Village electrification through renewable energy in India

Heleen de Coninck, COP 11, December 6th, 2005

The VERI project

Joint work of ECN and TERI
Contributions from READ Foundation and BASIX

Inputs from Roundtable during the DSDS 2005 and discussions with Ministries and other stakeholders Short survey in tribal villages in Orissa, India Evaluate the current policy for sustainability Develop implementation model

Village electrification in India

Household electrification:
2001 Census India: 44% Other sources: 30%

Village electrification number (Ministry of Power): 88%

Number contested

New definition and new survey by TERI should give resolution

Village electrification in India

Indian government aim:
In 2007, all villages electrified In 2012, all households electrified

25,000 villages identified under responsibility of the Ministry of Non-conventional Energy Sources (MNES) renewable energy Tribal villages: 11,000 of those 25,000 with quite common characteristics

Tribal villages in India

Location of the 11,000 villages

Tribal villages in India

Subsidence farming (rice) Remote from markets Very low income Additional sources of income after energy:
Tamarind processing Mango processing, pickle making Leaf plate making

Strong community cohesiveness Active Self Help Groups in place

Income generation
Energy necessary for income generation and subsequent poverty reduction, but also:
Access to markets Natural resources Capacity and entrepeneurship .

Energy provision

Perspective for income generation villages: Medium to low

Access to markets Capacity

Income generation

Poverty reduction Natural resources

Essential elements of "sustainable" energy provision

Usefulness - appropriate size, technology and energy Ownership - sense of responsibility
connected to usefulness

Affordability - relative term!

sometimes lack of energy access is due to lack of income sometimes for lack of availability of services

Post-commissioning - Operation & Maintenance

Capacity for simple repair Access to service and savings for more demanding repair

Policy: should take into account these factors!

MNES policy
Location-specific technology Capital subsidy (up to 100%!) Local capacity building

Fit?
Ownership: Very high subsidy usually not productive Affordability: O&M costs too high? Post-commissioning: local capacity building. Costs unclear

Oversubsidise many, and undersubsidise the most needy: more tailor-made approach required

Alternative implementation model

Upfront inquiry: identify income levels and income generation perspectives Costs of rural energy provision: decrease through learning Government spending effective
Middle income - able to pay, ESCO provision, per kWh initial subsidy Low income - high perspective: unable to pay capital costs and O&M costs at the start, but income generation expected shortly after energy provision Low income - low perspectives: unable to pay, even O&M

Assist business development

Development of electricity prices

12.0
Rural electricity cost

10.0 Cost (Rs/kWh) 8.0 6.0 4.0 2.0 0.0 1 2 3 4 5 Year 6 7

Urban electricity cost Rural willingness to pay

10

Rural electricity costs higher than urban

Implementation model - middle income

Contribution to electricity cost (assuming biogasifier) (Rs/kWh)

6 Spending Government 5 Spending villages 4 3 2

1 0 1 2 3 4 5 Year 6 7 8 9 10

Public-private partnership: ESCO provides energy

Implementation model - low income, high perspectives

35000 Expenditures by Government
Spending on electricity (Rs)

30000 25000 20000 15000 10000 5000 0 1 2 3

Spending villages high perspectives

5 Year

10

Combination with business development services

Implementation model - low income, low perspectives

35000
Spending on electricity (Rs)

30000 25000 20000 15000 10000 5000 0 1 2 3

Expenditures by Government Spending villages low perspectives

5 Year

10

Development path established upfront?

Main messages
Sustainable energy provision requires ownership, affordability, and post-commissioning arrangements Capital subsidies alone oversubsidise many, undersubsidise most needy More tailor-made model proposed, taking into account sustainability aspects and maximising effectiveness of government spending Perspective for income generation is essential and should be evaluated upfront