Rural Electrification using Renewable Energy Status
and Future Prospects

 

Introduction

Energy is vital to fostering development; lack of energy can potentially perpetuate poverty and jeopardise the growth of a nation. The absence of electricity severely curtails working hours and opportunities for the socio-economic betterment of 44 per cent households (approximately 84 million) in rural India.

However, the Indian economy is one of the fastest growing economies of the world with GDP growth rate of 8 per cent per annum. Currently, India consumes 3.7 per cent of the world’s commercial energy, making it the fifth largest consumer of energy globally. As per IEA report 2007, India is set to become the third largest emitter of CO2 by 2015.

The Indian power sector suffers from limited supply and poor quality coal; with low level of technological advancements, the Indian power plants produce 0.94 kg CO2 per kWh energy produced, which is approximately 50 per cent higher consumption than the world average. As India is set to become the third largest emitter in the world by 2015, it has a huge bearing on the climate change. As per the report, cost of climate change could result in 9-13 per cent loss to GDP by 2100 in comparison to non-climate change scenario. On the other hand, India has a huge potential for developing renewable energy based power plants. As per the Ministry of New and Renewable Energy, sources estimated that renewable energy potential in India is 179,000 MW (mega watts) of which India has hardly realised 10 per cent.

India has made rapid strides in several sectors and the benefits of economic growth are increasingly visible. But India continues to remain a country with about one-third of its population living below the poverty line. Rural India is deprived of reliable access to grid power, and institutional and infrastructural resources to meet its energy related needs. The presence of reliable energy services in the lives of these rural populations can significantly improve their prospects by offering a range of benefits such as poverty reduction, health improvements and opportunities for a better livelihood. If India aims to grow at the rate of 8 per cent from now through to 2031–2032 and meet the basic energy needs of its citizens, it will need to increase its electricity capacity and supply to around six times that of 2003–2004 levels. By 2031–2032, the power generation capacity must increase to nearly 800,000 MW from the current capacity of around 160,000 MW, inclusive of all captive plants.

In view of the transformative effect that reliable energy availability can have on the lives of people, the Government of India (GoI) has prioritised rural energy programmes. It has embarked on a massive programme to enhance the power generating capacity and promote rural electrification with emphasis on connections to households below the poverty line. GoI intends to promote renewable energy on a larger scale, both from an energy security point of view as well as a climate friendly option. The implementation of Rural Electricity Policy (2006) of GoI through promotion of Renewable Energy based Decentralised Generation (REDG) plants provide a unique opportunity for developing and strengthening household electrification in rural areas.

The experience of developing decentralised power plants based on renewable energy resources is relatively recent. The REDG, by design, ensures household level electrification, unlike the grid connected villages. However, the success with such installations has been limited due to the complex institutional frameworks in which these systems have to be installed and maintained. A REDG plant also runs the eventual risk of disuse on the arrival of the grid in the absence of an appropriate policy and regulatory framework at the state level.

Key Challenges

The key challenges for Renewable Energy Development in India are:

  • Optimal pricing of power generated from the renewable energy sources

  • Issue of the quality and consistency of renewable power

  • The costs of technology development and production need to be reduced significantly from current levels

  • Availability of financing especially project finance for renewable energies

  • Slow pace of rural electrification and pace of reforms in the rural electricity sector

Measures Undertaken by Indian Government

The ministry is aiming for a 10 per cent share for RE or 10,000 MW in the power generation capacity to be added during the period up to 2012. For this purpose, it has developed a twofold strategy comprising of liberalising regulatory frameworks and promoting investment, including encouraging FDI.

Regulatory Support for Renewable Energy Development

  • Electricity Act, 2003 – This Act promoted generation of electricity from renewable sources.

  • National Electricity Policy, 2005 – The policy emphasised on the complete development of feasible hydro projects and laid down procedures for the speedy implementation of the same.

  • Integrated Energy Policy, 2006 – The policy emphasised the use of renewables for reducing dependence on energy imports.

  • Rural Electrification Policy, 2006 – The policy recognised that non-conventional energy sources can be appropriately and optimally utilised to for reliable supply of electricity to be made available to each and every household.

  • Rajiv Gandhi Gramin Vidyutikiran Yojana (RGGVY) – This scheme aims at development of rural electricity infrastructure and household electrification, integrated schemes of generation, supply and distribution to rural areas through 90 per cent capital subsidy towards overall cost of the projects; and 10 per cent of the project cost would be contributed by states through personal resources as well as loans from financial institutions.

  • Jawaharlal Nehru National Solar Mission (JNNSM) – The JNNSM aims at development and deployment of solar energy technologies in the country to achieve parity with grid power tariff by 2022.

Encouragement of FDI

  • 100 per cent equity investment to be allowed with permission from Foreign Investment Promotion Board (FIPB), with the proposal to bring it under the automatic route.

  • Foreign investors can enter into a financial/technical JV with an Indian partner.

  • Foreign investors can set up RE-based power generation projects on Build, Own and Operate (BOO) basis.

Future Growth Drivers for RE in India

India has immense potential to meet its energy needs by developing renewable-based power generation systems. The key drivers for the RE in India are:

  • Significant Demand Supply Gap – Supply regularly being over stripped by demand

  • Large renewable energy potential – Abundance of sites for tapping natural and renewable sources of energy

  • Availability of new forms of capital – Private equity, CDM, increasing presence of PE funds in clean energy

  • Increasing state-level initiatives – Many states such as Punjab, Haryana and Andhra Pradesh taking the lead in development of RE projects

Initiatives of Development Alternatives Group

The DA Group has been working for many years towards promotion of renewable energy based electricity solutions. The key current initiatives are:

  • Village Electrification through Sustainable use of Renewable Energy (VE-SuRE), with Climate Change and Development (CCD); Embassy of Switzerland. This project aims to electrify selected villages in Uttar Pradesh, Madhya Pradesh, Rajasthan and Orissa by harnessing biomass and solar energy for power generation.

  • Smart Power for Environmentally Sound Economic Development (SPEED), Rockefeller Foundation, United States. The project aims at creating scalable and replicable business models with mobile towers being anchor loads.

Besides these existing projects, the DA group has prompted several RE projects encompassing various technologies. Some of the key initiatives include:

Lalitpur 15 kW Since 2007 Mauranipur 10 kW Since 2007 Gaushala, 05 kW Since Orchha 2007 q

Sharad Tiwari
stiwari@devalt.org

Source: http://www.iea.org/press/pressdetail.asp?PRESS_REL_ID=239

 

 

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