Solar mini grids for rural electrification

Decrease in technology costs make solar power a cost effective and green option

geetanjali

Geetanjali Minhas | March 3, 2014




Massive red- tape in the country is hindering maximum utilisation of resources. Given the present condition of grids in accessible areas, extending them to rural populations is an expensive proposition. Due to abundant solar energy available in most parts of the country, a better option for a long term scalable and low maintenance solution would be distributed, community level, renewable energy based solar photo-voltaic (PV) mini grids. Combined with biomass gasifier, clean cooking gas can be made available resulting in a versatile ecosystem. What is needed is a campaign to force policy makers to highlight renewable technology energy and underscore the critical role it would play in our country’s energy future.

These are the findings of a report, “Solar Mini-Grids for Rural Electrification: A Road Map to 100% Energy Access for India @75”, by the Observer Research Foundation. [Read the full report attached below.]

As per Census 2011:
•    Nearly one–third of India’s population – 80 million households accounting for over 300 million people – do not have access to electricity
•     Over 77 million households, mostly in villages, depend on kerosene for lighting
•     Nearly one-sixth of India’s 6 lakh villages and hamlets are not electrified

Further,
•    Only 10 percent households need to have connections for a village to have ‘electrified status’ and many  villages declared electrified by Rural Electrification of India (REF)  not all households have access to electricity
•    Fuel scarcity, inefficient equipment and maintenance shutdown leads to nearly 25% of India’s power generation capacity  going unutilised worsened by huge losses in transmission and distribution
•    Imported high cost fuel is the principal fuel for power generation in the country contributing to high cost of power  from conventional  and  polluting sources
•    India’s solar energy production is only 1percent of its total energy demand. China which is generating 10% electricity through renewable, mainly solar, energy is aiming for full rural electrification through renewable energy by 2015
•    Current grid-connected installed capacity for solar power is 1,700 MW.  At the end of the 13th five-year plan (2017-22), the target of Jawaharlal Nehru National Solar Mission (JNNSM) is to generate 20,000 MW  of solar power
Urging for maximum self-reliance in power and energy needs the report calls for following the Japan example where technology companies and private investors are installing solar panels on roofs of factories , shopping malls, office complexes and residential buildings and the power so generated is sold to electric power companies or decentralised mini grids. 

Suggesting the power ministry to  accept off-grid solar power plants as long term solution against considering it as transitory ‘ till the grid arrives’, the report says that investment in solar mini-grids  includes costs of supply of power for 25 years, ie, life of panels, is non polluting and promotes  decentralised development.

For a village of about 50 households with one or two commercial loads, viability of 10 kilowatt peak (kWp) or similar scale systems is very difficult if not impossible to achieve.

Challenges in deployment of mini grids in rural India
•    Coherence  of a village or cluster of villages
•    Availability of skilled manpower to install and operate these mini grids is a major roadblock to scale up these systems across lakhs of villages
•    On the technical side battery maintenance and replacement is a challenge for solar systems and one needs creative load optimisation as well as innovations in financing to tackle this cost
•    Appropriate metering, pricing and payment collection systems  
•    Operational challenges include overheads of reaching remote places , last mile logistics, laying down a localised grid
•    Lack of infrastructure  and difficult access to remote areas
•    High prices for energy access in rural areas  requires  supplementing of current subsidy regime to reduce tariffs
•    Confusion over applicability of subsidies. Present subsidy regimes and processes are either insufficient or too tedious. Appropriate capital grant or subsidy a must to make installation of mini-grids feasible even as a social business
•    Access to capital as solar mini grid is an expensive proposition and banks are not inclined to finance these small scale projects particularly local entrepreneurs who lack credit history and collateral

“ Villages and remote hamlets that are off the main grid can leapfrog into sustainable power access via solar PV mini grids as a long term solution rather than a stop gap till  ‘the time the grid comes’. These mini grids will provide ‘Electricity beyond Lighting’ which is critical for achieving livelihood enhancement. In a country like India where land is scarce resource and per capita land availability is low, technological innovation in solar power must receive a strong policy and investment push,” the report says.

Recommendations:

• Franchise of mini-grid operators or distribution agents that mobilises local citizens  at the front of the network where (a) large players provide scale in deployments through multiple installations by tapping their existing supply chains and leveraging their brand name in rural areas and (b) local entrepreneurs can become franchisees of these companies and operate at various levels of  BOOM (build, own, operate, maintain)

• Enabling an ecosystem  for facilitating   cooperation among  all stakeholders to evolve facilitative environment for  aggregators and local entrepreneurs to become driving force and states and central governments become enablers and facilitators

• Joint policy by the power ministry and new and renewable energy ministry in an enabling partnership with industry, entrepreneurs, NGOs and the finance ministry to aggressively tackle electrification through solar PV (or hybrid) mini grid

• Launch nationwide capacity building and rural entrepreneurship training programme to train thousand of youth who can be employed – especially entrepreneurs in addition to  thousands of technicians being sought  to be coached under the JNNSM

• Provide financial incentives like (a) capital subsidy, where the government needs to    regulate  and create  a  transparent and monitoring framework, (b) setting aside a corpus  for interest subsidy to make these projects economically feasible, (c) directing government loan waiver schemes to a loan guarantee corpus  so that banks have the confidence to lend, and  (d) separating rural energy  loans from power sector for ensuring  flow of funds

• Channelizing CSR funds into rural energy infrastructure besides incentivising companies with proportionate Renewable Energy Certificates for generated power

The study pushes for a mission similar to Aadhaar implementation across the country in three phases:

Phase I- LEARN (up to 2015):  Here a joint policy  should be  framed, processes streamlined , training given to  entrepreneurs, technicians, bankers, create public awareness,  identifying  avenues for sourcing  subsidy and grant  funding,  incentivise large companies and bring them on  board, encourage them to channel CSR funds for these projects to set large scale deployment of mini-grids. This phase should identify feasible on ground models which could then be groomed for speedy execution.

Phase II- SCALE (up to 2018): This will push efforts in magnitude to see large number of mini- grid operators as by this time viability will have proven. Large companies too will put up mini grid installations. Training of manpower will be stepped up and the pace will would now need to support six thousand villages  per year.

Phase III- DELIVER (2018 onwards): With the experience of installing tens of thousands of mini-grids, the entire nation goes full steam to cover ground. The policy for grid interactivity could be finalised and implemented. A clustered village approach besides speeding up environment would provide greater potential for installing Solar PV -biogas or Solar PV and micro-wind hybrid plants.
 

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