Mini-grids can be a viable source of power for India's energy poor

• 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 Pune

• Maharashtra is considered to be one of the progressive states in India but 3.5 million households rely on kerosene for lighting out of which 90 per cent belong to rural Maharashtra. There is still 16 per cent of population who have no access to electricity in the state

• CSE recommended making decentralised distributed generation or mini-grid projects bankable and investor friendly and at the same time move towards performance based incentives to make it sustainable

Pune, June 20, 2014: Energy access in rural India has been a development priority for the government for many decades. Presently, 45 percent of rural households still lack access to electricity, though its generation has grown at 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.

CSE organised a one-day workshop in Pune to deliberate on how to proliferate sustainable mini-grids for energy access. The deliberations included CSE recommendations on policy reforms and a mini-grid business model on which several stakeholders offered their views for future course of actions.

CSE emphasised on the need to scale up mini- grids development in the country. CSE demanded clarity in mini-grid definition and accordingly defined it in order to develop policies and regulations accordingly and build a sustainable model.

Coal based thermal power plants account for more than 60 per cent of the electricity produced in India. 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 lager scale coal based power plants (for that matter, other renewable energy based large scale power plants too) are unlikely to reach the 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 which addresses the climate change issues also adequately. Various renewable based mini-grid models have emerged in India. They have been able to set examples of how mini-grids can bring an end to 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 for most of the time to villagers.” said Nayanjyoti Goswami, Programme Director – Renewable Energy at CSE.

Besides the policy changes suggested by CSE, it also proposed a business 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 grids.

In the grid connected villages, the mini-grid has to co-exist with the main, 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 mega-watt scale that can be a tail end generator. It 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 capital subsidy has been suggested by CSE.

For queries or more details, please contact Aruna (CSE) on k_aruna@cseindia.org / 09818084477.