in India. Even with high levels of access, there are certain sections of customers, especially micro-enterprises, which are still unserved or underserved by the grid. The lack of quality and reliable electricity creates barriers for the social and institutional infrastructure of villages, posing challenges for improvement in healthcare, education, women’s development, and livelihood generation. This points to vast untapped potential that can be utilised to catalyse economic development and move closer to our goal of an inclusive clean energy transition. Despite being generation surplus, low levels of consumption in rural areas due to these gaps and resulting dependence on diesel presents an interesting paradox.
To this end, one of the fastest and most cost-effective solutions that has emerged, and is a widely accepted approach to last mile access, is distributed renewable energy. Solutions such as mini-grids and rooftop systems have helped communities gain access to reliable energy from clean sources for household and productive use, with recorded improvement in customer satisfaction. Rural businesses are opting for solar mini-grid connections and rooftop systems to improve productivity, increase revenues and compete in the market. DRE caters to a multifaceted problem of generating demand by providing reliable access to the remotest of communities while reducing their carbon footprint.
But the success of DRE as standalone systems is not a new revelation for the developing world, especially India. Time and again in the last few years, we have seen exemplary impact of power from mini-grids in improving various socio-economic outcomes of the villages where they are installed. They have led to higher incomes and savings for rural entrepreneurs and empowered women to be equal stakeholders in this conversation. By facilitating the provision of good quality service to customers giving special focus to billing, collection and grievance redressal, ESCO’s are able to match the customers’ aspirations without falling into a debt spiral.
So, the question arises, how can we replicate this success to effectively ensure that our goals of universal access to clean and reliable energy are fulfilled? As we near a new proposition of policy action towards these goals with the new budget, we need to recalibrate our priorities going forward and create a suitable ecosystem for clean energy to penetrate lives and make strides in poverty reduction.
Importance must be given to thoughtful activations on ground that incentivise replacing conventional sources of energy, educate people about the usage of appliances and managing power expenses, and create channels for fast complaint redress. These interactions will eventually lead to higher adoption rates and new demand. Schemes for access to C&#038;I sector should give prominence to facilitating easy financing for customers along with training and skill development, market connect, and guidance on expansion.
Most importantly, building on the call for national transformative partnerships by Global Energy Alliance for People and Planet (GEAPP) and other clean energy consortiums spoken about at COP, we need sustained commitment of stakeholders from different spheres of energy access, to come together to provide the financial ecosystem required for scaling of DRE solutions to a national level. Interventions are in place to incorporate concessional capital in order to de-risk projects and unlock larger capital flows from development financial institutions (DFIs) and commercial investors. This is to be supported with tailored financial solutions that address key investment bottlenecks like local currency, pooled procurement, and risk guarantees. Philanthropic capital to create significant public and private financial leverage will give a greater push to ESCO’s to deliver the intended impact.
Funding of projects, on ground implementation with the help of ESCOs, multilaterals, philanthropies, technical experts and citizens themselves will bring everyone on the same wagon, with a common goal of manifesting the great transition.
Jaideep Mukherji, CEO at Smart Power India, and Vaishali Mishra, Associate Director, Communications and Advocacy at Smart Power India. The views expressed in this article are those of the authors and do not represent the stand of this publication.
T&D India January 26, 2022
As the nation gets set for Net Zero target announced by Hon’ble Prime Minister at COP26, we are seeing a pivotal shift towards collective policy and industry effort, focused on generating equitable economic growth for the people through a green pathway, notes Jaideep Mukherjee.
Transitioning to a cleaner energy system represents a unique opportunity to meet our climate goals while enabling socioeconomic development for the people, creating new employment opportunities, and enhancing human welfare.
Smart Power India uses these learnings to come up with innovative models of delivering clean and reliable energy at the last mile, with interventions to encourage use of alternative sources.
Efforts to protect the planet have excluded the energy needs and economic aspirations of billions of people in the developing and emerging world. In order to safeguard the livelihoods of their citizens, developing and emerging countries have had to prioritize their growth at the expense of our shared climate future, and India is not an exception.
Lack Of Grid Access
Even with high levels of access, there are certain sections of customers in rural India, especially micro enterprises, which are still un-served or underserved by the power grid. Lack of quality and reliable electricity creates barriers for the social and institutional infrastructure of villages, posing challenges for improvement in healthcare, education, women’s development, and livelihood generation. This points to vast untapped potential that can be utilized to catalyze economic development and move closer to our goal of an inclusive clean energy transition. Despite being generation surplus, low levels of consumption in rural areas due to these gaps and resulting dependence on diesel presents an interesting paradox.
To this end, one of the fastest and most cost-effective emerging solution is distributed renewable energy. Smart Power India invests in technical assistance, on-ground implementation and facilitation of solutions such as mini-grids and rooftop systems, which have helped communities gain access to reliable energy from clean sources for household and productive use, with recorded improvement in customer satisfaction. Rural businesses are opting for solar minigrid connections and rooftop systems to improve productivity, increase revenues and compete in the market.
The Significance Of DRE
Distributed renewable energy (DRE) caters to a multifaceted problem of generating demand by providing reliable access to the remotest of communities while reducing their carbon footprint. Time and again, in the last few years, we have seen exemplary impact of power from mini-grids in improving various socio-economic outcomes of the villages where they are installed. They have led to higher incomes and savings for rural entrepreneurs and empowered women to be equal stakeholders in this conversation. By facilitating the provision of good quality service to customers giving special focus to billing, collection and grievance redressing, ESCO’s are able to match the customers’ aspirations without falling into a debt spiral.
As we near a new proposition of policy action towards these goals with the new budget, we need to recalibrate our priorities going forward and create a suitable ecosystem for clean energy to penetrate lives and make strides in poverty reduction. Importance must be given to thoughtful activations on ground that incentivize replacing conventional sources of energy, educate people about the usage of appliances and managing power expenses, and create channels for fast complaint redressing.
These interactions will eventually lead to higher adoption rates and new demand. Schemes for access to C&I sector should give prominence to facilitating easy financing for customers along with training and skill development, market connect, and guidance on expansion.
Most importantly, building on the call for national transformative partnerships by GEAPP (Global Energy Alliance for People and Planet) and other clean energy consortia spoken about at COP, we need sustained commitment of stakeholders from different spheres of energy access, to come together to provide the financial ecosystem required for scaling of DRE solutions to a national level. GEAPP will bring together preeminent philanthropic, government, donor, MDB, DFI, and private sector partners to build a unique international platform to transform the energy system in 60+ priority countries.
At its core, the alliance is focused on delivering transformational projects that will accelerate and scale an equitable energy transition across the emerging and developing world. This is to be supported with tailored financial solutions that address key investment bottlenecks like local currency, pooled procurement, and risk guarantees. Philanthropic capital to create significant public and private financial leverage will give a greater push to ESCOs to deliver the intended impact.
Funding of projects, on ground implementation with the help of ESCOs, multilaterals, philanthropies, technical experts and citizens themselves will bring everyone on the same wagon, with a common goal of manifesting the great transition.
January 24, 2022. By Manu Tayal
Amidst the pressure of boosting the economic activity, controlling inflation, job creation, and higher income generation among others, this year’s Budget comes at a time when there’re elections in five states in the country.
Despite the third wave of the coronavirus pandemic, the Indian economy is estimated to witness significant growth in FY23, as the real GDP is likely to reach 9.1 per cent, as per India Ratings and Research data. In spite of this, it will be a tightrope walk for the Finance Minister to maintain the fiscal deficit on one hand and to meet the expectations of various stakeholders on the other hand in the upcoming Union Budget 2022-23, which is slated to be tabled in the Parliament on February 01, 2022.
Amidst the pressure of boosting the economic activity, controlling inflation, job creation, and higher income generation among others, this year’s Budget comes at a time when there’re elections in five states in the country, which would mean higher allocation of resources to rural sectors like agriculture, power etc.
In the economic growth of any country, the power sector plays a vital role, and is, therefore, considered as the backbone of industrial and agricultural growth.
As the race to reach emission goals intensifies, India has committed to reducing carbon emissions to net-zero by 2070, along with the installation of 40 per cent of its electricity generation capacity from non-fossil fuels by 2030.
Ahead of Finance Minister Nirmala Sitharaman’s Budget, renewable energy (RE) industry stakeholders eye more relief for ‘Ease of Doing Business’ amidst the challenges of the pandemic.
The wish list which we gathered from the power industry stakeholders includes – policy reforms, Production Linked Incentive (PLI) scheme expansion, the mandate of usage of green hydrogen, DISCOMs privatisation, long term financing support, reduction in duties on key components for batteries & electrolysers, basic custom duty, the passage of the electricity amendment act, GST on sale of electricity, uniform net metering policy, reduction in GST on Solar Modules among others.
Stressing on the need for firm deadlines and diversification of climate finance sources, Mahesh Palashikar,President, GE South Asia, told to Energetica India that “India’s pledge to add 500 GW of non-fossil fuel energy by 2030 is promising but not without challenges. Analysts estimates of necessary investments are high. The ask is steep especially in the context of today’s volatile markets and dependence on global funding. While funding is important, it is just as critical to look at how those are deployed. We need to focus on climate change mitigation measures. We must also focus equally on adaptation measures, which are meant to prevent and eliminate climate disasters. I hope the Budget provides a roadmap with firm deadlines while diversifying the sources of climate finance to put the country on track to achieve Net Zero by 2070.”
Taking a cue from the FM’s last year Budget announcement on the launch of the National Hydrogen Mission, Pashupathy Gopalan, Investor & Advisor, Ohmium International, a specialist in the design, manufacture and deployment of PEM Electrolysers, remained optimistic on further plans of the Govt on Green Hydrogen production and demand creation in India, told to Energetica India that “we are looking forward to the announcements supporting the National Hydrogen Mission including policy around Production Linked Incentive (PLI) scheme. Other supporting policies like the certain mandate of use of Green Hydrogen in refining and fertilizers industry as well as blending of hydrogen into Piped Natural Gas and Compressed Natural Gas will launch the Indian Green Hydrogen sector.”
Notably, Reliance Industries, JSW Steel and Chart Industries-led India Hydrogen Alliance (IH2A) have estimated that India would require USD 25 billion investment, from public and private sectors, to create a domestic hydrogen supply chain with a national installed electrolyser capacity of 25 GW producing 5 MT of Green Hydrogen by 2030.
In line with this, Jillian Evanko, Chief Executive and President, Chart Industries, and founding member, IH2A, suggested that “Funding support is critical for the development of a hydrogen economy in India. A comprehensive set of policy interventions and budget incentives covering the entire hydrogen value chain are needed.
Public and private funding for hydrogen should cover the entire supply chain – from production and supply-side, storage and transport as well as demand-side to encourage industrial off-take in hard-to-decarbonize sectors of the economy.”
While sharing his Budget predictions, Girishkumar Kadam, Senior Vice President & Co-Group Head – Corporate Ratings, ICRA Limited, one of the leading credit rating agencies, told to Energetica India that “With strong policy focus on renewables by the Government, measures to augment the availability of adequate long-term financing avenues at cost-competitive rates remain important so as to fund the significant investment outlay for policy targets. Further, incentives & policy measures are required to promote investments in the energy storage segment, along with the increase in PLI scheme outlay for attracting further investments in integrated solar module manufacturing facilities. In addition, the budgetary allocation is expected to be increased towards strengthening the distribution infrastructure for distribution utilities as well as for the transmission infrastructure (both at intra-state and inter-state level), towards evacuating power from the regions having high renewable generation potential.”
Agreeing with Girishkumar Kadam’s predictions and putting a strong case for speeding the RE capacity addition along with Discoms privatisation, Sumant Sinha, Chairman and CEO, ReNew Power, India renewables giant, added that “India’s renewable capacity addition has increased in the past two years. ICRA estimates RE capacity add will cross 16 GW this year. This is a welcome trajectory, but the pace needs to be stepped up further for enabling our national clean energy transition and our 2030 climate goals. In fact, we have to increase the pace of capacity addition to almost 30 GW in order to achieve our national goal of becoming net-zero by 2070. The Union budget, therefore, comes at an opportune time. We anticipate that government will follow up on the PLI scheme with the reduction of duties on key components for batteries and electrolysers, which will help the storage and hydrogen industry find its feet in India. The government should also take measures to bring electricity under the ambit of GST which will help bring down the input cost significantly and make it more friendly for end-users. I expect more Discoms will be offered to private players in 2022 and government will increase the pace of privatisation. Similarly, the passage of the electricity amendment act is important to ensure that we create a robust consumer-friendly electricity sector that can help with the growth of the Indian economy and enable it to become more climate-friendly and sustainable.”
In line with expectations of Sumant Sinha on Discoms Distress, Rajiv Ranjan Mishra, Managing Director, Apraava Energy, one of the leading Independent Power Producers (IPP) in India jointly owned by CLP Group and CDPQ, told to Energetica India that “we hope that the government resolves the financial issues of distribution companies’ finances and ensures that contracts that were awarded are respected on the fiscal front. Seeing the excellent response that PLI schemes have attracted, we would like for them to be extended into the future as well. We would also like import duties on items like batteries and electrolytes to be lowered so that we can strengthen our capabilities in areas like green technologies and hydrogen. Last, but not least, we request that electricity be included in the ambit of GST, as it will result in the reduction of costs and ultimately benefit India’s consumers.”
However, emphasizing on providing a level playing field for all major RE technologies, Rahul Varshney, Country Manager, Statkraft India, the Indian arm of Europe’s largest renewable energy generator, discussed with Energetica India that “Government’s focus on meeting the incremental energy need primarily from renewable energy to power our fast-growing economy while combating climate change is highly commendable. Any fiscal measure that helps the growth of the RE industry like allowing GST on the sale of electricity that enables power generators to offset GST cost on the input side will lead to a reduction in tariffs and growth of the overall economy.
Further, allowing an extension upto 2 years for all sunset clauses providing relaxations to RE industry expiring in 2022/23 may be considered, e.g., Section 115BAB of Income Tax Act enabling RE projects to be taxed at lower rates. We would also like to recommend a level-playing field for all the major renewable energy technologies, namely solar, wind and hydropower by bringing uniform policies like levies and exemptions for these technologies.”
While keeping his fingers crossed on the expectations of the implementation of the Basic Customs Duty (BCD) on the import of solar photovoltaic (PV) cells and modules from April this year, as the Finance Minister recently assured the domestic solar manufacturers on its implementation, Avinash Hiranandani, Global CEO & Managing Director, RenewSys India, 1st integrated manufacturer of Solar PV Modules and its key components i.e. Encapsulants, Backsheets, and Solar PV Cells, shared his concerns to Energetica India that “we are keenly looking forward to the levy of BCD from April 1, 2022, on the import of Solar PV Cells and PV Modules. If this is delayed or not implemented the Indian solar manufacturing industry will receive a major setback, losing multiple years, before it is capable of standing on its feet again. The MNRE has been supporting the PV industry through the pandemic and we look forward to their continued support and guidance in the future also.”
On the flip side, Independent Power Producers (IPPs) sought for a grandfathering of BCD on modules for atleast projects bid out before the date of notification of BCD from the Government.
In line with this and emphasizing on uniformity in net metering policy in the country, Raghavendra Mirji, Senior Vice President & Head – Power Infrastructure & Renewable Energy (PIRE), Godrej Electricals & Electronics, an arm of $4.1 billion conglomerate Godrej Group company, clearly stated that “The ‘Net metering policy’ which is a key growth driver of Renewables, is also not uniform across the states and needs to be amended.
The Basic Customs Duty (BCD) that is scheduled to be implemented from April 2022 will have a significant impact on the cost of Solar projects and the tariff (Rs/Unit). Hence, the BCD implementation needs to be postponed for at least 6 months. The GST on Solar Modules increased recently from 5% to 12%. Again, this is impacting the Solar installation cost. In order to encourage Solar installation, the GST should be reduced to 5%.”
Agreeing with Raghavendra Mirji on BCD implementation, Sunil Badesra, Country Head-Sungrow India, a well-known solar PV inverters maker, expressed his concerns that “Our Hon’ble Prime Minister Narendra Modi has always kept the manufacturing sector at the forefront of the flagship Aatmanirbhar Bharat. As the biggest local manufacturer of Solar Inverters in India, Sungrow has been keeping those expectations from the 2022 budget. As a ‘Make in India’ supporter, we hope that this budget will have something in the form of PLI further for manufacturers which will motivate overseas investors to make more investments in the local market and strive to make the local supply chain stronger, which is primary demand now. In addition, the proposed duty on Solar Modules and cells may be implemented in a Phased manner to avoid any disruption in the solar market and to avoid any further delay in ongoing solar capacities development.”
Looking for more clarity on infrastructure for RE, Jaideep Mukherji, CEO of Smart Power India, a subsidiary of The Rockefeller Foundation, commented “We have partnered with the government to leverage the existing grid infrastructure for equitable distribution of electricity & intend to expand on it to achieve the goal of enabling clean and cost-effective electricity access for maximum rural/low-income households.
We are glad that a green energy corridor (GEC) has been announced and hope that the budget will bring more clarity on the infrastructure for renewable energy capacities to thrive and also financial support that will give a huge impetus to the sector’s growth in the future.”
As a strong believer of futuristic and bold approach towards promoting electric vehicles (EVs) in the country, Maxson Lewis, MD & Co-Founder, Magenta, integrated clean energy and electric mobility solutions provider, shared with Energetica India that “The fledgling EV industry is young and dynamic. What the budget needs to do is unshackle this from the traditional automotive mindset.
The industry needs a budget which can provide a stable, long term view, associated processes and guidelines; the industry does not need a subsidy based discriminative approach but a research-based forward-looking incentive.”
While stressing on the need for creating domestic demand for EVs, Awadhesh Jha, Executive Director, Fortum Charge & Drive India, an arm of leading Nordic EV charging service provider, said “We anticipate a strong growth-oriented Union Budget 2022-23, which gives a much-needed fillip to the economy. We have great expectations and hope that the government will continue to take the necessary steps to put India on the global EV map. The government has demonstrated its support for EVs through various initiatives such as the National Electric Mobility Mission plan 2020 and capital subsidies under FAME, plus the recent PLI Scheme. While this will help local manufacturing, the government should also consider increasing domestic demand by incentivising individual Passenger EV adoption across the country through the FAME-II scheme.
Redirected policies towards ease of financing, reduction in GST from 18% to 5%, and additional supportive steps on enhancing the EV public charging infrastructure through greater participation from the private sector will benefit the sector. Making a statutory provision for sourcing the power through Open Access for meeting the EV charging need by Charge Point Operator shall go a long way in meeting our Net-Zero Emission goal.”
Agreeing with Awadhesh Jha on sourcing RE power via open access, Venkat Rajaraman, CEO and Founder, Cygni, a Hyderabad-based next-generation energy storage company, shared his wishlist with Energetica India that “Enhance policy and market collaboration across mobility, energy and real estate sectors. These sectors working in silos will result in sub-optimal outcomes. A joint policy task force across these sectors will accelerate EV adoption and strengthen the business case for efficient electric fleets, effective space management, charging network creation and grid management. It is only when these sectors collaborate that large-scale capital can be attracted to this transition.
Secondly, Govt should enhance the FAME-II scope to incorporate battery swapping for 2Ws and 3Ws.
Thirdly, the focus should be on non-fiscal incentives to maximize impact with limited resources such as – Instituting Low-Emission Zones (LEZs) in congested urban centers, relaxing day-time municipal entry for electric urban freight and legalizing e-bike taxis are a few policy opportunities that will support early EV adoption without the need to expend resources.”
Putting emphasis on building a strong EV charging network pan India, Pratik Kamdar, Co-Founder, Neuron Energy, an EV solutions provider, explained to Energetica India that “Firstly, it is imperative to boost the charging infrastructure in the country as it can directly impact sales by minimising range anxiety and encourage adoption. Additionally, adequate funds should be allocated to uplift the charging ecosystem and attract newer channel partners to make BMS a commonplace.
Keeping in mind the importance of the role of batteries in the ongoing EV revolution, the upcoming budget must relook at the PLI Scheme and make the required alterations to propel Lithium cell manufacturing in the country. Reduced customs duty on import of lithium cells and EV lead-acid batteries from other geographies will shift the spotlight on India as reliable manufacturers with adequate supplies.
FAME II policy to be extended with larger subsidies and newly defined EV Zones for creating world-class manufacturing facilities with benefits like SEZs etc. will go a long way in proliferating battery production.”
With the government’s keen focus towards mandating automakers to offer biofuel vehicles in the next six months and directives to oil CPSEs to set up Second Generation (2G) Ethanol Bio-refineries in different parts of the country using agri-residues and biomass, Faizur Rehman, Country Director, Chempolis India and Head, Bio2X, Fortum India, anticipated that “the upcoming Union Budget 2022-23 to provide impetus and policies for promoting the manufacturing of second generation (2G) biofuels across the country.
We expect the budget to propose schemes and initiatives that will propel investments and growth opportunities to the sectors of our operations, especially relating to bio-based solutions to curb carbon emissions through conversion of biowaste into valuable end products, such as second-generation (2G) biofuels. We will continue to operate in line with the government’s vision to usher in the combined growth of India’s economy and our business.”
NAGALAND 25th January 2022
Dimapur, January 24 (MExN): The Mon District Administration, Government of Nagaland and Mithun Rural Development Foundation (MRDF) has signed a 20-year agreement to set up solar mini-grids in rural areas of Nagaland.
The Memorandum of Understanding (MoU) was signed to deliver last mile access to electricity in the ‘economically constrained villages,’ a press release informed.
The first three mini-grids would be installed in Longkei, Totok Chingha and Chenwetnyu under Mon district by as early as February 2022 and it envisages to cover 1000 villages in the next 7 years, it said.
Calling the agreement a landmark development, it informed that the MoU is also aimed at encouraging the use of a clean energy platform to increase local household incomes by 15-20% per annum and for enterprises by 20% in the targeted villages.
Other goals of the initiative are to improve livelihoods, support women entrepreneurs and increase the GDP of the state, while reducing GHG emissions aligning with the UN Sustainable Development Goals and reduce the carbon footprint along with generating green jobs.
The set up of the mini-grids will aim to develop the community through an Integrated Village Development Programme involving all members of the community and not just the customers, the release said.
The local administration will help facilitating coordination between the Village Council/Village Development Boards and MRDF, it added.
It was further informed that the Smart Power India (SPI) would play an important role in supporting the entire programme framework and value chain including design, delivery and facilitating financial and market linkages, the release further noted. A subsidiary of the Rockefeller Foundation, SPI was established in 2015 to “develop and scale sustainable models to accelerate electricity access and spur economic development amongst the rural underserved communities.”
The MRDF is a Special Purpose Vehicle (SPV) floated specifically for rural development of North-East India through the platform of renewable energy based mini-grids to service the electricity access needs and is supported by organisations such as Smart Power India (SPI), ONGC and NABARD.
The release quoted Vijay Bhaskar, Managing Director, MRDF as saying that the association is “aimed at arriving at a sustainable and holistic model of rural economic development based on DRE mini-grids, which can be implemented and scaled to about 1000 villages of Nagaland.”
“The MoU is aimed at sustainable socio-economic development through DRE,” stated Jaideep Mukherji, CEO, SPI, further stressing on the importance of reducing carbon footprint “which would require a collective effort from every level of the society.”
Extending full support to the MDRF and SPI’s efforts, Deputy Commissioner Mon, Thavaseelan K also informed that the targeted “clusters are economically backward and DRE mini-grid interventions will bring an all-round development to the region as they will integrate clean, high-quality and reliable energy with livelihoods, agriculture, health, education and public infrastructure.”
The District Administration is also assisting MRDF by coordinating the efforts of various departments such as health, education, renewable energy, rural development with the work in the villages, the release added.
Climate financing specifically aimed at solutions such as solar rooftop installations for the rural C&I segment will help countries like India increase energy access, reliability and at the same time, decrease carbon emissions.
In 2015, 196 parties signed the Paris Agreement at COP21 which was aimed at limiting the rise in global temperatures, preferably below 1.5°C of pre-industrial levels. This agreement signalled a turning point in the global recognition of the urgency of the climate crisis.
Signatories of the Agreement were expected to submit increasingly ambitious Nationally Determined Contributions (NDCs) every five years. Hence, COP26 was considered to be the first real test of the commitments made at Paris in 2015. The delayed convention at Glasgow became ever more important because of the emphasis on a green recovery after the COVID-19 pandemic.Unfortunately, even renewed NDCs from COP26 have a 68 percent chance of putting us on track for a 2.4°C (vis-à-vis a desired 1.5 0C) increase in average temperatures — a scenario with alarming consequences for the planet. Developing countries could account for 88 percent of the increase in global energy demand over the next few decades, and without intervention, this is projected to be done by the addition of fossil fuel sources. A swift and just energy transition, especially in energy-poor countries, is fundamental in achieving global climate targets and remaining within the 1.5°C range prescribed the Agreement.
The country’s enhanced commitments announced at COP26 reflect an ambitious strategy of mitigating climate change. India’s trajectory in the energy transition has been positive over the last decade. The enhanced commitments announced in 2021 include increasing renewable energy capacity to 500 GW, fulfilling half of India’s energy requirements through renewable sources, reducing projected carbon emissions by 1 billion tonnes, and reducing the economy’s carbon intensity by 45 percent — all by 2030.By 2022, India aims to meet the target of installing 175 GW of renewable energy, including 100 GW of solar energy, 60 GW of wind energy, 10 GW of bio-power and 5 GW of small hydro-power. Of the 100 GW target for solar, 40 GW is targeted to come from grid-connected rooftop solar projects.India has installed over 150 GW of renewable energy capacity as of December 2021 and is on track to reach its target of 175 GW by the end of 2022. Currently, the installed capacity of rooftop solar in India is 6.1 GW (vs a target of 40 GW by 2022). Rooftop solar installations are PV systems with panels mounted on rooftops of buildings. They are often connected to the government grid and, depending on state regulations, may have net metering provisions. The commercial and industrial (C&I) segment represents almost three quarters of this market; however, these customers are usually confined to urban or peri-urban areas despite the 9 GW market potential of rural C&I customers.
Even though solar rooftop installations represent less than 20 percent of India’s renewable energy target, they can be an extremely useful tool for India’s green energy transition as about 40 percent of rural microenterprises are still heavily on sources such as diesel to reliably service their energy needs. This translates into a consumption of approximately one billion litres of diesel each year!Rooftop solar installations can not only greatly improve the quality and reliability of power supply to C&I customers, especially in rural areas where grid access is intermittent and of poor quality, but also drastically cut emissions from diesel usage. This in turn could boost rural economic growth through enhanced productivity and an increase in local, green jobs.Additionally, C&I customers benefit from cost savings from electricity and gaining an additional source of revenue by selling excess power to the grid. Solar rooftop installations for the rural C&I segment can play a vital role in decoupling economic growth and emissions from emerging nations like India. Every megawatt of capacity installed reduces carbon emissions by 2,000 tonnes each year and brings the country one step closer to reaching its target of 40 GW of grid-connected solar.
Despite this opportunity, scaling of rural solar rooftop installations has been slow. This is largely as rural customers have a relatively small ticket size and lack credit histories. Many of these customers are also unable to offer any collateral guarantees. Innovating financing from Development Financial Institutions (DFIs) and other financiers that focus on small ticket solar rooftop C&I projects could help unlock the potential of Distributed Renewable Energy (DRE) solutions for rural customers.Climate financing specifically aimed at solutions such as solar rooftop installations for the rural C&I segment will help countries like India increase energy access, reliability and at the same time, decrease carbon emissions. Though the size of each installation may be small, solar rooftop when implemented at scale at a local level can contribute considerably to reduction in greenhouse gas emissions and also drive socio-economic development in rural areas.DRE should be recognised as the fastest and most affordable way of decoupling inclusive economic growth from carbon emissions, and climate finance promised to emerging nations must be used in scaling these solutions to speed up climate action to stay within 1.5°C range agreed upon under the Paris Agreement.
—The authors, Jaideep Mukherji is CEO and Aditi Mehta is Program Analyst at Smart Power India. The views expressed are personal.
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.