Former UN Secretary General Ban Ki Moon described energy as “the golden thread that connects economic growth, social equity, and environmental sustainability” in an event address at Washington DC. This statement reflects how access to energy can be vital in bringing positive changes to lives, especially for the marginalised. Studies have shown a strong correlation between rural poverty and access to electricity. But what is the point if electricity doesn’t reach the intended groups?
In India, electricity has yet not reached 45 million rural households. The gravity of the issue can be understood when the definition of ‘electrified’ is considered further. According to the criteria used by the power ministry, a village is considered electrified if electricity is provided in public places and at least 10% of households. This means that a village is considered electrified even if 90% of its households do not have electricity. Although currently, the electrification rate is high at 96%, 244 million or 19% of the population still does not have access to electricity as of 2016. Other than this, there are questions raised about the quality of energy supply, individual connectivity and the duration. So, does the answer to rural energy security lie in renewables? Do renewables have enough firepower to sustain and empower the rural economy?
There is no simple answer yet.
If the same questions were raised a decade earlier, the answer would have been a definitive ‘No’. But over the years, renewed vigour in research and development has paved the way for more affordable and accessible renewable technologies. This is especially in the case of solar technology. As per a World Bank report, the cost of electricity from solar photovoltaic (PV) is currently a quarter of what it was in 2009 and is set to fall another 66% by 2040. That means a dollar will buy 2.3 times as much solar energy in 2040 than it does today. Favouring its adoption even more, is the fact that India is in a fortuitous position to tap solar energy, with the country receiving 300 days of sunshine throughout the year. A major thrust has been put to develop a conducive environment for the growth of the solar sector in the country. In the international arena, India even scored a diplomatic win by pioneering the International Solar Alliance (ISA) and rallying the cause for affordable and accessible solar energy. But what does all this hullabaloo around renewables mean to the people in villages?
Sustaining Rural Economy
A rural renewable project not only raises productivity but also provides a host of socio-economic benefits. Apart from gaining access to better electricity services, it also helps develop a self-sustaining micro economy. A Rockefeller Foundation initiative called “Smart Power For Rural Development” based on renewable power in Bihar and Uttar Pradesh is showing positive results in uplifting and rejuvenating the local economy. In the village of Kamlapur in Uttar Pradesh, a local entrepreneur set up a new business to manufacture garments with the use of electric sewing machines. After a two-month training, 50 local women were employed from the community, resulting in increased incomes for families that traditionally depended on agricultural wages. Like these, scores of other encouraging stories of empowerment of women, girls and the youth have shown that renewable power can be an agent of social transformation too.
It also has the potential to bring positive changes in the mainstay of the rural economy, i.e. agriculture. Adopting a renewable route to agri-power makes economic sense as a significant subsidy to farmers can be drastically reduced. Not only this, the operations and maintenance of such energy assets itself will require a team of semi-skilled workforce wherein the rural youth can be meaningfully engaged. But the question remains whether we are ready to harness renewable energy at the grassroots entirely.
What’s Holding Back Renewables?
Renewable energy has a unique quality that raw material is available at the site itself and no external supply is required – be it wind, solar or small hydro. Being constraint in resources and delivery mechanism, it makes sense to go for an off-grid model which leverages this quality. This is a not a new concept as the government has already been toying with the idea of decentralised renewable energy (DRE) based rural electrification for years now. However, the implementation and application has been met with limited success owing to many factors.
One major impediment is the financial viability. It includes both up-front installation costs and high operation and maintenance expense. It further leads to prohibitive tariff structures that are a barrier to the low-income rural population. There is a significant disparity between a grid-connected and off-grid tariff structure. This is where government and private players have to step in. It is a state imperative to devise creative financial instruments that hedge the risks for private operators, even out tariff iniquities and at the same time ease the access to financial capital for the local community.
Currently, there is no robust finance mechanism for supporting DRE projects at the start-up or in the initial phase except for capital subsidies. Thus, a cohesive partnership between government and private players and local stakeholders is needed, and the grey areas in capital finance and tariff structure cleared.
There is a clear policy bias towards grid extension as the preferred mode of electrification. Consequently, the government has been reluctant to heavily invest in off-grid options for rural electrification, barring remote villages. This adverse policy environment is hindering the growth of an ecosystem that is essential for developing off-grid communities in remote areas. Developing an off-grid village should not be seen just as a costly and complicated exercise but we also need to account for its extended socio-economic benefits regarding women empowerment, enhancing organisational capacity of rural masses and social dignity.