Grid Innovation is Key to Fulfilling India’s USD 5 Trillion Economy Dream

The government’s vision for a new India is to achieve broad-based and inclusive economic growth across regions, states, and sectors. Since there is an absolute relationship between economic prosperity and availability of affordable, reliable, and sustainable energy, there is an urgent need for India to look at strengthening its power infrastructure across the length and breadth of the country. Although India has achieved 100% household electrification, reliability, quality, and affordability continue to remain major challenges, as does 24x7 power supply. Without secure electricity access, developing basic facilities like education, health, clean drinking water, or even training and skill development in the rural hinterland will always remain an uphill battle.

The Economic Survey 2018-19 highlighted that India’s energy usage is much below the global average. The per capita energy consumption of India stands at 0.6 tonnes of oil equivalent (toe) against the global per capita average of 1.8 toe. It added that India needs to increase its per capita energy consumption by at least 2.5 times if the country has to fulfil the economic aspirations of its citizens and increase its per capita income to $5000.

Current state of electricity access in India and the challenges

A 2015 World Bank study ‘Power for All: Electricity Access Challenge in India’ highlighted that despite access to electricity, many rural households choose not to apply for these connections. There are multiple reasons why nearly one-fifth of India’s rural households, around 31 million of them, continue to depend on biomass for their energy use. Among them, other than the reliability and quality of power, is the inability or unwillingness to pay for electricity.

There are three approaches to resolve the power woes of customers. First, on-grid connectivity with distribution infrastructure; second, off-grid connectivity that includes mini-grids; and third, a hybrid option that integrates the grid with off-grid solutions. Much has already been talked about the poor health of the distribution utilities facing losses due to weak service delivery, power theft, and poor payment collection, thus dampening their investment decisions in rural areas and setting in the vicious cycle of unreliable electricity.

The decentralized network of electricity in off grid, mini-grid or franchise models has proven to be a successful second option for improving energy access in unserved or underserved areas.

Key mini-grid led demand generation strategies

The mini-grid sector has played a critical role in providing access to reliable electricity in rural India. A mini-grid distribution network has the potential to give rise to micro-enterprises, and (per community) generate access to at least 100-140 households, 50-60 shops as it extends 1-2 km from the plant.

What’s required is to generate demand for mini-grids at scale, and increase electricity consumption among underserved rural communities for better social and economic development. Energy Service Companies (ESCOs) can design these to encourage potential customers to use the mini-grid generated power. Thus, an electricity connection is not just about generating revenue for the mini-grid operator, but also about offering freedom from the smoke that results from biomass fuels (firewood, dry animal manure etc.) that affects health in the long run. Electricity access to a household and local businesses means socio-economic development of the family, of the village, of the district and the country.

Specifically, here are three steps to generate demand for electricity among potential rural customers:

- Awareness generation among potential and existing users

Raising awareness through an effective mode of communication, with a tailor-made strategy for individuals, households, and the community will be a key step to generating demand. They can be made aware of the complete cycle of bill generation, the reason for fluctuation in the bills. They should also be made aware of the tariff pattern, and user-friendly grievance redressal mechanism.

Today, communicationhas evolved from sporadic awareness-raising information, education, and communication (IEC) activities to strategic, evidence-based behaviour change communication (BCC) strategies. The change has come about with the realization that socio-cultural and gender norms influence individual behaviour and the need to mobilize communities in support of recommended behaviours is imperative to achieve this objective. For mini-grid projects, the ESCOs need to design a communication strategy that targets individuals, households, and the community separately so that behaviour changes can be stimulated.

- Target underserved but high demand regions/communities

Targeting a high demand area is critical for generating adequate demand. A robust site selection framework should be able to estimate the potential demand of the village as well as provide inputs to the demand generation strategy. The critical factor for the success of any solar mini-grid is its reliability in meeting consumer demand cost-effectively. At the core of the framework is the generation of electricity demand to ensure that the mini-grid is sustainable, scalable, and attractive for an ESCO.

- Demand enhancement through energy efficient appliances

The targeting basic lighting and conversion and expansion of commercial motors helps ESCO achieve 30%-35% of the targeted load to make the solar mini-grid sustainable. An additional 5%-10% increase in utilization can be achieved through energy-efficient appliances. Meeting the energy needs of such appliances can contribute up to 40 to 45% of the total demand for electricity of the mini-grid and hence is quite essential. The introduction of energy-efficient appliances (EEAs) creates numerous additional benefits for both the consumers as well the ESCO, and this is detailed in subsequent sections.

After 100 percent electrification, India needs to simultaneously work on the demand generation in the underserved areas and economic social development of our rural villages, as both will depend on each other. Mini-grids can play a significant role in creating demand as power reliability is guaranteed, and help India achieve the goal of becoming a USD 5 trillion economy by 2025.

- William Brent, Chief Campaign Officer, Power for All ; Jaideep Mukherji, Chief Executive Officer, Smart Power India