For good reason, sub-Saharan Africa gets much of the attention when it comes to electricity access. It is home to more than 600 million energy poor spread across nearly 50 countries. But it is likely going to be India — by itself home to roughly 300 million unelectrified — where decentralized renewable energy (DRE) achieves the scale needed to deliver Sustainable Development Goal 7 (SDG7) — universal access to modern, affordable, reliable and sustainable energy by 2030.
India has a strong central government with support from the states. It has a thriving innovation and start-up economy. It is building infrastructure and supply chains for needed capacity. And it has access to money for R&D and deployment — not just for rural household power, but for productive use. It also has the desire and ability to leverage its international stature and market size to partner in Africa and other low energy access countries. These are all ingredients for further cost reductions and global scale.
The Ministry of New and Renewable Energy (MNRE) is on record as saying all households will be powered in India by May 1, 2018, although the official goal for 24/7 electrification remains 2022. It is no secret that the Indian government’s electrification dream is based on grid extension. It is also becoming increasingly clear to many in both the public and private sector, however, that such a dream will be impossible to achieve without a primary role for DRE (see expert perspectives from the CLEAN Network and Smart Power India for more). DRE must take a front seat if India is to provide universal access. Below are five reasons why.
States and the private sector
India has already decided that states and the private sector will play leadership roles in the future of energy infrastructure, especially generation and distribution This is perfectly suited for the DRE sector, which is dominated by private sector players who are already nimble enough to navigate a customer base — the rural poor — that state-owned power companies, already deeply in debt, avoid as being unprofitable and too complicated to manage.
Energy poor states such as Odisha, West Bengal and Assam are already working to figure out how to build integrated energy action plans that incorporate DRE as a key component to reliable, affordable rural electrification. Bihar and Uttar Pradesh, the two states with the highest number of energy poor, also are taking steps to increase the role for DRE, and their new chief ministers are both from the same ruling party as Prime Minister Modi.
Whether it’s electricians, loan officers, sales force, manufacturing, standards and quality assurance, hardware design or IoT and software, India has the pieces in place to scale DRE and create significant job opportunities. The Skills India campaign, with a goal of training 500 million youth by 2020, including those in villages, will help. Energy access is one focus of that training. At the same time, civil society and social enterprises are working to build capacity in other areas, such as banking, women entrepreneurship and micro-enterprises (see here and here). Moreover, the recent introduction of a Goods and Services Tax is expected to discourage imports of DRE products and increase domestic manufacturing and assembly, adding greater scale and capacity within India.
Households and beyond
While pioneering new DRE services and appliances for homes and building consumer awareness and rural distribution for basic access, India is also the global leader in applications that will take DRE further than lighting and phone chargers. Such programs as the Rockefeller Foundation-funded Smart Power India are clearing a path to scale micro-grids, including developing a Utility-in-a-Box solution. Private ESCOs are pioneering new micro-grid business models that are virtually battery free, or based on anchor loads from cold storage, irrigation and other productive uses, while civil society is working to enable rural healthcare and education via DRE. Solar Irrigation alone is estimated to be a $60 billion opportunity in India.
Money and policy follow opportunity
DRE in general is a massive economic opportunity in India (see a new infographic showing why). Yet despite the opportunity, lack of access to finance and adequately supportive policy remain challenges to scale. It was a positive signal that the World Bank loaned India $625 million to install 100MW of grid-connected rooftop solar on commercial, institutional and industrial buildings, but India should seek the same level of support from global financiers for DRE. Some encouraging signs are emerging, such as an expected $100 million Green Climate Fund facility for DRE in India. The finalization of a new National Energy Policy (NEP) and the first national micro- and mini-grid policy can also play a critical role in providing additional policy support for DRE to take its proper place. The NEP proposes the creation of an Energy Access Fund, which will be needed following the diversion of billions of dollars in revenue from a coal levy that was previously earmarked for renewable energy projects. India also has almost 300 active micro-finance institutions, second only to Bangladesh, which can play an enhanced role.