Do chickens read at night? Options for sustainable rural electrification in India

By Saksham Nijhawan

This article was originally published on Forum For The Future and is republished with permission.


Whilst India ‘transitions’ with the fastest growing global economy (+7.6% GDP), are the 18,452 un-electrified villages are getting a taste of India’s rapidly growing and changing economy? Reading is arguably the most important vehicle for gaining knowledge. I wonder how do chickens in these villages read at night?


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India still has very low per capita energy consumption, well below the world average. The poor lose out in the race for these resources and feel the impact of any supply shortfall. Lakshwadeep has highest per capita energy consumption at 56.7 kWh, Delhi’s per capita consumption is 43.2 kWh while Bihar has the least at just 3.5 kWh. In other words, an average Delhi resident consumes over 12 times as much electricity as an average person in Bihar.


Energy is one of the key drivers of development, and access to clean, safe, affordable sources of energy can stimulate economic, social and physical development.  Inadequate access to resources severely limits livelihood enhancement possibilities such irrigation, efficient processing, storage and electrically powered machines.


India still has 300 million people with no access to electricity (comparable to 490 million in 1991). The bulk of these people live in rural areas that are geographically ‘unviable’ to be connected to the grid. Higher last-mile connectivity costs coupled with low purchasing power has for years, prevented state distribution companies (Discoms) from expanding their service network. Discoms across the country have accumulated over Rs.4,300 billion in debt due to (a) heavy AT&C losses (b) leakages and theft of electricity by households, small and medium businesses and even industries (c) inefficient billing and (d) incompetent management of Discoms. 


There is an increasing awareness and realization of the importance of Decentralised Distributed Generation (DDG) and DRE (Decentralised Renewable Energy) systems, to service the energy deficient in rural areas. However, there are critical issues that have to be addressed in planning and implementation of programmes and policies in order to have a sustained and substantial impact on the rural electrification in India. These are detailed below.


1. On-ground institutional support 


Challenges can arise due to lack of local technical and management ability for long term operation and maintenance of rural DRE systems. Such challenges can increase the cost, thereby impacting financial viability. Building a strong on-ground network of trained workforce to not only service but to run successful business models can act as a strong base for making DRE systems a success. 


2. Grid-integrated or integration-ready systems


Building with the aim of grid-integration or integration-ready systems strongly increases the viability of a DRE system, especially for locations where the grid already runs close-by the village. Such systems allow the operator to feed excess or surplus energy units back to the grid.  While some RE-progressive states have made positive steps to promote grid integration of DRE systems, there are still concerns with the policies, such as prohibition on islanding (feeding into the grid when it is not live), low and static feed-in tariffs, stability of grid (ex. instability issues in Tamil Nadu grid) and viability gap funding. 


3. Organic micro-business models


Standalone DRE systems can have limited impact. However, allowing for and even promoting an organic growth or integration of DRE systems in local markets can increase their impact and reach. Inclusion of productive loads within a village can trigger larger economic benefits, in turn, increasing the willingness and capacity to pay.


4. Inclusion of all stakeholders


There are multiple stakeholders for energy systems in rural areas. Community members, panchayati raj institutions, forest committees, regional NGOs, block level officials, junior engineers, private sector developers, RESCOs, Discoms, micro-finance institutions, state nodal agencies and central government ministries. Laying down guidelines for inclusion and interaction of all stakeholders should be done at a state level. There are multiple frameworks developed by institutions that provide innovative and inclusive approaches to include all stakeholders and ensure sustainable scale up of DRE interventions; such frameworks should be critically analysed and included in state policies. 


5. Positive environment for growth of private sector


In the past, large numbers of DRE systems have failed due to lack of participation from private sector in operation and maintenance of such systems. The DDG market in India is valued at INR 13,000 Crores, while the actual deployment is only of the order 1-2%. There are still measures that can be taken to foster crucial public private partnerships, allowing for dynamic tariff regulations, flexible subsidy distribution and renewable purchase obligations for DRE systems.


6. Access to micro-credit facilities


There have been a number of cases where rural banking and micro-finance institutions have proven effective in providing gap-funding to both developers and end-user levels. Although a majority of rural population still does not have access to micro-finance institutions, efforts should be made at a central and state level to promote and create awareness on the rural micro-finance sector; one such way could be to link micro-finance institutions to state RE policies.


The DDG market, touted as the next “smartphone market” can cater to large and unmet energy needs of rural and urban household and commercial users. A comprehensive and collective vision is one of the keys to unlocking this maze. A vision where all input and output factors are deliberated, analysed and included through the lenses of various stakeholders. This vision gives not just chickens but all beings the right to read at any time. 


Power Up Odisha is a joint initiative set up by the Ministry of New and Renewable Energy (MNRE), and the UK Department for International Development (DFID) and coordinated by Forum for the Future. Our aim is to accelerate 24×7 Power for All throught the deployment of DRE in the state of Odisha, which currently has the highest number of villages without power in India.

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