How Clean Energy Mini-Grids Can Empower Rural India

Far from the national power grid and without access to a reliable source of electricity, Sunil Kumar, the owner of a carpentry shop in Siwan, a district in Bihar, used to take three to four days to build a table. But when a solar-powered mini-grid was installed in his village, Sunil's livelihood changed. Today his shop is buzzing with the sound of power saws and electric drills. He's able do more work in less time and take on more customers. Business is booming.

Mr. Ban Ki-moon, UN Secretary-General, has described energy as the "golden thread that connects economic growth, social equity, and environmental sustainability." These words—meant to spur action for the 1.2 billion people globally without access to power—couldn't resonate more deeply from village to village in Uttar Pradesh and Bihar, two of the poorest states in India, and where less than 10% of rural households are connected to the national grid. It's also where the Rockefeller Foundation has been spearheading an innovative, market-based initiative since 2014 to bring electricity to the rural poor at a scale capable of stimulating economic growth across the region.

"Mini grids are small enough to construct quickly, rely on renewable power such as solar, [and] provide enough consistent energy to light multiple homes and businesses within a village.

In just two short years, the Smart Power for Rural Development (SPRD) initiative has helped install 93 mini-grids in India. Mini grids, unlike the national grid or small home systems, are small enough to construct quickly, rely on renewable power such as solar, but provide enough consistent energy to light multiple homes and businesses within a village. This influx of reliable energy has given local entrepreneurs the means and confidence to start their own businesses—from cyber-cafes and convenience stores to manufacturing and water purifying plants. Shopkeepers once limited by diesel generators now keep their doors open longer. Today more than 3500 small businesses, 150 telecom towers and 31,000 people are powered by mini-grids.

Mini-grids are not a new phenomenon in India. A handful of villages have used them for years, albeit on a modest scale. But the SPRD initiative is the first to pursue the creation of a mini-grid sector big and robust enough to fuel commercial enterprises and drive economic development beyond one village to many villages.

To achieve this catalyst effect, to build a new sector at scale, the Foundation and its partners are working to support an enabling ecosystem where mini-grids can thrive. We've worked with government to promote policy and regulatory frameworks so energy companies and their investors feel confident making long-term investment decisions—such as the mini-grid policy in Uttar Pradesh. We have supported entrepreneurial energy companies to build mini-grids by providing low interest loans to support start up costs. We have also established a non-profit company, Smart Power India (SPI), which supports energy service companies to be successful, works with villages to ensure micro-enterprises can grow, and secures agreement from telecom and other growing sectors to be anchor customers – ensuring a steady flow of revenue to the mini-grid operators. On the policy front, SPI informs government about policies that will create a pathway for mini-grids to expand in tandem with and be mutually reinforcing for the national grid.

Each partner in this system plays a crucial role in supporting the growth of this new sector, and the Foundation's ultimate goal is to impact more than one million lives and establish self-sustaining momentum in the energy market for a new rural electrification model.

A recent evaluation of the mini-grids' impact in the communities they serve uncovered a broad range of benefits:

Economic Impact

  • 70% of micro-businesses report increased numbers of customers
  • 80% say they plan to expand their business
  • Entrepreneurship and the number of new businesses has grown, particularly among women who are having to spend less time on household work, freeing them to start new ventures.

Social and Environmental Impact

  • 87% of household users say their children use light to study after dark, increasing their average daily study time by two hours
  • 86% of women surveyed reported increased mobility and a reduction in theft
  • 50% of household users reported reduced eye problems
  • A dramatic decline in the use of fossil fuels: kerosene use dropped from 21% to 0%; diesel from 52% to 0%.

Supplying rural areas with strong and reliable electricity is never a simple proposition. But as these initial outcomes show, it can be done if there's an enabling ecosystem that allows renewable solutions like mini-grids to take hold and scale.

"Today more than 3500 small businesses, 150 telecom towers and 31,000 people are powered by mini-grids.

India's rise as a global economic power—and its goal of delivering power to 237 million "energy poor" people by 2022—will depend on large-scale solutions to its energy infrastructure. On 2 October, India ratified the Paris climate agreement. Greater reliance on renewable energy will also reduce the country's use of coal and other fossil fuels that contribute to climate change.

The experience in the lives of rural villagers in Bihar and Uttar Pradesh illustrates the power and potential of that golden thread of energy that the UN Secretary-General so profoundly envisions. We are committed to doing our part to spur renewable energy access and economic development in India by working with our grantees and partners to guide that thread through the needle.

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