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.