Rural Electrification in India: Economic and Institutional aspects of Renewables

The paper assesses the demand for rural electricity services and contrasts it with the technology options available for rural electrification. Decentralised Distributed Generation can be economically viable as reflected by case studies reported in literature and analysed in our field study. Project success is driven by economically viable technology choice; however it is largely contingent on organisational leadership and appropriate institutional structures. While individual leadership can compensate for deployment barriers, we argue that a large scale roll out of rural electrification requires an alignment of economic incentives and institutional structures to implement, operate and maintain the scheme. This is demonstrated with the help of seven case studies of projects across north India. 1 Introduction We explore the contribution that decentralised and renewable energy technologies can make to rural electricity supply in India. We take a case study approach, looking at seven sites across northern India where renewable energy technologies have been established to provide electrification for rural communities. We supplement our case studies with stakeholder interviews and household surveys, estimating levels of demand for electricity services from willingness and ability to pay. We also assess the overall viability of Distributed Decentralised Generation (DDG) projects by investigating the costs of implementation as well as institutional and organisational barriers to their operation and replication. Renewable energy technologies represent some of the most promising options available for distributed and decentralised electrification. Demand for reliable electricity services is significant. It represents a key driver behind economic development and raising basic standards of living. This is especially applicable to rural India home to 70% of the nation's population and over 25% of the world's poor. Access to reliable and affordable electricity can help support income-generating activity and allow utilisation of modern appliances and agricultural equipment whilst replacing inefficient and polluting kerosene lighting. Presently only around 55% of households are electrified (MOSPI 2006) leaving over 20 million households without power. The supply of electricity across India currently lacks both quality and quantity with an extensive shortfall in supply, a poor record for outages, high levels of transmission and distribution (T&D) losses and an overall need for extended and improved infrastructure (GoI 2006). The Indian Government recently outlined an ambitious plan for 100% village level electrification by the end of 2007 and total household electrification by 2012. To achieve this, a major programme of grid extension and strengthening of the rural electricity infrastructure has been initiated under …