Over the years, India’s economic development has been largely uneven due to the lack of reliable, uninterrupted and affordable energy in different parts of the country, especially in rural areas. Rural India, which accounts for two-thirds of India’s population, continues to suffer from power outages and limited access to energy, impacting the health, education and means of subsistence. If these issues are resolved, rural areas have the potential to act as an engine of economic growth for the country.
As development progresses in rural areas, demand for energy increases. Conversely, as energy becomes more available, its demand for productive socio-economic purposes increases by leaps and bounds. Goal 7 of the United Nations Sustainable Development Goals (SDGs) calls for ensuring access to affordable, reliable, sustainable and modern energy for all. Access to energy also underpins progress on various other SDGs, including health, education, gender equality, economic growth and climate action. Providing everyone with access to energy is therefore of paramount importance for a developing country like India.
The challenges of rural electrification argue in favor of decentralized solutions
Connectivity and grid penetration in India have improved in recent years, but the availability of reliable and affordable energy supply to rural households and businesses remains a challenge. Attempts by state governments to make electricity affordable for rural consumers by subsidizing the supply and providing unmetered electricity for agricultural connections have ended up creating financial burdens for governments as well as their DISCOMs.
Rural India could be better served by decentralized energy solutions tailored to the target, such as a micro-grid. A recent study by the Rockefeller Foundation, Smart Power India and the Sustainable Energy Policy Initiative (ISEP) on rural electrification in India found that only two-thirds of rural businesses or enterprises are electrified, although they are the best paid energy consumers. and the main drivers of rural economic growth. This indicates significant demand for new energy solutions, but their delivery poses challenges: The fragmented nature of the rural microenterprise ecosystem increases the costs for energy providers to acquire customers as well as limited funding channels.
All of this argues for the implementation of decentralized renewable energy (DRE) solutions in rural areas. Access to DRE will reduce dependence on other environmentally polluting energy sources such as kerosene or biomass, thereby reducing carbon emissions. DRE also opens up new employment opportunities, at the rural level, creating decentralized energy entrepreneurs and professionals in operation and maintenance. This can generate sustainable growth across the country and ease pressure on urban centers by boosting local employment and economic prosperity.
A framework for franchisee models for decentralized systems, and technical and operational standards for network interaction and interoperability, would significantly boost the DRE ecosystem. This would help pave the way for collaboration and complementarity of DRE systems and the national network.
Collaborate to maximize the reach and impact of interventions
DRE technologies can generate enough energy to power productive business loads such as rural businesses, community health facilities, schools and training centers, as well as agriculture and related activities. With strong and sustained investments and efforts, it is also possible to convert the rural economy to a circular economy by minimizing waste, recovering waste and manufacturing biodegradable products. DRE systems are being deployed in several rural areas across India through different models, but more collaboration and better results are needed. To provide a consistent and satisfactory last mile service to the rural customer, existing and future DRE assets must be integrated into the existing generation and distribution infrastructure. Collaborative public and private sector efforts can help achieve this and achieve universal energy access in India.
As energy is a catalyst for various socio-economic activities, access to energy is not a stand-alone opportunity but is linked to opportunities in other areas such as finance, agriculture, employment , health care and nutrition, education and skills development and digital inclusion. None of these opportunities can be effectively addressed in isolation. It requires collective expertise in these areas – which is possible if government, the private sector, startups, universities and NGOs come together and innovate at scale. The rural market is a big box of opportunities for inclusive and socially impactful growth. And there’s only one way to open it – by working together collaboratively.
The opinions expressed above are those of the author.
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