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Towards Low Carbon Vibrant
Local Economies
Background:
I ndia’s
Nationally Determined Contributions at the Paris Summit reflect the path
of development for clean energy in the country. The Indian Government
has pledged to install 175 GW of renewable power by 2022 and increase
its non-fossil fuel power to 40% by 2030. The intention is to build 100
GW of solar capacity. This move is reflective of the current
government’s strong shift towards solar energy as the choice renewable
energy source.
Such a shift is not just to cut carbon emissions, but
is also pragmatic considering power shortages and increasing energy
needs of a rapidly developing economy like India. Moreover, the price of
coal, which India is a major importer of, has been rising since the past
few years which is affecting the grid parity.
However,
there are three major obstacles in achieving the goals as envisioned -
feeding into the grid, technology and finance. The Indian transmission
and grid system is outdated and is not effective to integrate renewable
energy. The inability of incorporating power from different intermittent
sources makes integration on a large scale unviable and this is partly
due to the absence of the required technology. It is a technical
challenge for India to achieve 175 GW. Financing a renewable energy
power plant requires ample capital and the financing terms are
unattractive. This is due to high cost of debt and variable interest
rates. Additionally, Indian manufacturers of renewable devices are
behind the Chinese in terms of competitiveness and quality.Current
Policy Response
India as in many other spheres has been an outlier in
the renewable energy space. It is the only one country in the world with
a Ministry of New and Renewable Energy (MNRE), dedicated to clean
energy. But looking at the ‘Green Energy Corridors’ project as an
alternative transmission network one can infer that India has been
lacking behind. Renewable energy source is intermittent and requires an
amount of conventional energy to balance the power need. Such a bundling
will average the cost of power. There is a growing market for off-grid
electricity solutions and the MNRE encourages by incentives and
subsidies. The current policy programmes and schemes of MNRE are
classified as:
1. Grid Interactive and Distributed Renewable Power
• Grid - Interactive
• Off-grid power systems
2. Renewable Energy for Rural
Applications
The global solar power capacity is 177 GW and India
is only 3.3 GW1. Considering the high transmission and distribution
losses in central grids, decentralised renewable energy micro-grids are
thebest approach to a low carbon, sustainable and smarter energy. Energy
produced and used locally reduces carbon emissions and works
independently to serve basic needs of rural consumers while helping
reach the international clean energy commitments for India.
Field Evidence from Pilots that Inform Policy
The MNRE concedes that grid extension for rural electrification is a
very costly proposal and a not sustainable alternative. According to IEA,
World Energy Outlook 2015 nearly 74% of the rural sector in India has
been electrified and there is a grid set up nationwide for transmission
of power. However, wherever available, the access is erratic and
unreliable that is hampering the growth of rural industries and
enterprises. Providing access to clean energy would improve economic
opportunities and quality of life of the rural population.
A study of Gopalganj and Saran in Bihar reveals that DRE models help in
green job creation and help improve community mobilisation for demand
for renewable energy and payment for services. Such an approach
overcomes hurdles such as finance and grid integration. The demand for
energy can be translated into successful business cases.
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Manoj, has been living in the
Laliya village for the last 22 years. His
father is a doctor by profession and owns a clinic. His father wanted
him to work in the clinic, but, Manoj was always fascinated by the way
tailors stitch and design clothes. When TARA offered him a business
expansion idea & prompted switching to motorised machine to reduce
physical labour, he immediately sensed the opportunity and signed up.
"Now I don’t have to go back home with thumping pain in my feet" says
Manoj.
He has a metered connection
with a monthly subscription package of Rs.450. He even trains five young
boys at his shop, who in turn assist him in stitching work. Together
they sew men’s clothes and school uniforms for children. As against his
previous revenue of Rs.6,000 he is now able to secure a monthly revenue
of Rs.10,000 with a monthly electricity consumption of 25-27 units. His
customers have increased from 4-6 to 13 in number on a weekly
basis. After being connected with a 90W motor, his profit increased from
Rs.2,000 to Rs.8,000 per month.
Since the day he has been using motorised machine,
he found himself efficient enough to take up more number of orders and
deliver them in due time or even before delivery time. He believes TARAurja has enhanced the "shobha" (brilliance; beauty) of his shop, and
village on whole, by providing access to reliable electricity. |
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Key Policy Recommendations
The off-grid solar energy market maybe small with only 13.4% of India’s
total solar capacity. However, it sits on huge potential for households,
mini-grids and even industrial consumers. In India, the focus of
electricity is majorly still geared towards centralised and conventional
grid systems with fossil fuels as the dominating source of power
generation. DRE can help open up new avenues that provide relatively
stable mechanism for energy needs of the rural population.
Decentralised production systems help allow a greater number of people
to access economic opportunities as compared to centralised production
systems. But for a larger viable system, what is required is to design a
tariff mechanism for micro-grids that would help in improving the
economic viability of the energy system. DRE as a bottom-up approach
using renewable energy and further helping rural areas integrate into a
centralised grid would be the best approach.
The approach to providing electricity maybe via top down and increasing
the grid approach or by creating off-grid generation systems. The bottom
up approach however is a preferred option as compared to a fully
integrated grid because micro grids can switch from isolation to
grid-connected mode. This makes micro grids flexible and sensitive to
local supply and demand.
DRE grid systems can come with a cost-recovery basis of a guaranteed
margin and therefore could be utilised to attract private sector
investments. India in the long run needs to facilitate finance for
building up renewable energy production from the private sector. This
would help in developing and gradually transforming the current energy
system to accommodate renewable energy production and consumption.
Instead of in the grid versus off the grid debate, what is required is
integration and not competition. An evolution of a smart grid that
provides and connects different energy sources to ensure a constant flow
to users would be the way forward. This must be supplemented with a more
efficient revenue collection technology.
References:
• http://www.greenpeace.org/india/Global/india/report/Bihar-Smart-Energy-Access.pdf
• http://www.greenpeace.org/india/Global/india/report/Empowering-Bihar-Policy-pathway-for-energy-access.pdf
• http://cseindia.org/docs/photogallery/ifs/Renewable%20Energy%20in%
20India%20Growth%20and% 20Targets.pdf
• http://www.greenpeace.org/india/Global/india/report/BiharSmart
EnergyAccess.pdf
• Energy for All:
Financing access for the poor, IEA
• Ministry of New
and Renewable Energy – Energy Access – Draft Sub-Group Report
• Goswami, U.
(2016). India’s renewable energy targets catch the attention of
global investors, still need ground work. The Economic Times.
q
Syed A A Farhan Ishaqi
sishaqi@devalt.org
Endnotes
1 As on Jan
2014, IEA PVPS)
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