For Access to Clean and Reliable Energy, India Needs Policy Action in Budget 2022

Network 18

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&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.