First of all, let me apologise for the inordinate delay since my last blog on this site. One of my excuses is that during this period DFID India, along with other DFID offices across the world, has been busily engaged in drawing up new business plans for the next four years. We in India have also been preoccupied for the past few weeks with a visit by the UK Parliamentary International Development Committee, which has been conducting an enquiry into the DFID programme in India… an interesting and broad-ranging process that’s part and parcel of DFID’s accountability to the UK public.
In between these imperatives, one of the issues that’s occupied most of my attention is that of access to energy. As I’ve highlighted in previous blogs, more than 400m Indians do not have access to electricity, and 75% of the population rely on fuelwood to meet their cooking energy needs. And the links between lack of access to modern energy and poverty and ill-health have been well documented – most recently in the 2010 edition of the World Energy Outlook, published by International Energy Agency and the UN Development Programme.
The problems of a lack of electricity are plain to see, but encouragingly, promising solutions are at hand. Visit a remote village in India after dusk and the chances are that you will find dimly lit homes, closed shops, dark deserted streets and very few signs of life. This is true for the majority of remote villages in India, but not for village Ranidhera in Chhattisgarh state, which I visited recently to review a DFID-funded energy access programme implemented by Winrock International.
In Ranidhera, a poor tribal village of 110 households, every evening after sunset, homes come alive with the magic of electricity. Kids gather under the soft white light of compact fluorescent lamps (CFLs) to complete their homework, radios and TVs inform and entertain the elders and people from neighbouring villages bring their mobile phones to be charged for a payment. Outside, the shops are open until late and the village streets are lit by towering streetlights giving the village the look of a small town. Interestingly, every watt of this power comes from within the village.
The residents of Ranidhera through their Village Energy Committee (VEC) and a women’s self help group run a power unit of three 3.5 KVA generators with 7.5 KVA backup capacity. The power unit provides three hours of domestic and three and a half hours of street lighting every night. To top it all, these generators are run on straight bio-diesel (without processing) produced from Jatropha seeds grown and pressed to extract oil in the village itself, thus making the village self-sufficient in energy production. The power unit also has a computer in its premises which is used to train village kids in basic computing skills - you can see the kids enjoying this facility in the accompanying picture.
Supplying electricity to 97 tribal households, the Ranidhera power unit has been running successfully, with zero down time, for the last four years. There is almost 100% collection of service charges from the user households since the collection is managed by the VEC whose members are elected from the user households themselves. The costs to households, at Rs 25 (£0.33) per month for an 11 watt CFL and Rs 35 (£0.47) per month for a plug point, are offset by savings in spending on kerosene. The power unit has also enabled new sources of income for villagers, for example from a rice de-husking mill and from sale of de-oiled Jatropha pressed cakes.
The project has demonstrated the potential for biomass-based Decentralised Distributed Generation (DDG), using standalone mini-grids to meet the energy needs of villages in remote areas. Although it costs more to generate power from biomass than conventional fuels, the costs of extending the electricity grid to remote areas can make such schemes economically viable. Village mini-grids and other off-grid solutions are also much less prone to leakage than the centralised grid which experiences transmission and distribution losses of up to 40% (a problem that DFID is helping state governments to address separately).
I haven’t even mentioned the environmental benefits yet: not only is the biomass power carbon-neutral, by substituting for kerosene it also helps to cut down on indoor air pollution, a major cause of ill-health in poor rural households.
Where do decentralised renewable energy schemes like the Ranidhera mini-grid fit into the bigger picture? The Indian government recognises the major role they have to play in bringing electricity to remote villages for which central grid extension is unlikely to be economically viable, and provides capital subsidies for DDG schemes through some of its programmes. I think they are likely to prove attractive to a much larger number of villages which notionally are connected to the grid, but which suffer from the severe shortages in grid supply that are common across much of the country. Ranidhera in fact is one such village – electricity lines were extended to the village outskirts by the state power utility about three years ago, but it has yet to receive a single KwH of electricity through these lines.
Despite the potential, and proven viability of the technology, schemes like that in Ranidhera remain thin on the ground. A few social enterprises such as Husk Power Systems (which operates in Bihar, one of India’s poorest states) and Desi Power are active in the sector, but the total number of plants remains tiny in relation to need. There are many issues that need to be addressed if such projects are to operate successfully on a sustainable basis, including how to ensure fuel supply, how to access commercial financing, how to involve and train local villagers in the management of plant operations, how to ensure maintenance, and how to price services and manage collections.
In short, what sort of business models will be needed to enable renewable energy mini-grids to really take off on a large scale, and what policy frameworks are needed to support this? These are the basic questions we will be working to try to find answers to, in partnership with the Indian government, private sector and civil society, over the next four years. They are equally relevant for other renewable energy products, such as solar lighting and clean cookstoves, which we will also be working on. For more on these watch this space!