Distributed generation or mini-grids are the solution to India's power woes in the rural sector, says CSE

• New Delhi-based think-tank Centre for Science and Environment (CSE) discussed the role mini-grids have to play to eradicate energy poverty in the country and proposed a model to ensure at least 12 hours of electricity to every household per day at a workshop on “Sustainable Mini-Grid for Energy Access” in Delhi

• There are 79 million households in India that have no access to electricity in India and more than 74 million out of those live in rural areas.

• Decentralised distributed generation or mini-grid projects can help provide electricity to these rural households sustainably, says CSE. These projects should be made bankable and investor friendly and be provided with performance-based incentives to make them sustainable in the long run.

• CSE proposes a new mini-grid model and releases a set of recommendations

New Delhi, June 27, 2014: “Mini-grid – or decentralized generation of power – offers exciting possibilities of reducing India’s energy poverty,” said Chandra Bhushan, deputy director general, Centre for Science and Environment (CSE), in his opening remarks at a workshop on “Sustainable Mini-Grid for Energy Access” here today. The workshop was organized by CSE, which had invited stakeholders and experts to deliberate on how to develop sustainable mini-grids to provide energy access to millions in India.

Energy access in rural India has been a development priority for the government for many decades. But 45 per cent of rural households still lack access to electricity, even though power generation in the country has grown at a rate of 7 per cent between 2002 and 2013. There are still around 77.5 million households in India who are dependent on kerosene for lighting. Out of these, 93.6 per cent belong to rural India. 

At the workshop, CSE showcased a mini-grid model and released its recommendations on policy reforms. Emphasising the need to scale up mini-grid development in the country, CSE demanded clarity in mini-grid definition.

Though generation capacity is growing in the country at 7 per cent (mostly coal based), consumption is growing even faster due to rapid infrastructure growth in urban and semi-urban areas. Therefore, grid powers from large-scale coal-based power plants (for that matter, other renewable energy based large scale power plants too) are unlikely to reach rural India to provide energy on demand. On the other hand, renewable energy based mini-grids can be a possible solution to meet the electricity demand of vast rural population of India while simultaneously addressing climate change issues as well.

Various renewable based mini-grid models have emerged in India. They have been able to set examples of how mini-grids can end energy poverty in India. But mini-grids developed so far in the country are facing several challenges due to high capital and operating costs, high tariff and inconsistent revenue collection, low demand in the villages, and bureaucratic delays etc. 

Tariff mechanisms for mini-grids
“In order to make energy access through mini-grid a reality, we need a simple but robust model to provide reliable electricity to villagers,” said Nayanjyoti Goswami, programme director-renewable energy at CSE.

Besides the policy changes, CSE also proposed a model to make the operation of mini-grids sustainable.

CSE divided the energy poor into two categories: 

1) Grid connected rural areas (not receiving at least twelve hours of electricity in a day) and;

2) Remote villages and hamlets not connected to the grid.

In the grid connected villages, the mini-grid has to co-exist with the main grid, so that villagers receive reliable power on demand. Mini-grids in such situations must act like a franchise to the DISCOM, or the electricity distributor. Using reverse bidding, renewable energy based mini-grids would be set up for a cluster of villages to ensure minimum supply of twelve hours of electricity. The developers will receive feed-in tariff (FiT) and the villagers will pay a minimal rate for the power they use. The choice of technology can be left to the developer. The idea is to develop a mini-grid of large scale that can act as a tail end generator. The developer can export the surplus power back to the national grid. 

Remote villages will not come under the purview of DISCOMs under normal circumstances. Generation based incentives (GBIs) on the basis of the number of units generated or viability gap funding (VGF) for developing mini-grids in this region has been another suggestion from CSE. 

One of the key issues that emerged in the workshop was, what happens when the grid reaches the village. Said Chandra Bhushan: “We suggest that when the grid reaches the mini-grid in a remote village, they can become interactive with each other. The consumer can pay the tariff of conventional energy and the difference can be paid as feed-in tariff by the discoms. The money for the feed-in tariff can come from sources like the National Clean Energy Fund.”

For queries or more details, please contact Aruna (CSE) on k_aruna@cseindia.org / +91-9818084477.