Exploring Electricity Access in India

What role does electricity play in the world's second-most populous country?

Electricity is on the verge of playing a larger role in the global energy system in the New Policies Scenario, outpacing the growth of all other fuels to take almost a quarter of the total final consumption of energy by 2040. Electricity demand in India is tripling and exceeding the present level of demand for electricity in the United States. Approximately half of today’s global demand for electricity is in the buildings market, which since 2000 has accounted for 52 percent of global growth in demand for electricity. It retains its important role in the New Policies Scenario as an engine of global electricity demand growth, contributing nearly 55 percent (7 200 TWh) to global growth by 2040. The share of the residential sector in the building’s electricity demand growth rises from 54% in the period 2000–17 to nearly 60% over 2017–25 and 70% over 2025–40. There are various contributing elements: today, around 30% of households worldwide own an air conditioner; only 13% of households use electricity for heating; there are nearly 1 billion people without access to electricity, and electricity needs for information and communication technologies are on the rise in an increasingly digitalized world. In the buildings market, electricity to power cooling services is the fastest-growing of end-uses, at nearly 3.5 percent of global annual growth. Industry demand in India (driven by its “Make in India” initiative) and other countries in Southeast Asia is increasing, adding roughly 30 percent to a global demand for industrial electricity, which is roughly 4 100 TWh higher than today by 2040. The dramatic increase in electricity demand for road transport is mostly driven by passenger cars, which represent 60% of the growth. This is primarily due to two main reasons.

1. Policy commitments at country, regional and city levels to support the electrification of vehicles.
2. Commitment to electric vehicles being shown by the auto industry.

Industrial end-use applications account for 40 percent of global demand for electricity. Non-energy intensive industries account for around 20%, mostly for motor-driven systems (including fans, compressors, and drives). Chemicals, iron and steel, and aluminum production together account for around 15% of electricity use worldwide. Aluminum production grew at 6% per year since 2000, leading to a 5% electricity growth in that sector — the fastest rate among end-users in industry.

The Indian government has now set a target of producing 175 GW of renewable energy by the end of 2022 by generating at least 100 GW of solar, 60 GW of wind, 10 GW of biopower, and 5 GW of small hydropower. The energy ministry has also set up a bid round to generate 115 GW and thus liquefy the sector to improve the development. Norms for Renewable Purchase Obligation (RPO) until 2022 has been prescribed Grid integration of the introduction of large-scale renewable energy capacity will be supported by Green Energy Corridors growth. In 2010 India, along with such measures, initiated it’s National Enhanced Energy Efficiency Experiment (NMEEE), another of eight NAPCC projects. This targets a potential 20GW of avoided ability to generate electricity and 23 m tons of fuel savings per year.

India also has a national smart grid plan, a rating system to assess the energy efficiency of buildings and another to promote more environmentally friendly manufacturing for small industries. It recently released a new action plan to reduce demand for cooling energy–a major driver of growth in electricity demand–by 25–40 percent by 2038. The program also aims to reduce demand for refrigerant by the same year by 25–30 percent. The Government is planning to replace the 14 m traditional street lights of India with LEDs by 2019. The rollout of LEDs in houses, with 312 million deployed so far, is also subsidized.

There are four main ways of providing flexibility to manage electrical power systems: making the power generation fleet more flexible; making demand more flexible; installing and updating energy storage and enhancing power grids and their operation. All of these require proper regulatory frameworks and market design if they are to work properly.

A large number of organizations are currently working to empower a large number of households with electricity that are part of the mission to meet rural India’s energy needs. Nevertheless, there has been a rapid increase in funding, innovation, and promotion of mini-grids as the “solution” for the energy needs of rural India over the past 3–4 years. A high level of interest in the private sector and impact investments have brought attention back to solar-powered mini-grids. For instance, the Smart Power program by the Rockefeller Foundation to implement 1000 mini-grids in rural India, OMC Powers plans to own and operate 500 mini-grids in Uttar Pradesh, Linda Foundations active plans to implement 100 mini-grids in Jharkhand, Boond’s plans to experiment with 50 mini-grids for very poor communities and many other small, medium, and large funders, investors, and research grants being poured into efforts across Indian states such as Maharashtra, Odisha, Bihar, Jharkhand, Uttar Pradesh, West Bengal, etc. Experimentation primarily in the fields of infrastructure forms, sizes and value-added, operational strategies, and end-user diversification to improve mini and microgrid research and viability/sustainability. Newer private corporations/ institutions or local NGOs are branching out into becoming RESCOs (Rural Energy Services Companies) officially recognized by the Indian Government. A Renewable / Rural Energy Service Company (RESCO) is an ESCO Energy Service Company providing energy from renewable sources, typically solar photovoltaics, wind, or micro-hydro. RESCOs include publicly owned companies, cooperatives, and community organizations.

Players running larger mini-grids want to turn to several pico grids in terms of the size of mini-grids as maintaining a captive consumer group for the larger one is a painful process as opposed to keeping smaller pico ones. On the other hand, the organization operating pico grids is now fully moving to a mini-grid model due to very high transactional costs of pico grids, to focus on livelihood loads in the villages.

The government should also encourage the establishment of a third-party monitoring team that can keep a watch on the company’s technical and financial results–protecting both the rights of the mostly poor end-users as well as the rights of the companies themselves (if financially sustainable). A fund should also be set up by the government and some of the large foundations to promote application-based developments (mainly focusing on livelihoods) that could make electricity socially more important and financially viable. The future of electricity is not in technology, but on the equation’s application side: economic activity can lead to better social acceptance.

This publication was initially released on the offical website of Candela Energy. Candela Energy is a social enterprise working to create a living ecosystem suited to better peoples lives in marginalized communites.