“Rural electrification is at a crossroads”

Interview with Smart Power India’s JaideepMukherji

Renewable energy mini-grids are not new in India. They have been deployed as part of the central government’s solar energy development efforts and various rural electrification programmes. However, the installation of mini-grids has not taken place on a large scale, primarily due to the capital-intensive nature of projects, policy flip-flops, implementation challenges and a lack of awareness. Nonetheless, renewable energy mini-grids hold significant potential in increasing energy access for the population living in remote and rural areas where the central electricity grid cannot reach or electricity supply is interrupted. In an interview with Renewable Watch, JaideepMukherji, chief executive officer, Smart Power India (SPI), talks about the scope of distributed renewable energy in India’s rural electrification programme, the key challenges in deploying mini-grids in the country, and the role of energy storage systems in this sector. Excerpts…

Tell us when and how Smart Power India was established? What are the major areas in which it operates?

Established in 2015 by the Rockefeller Foundation, SPI is the key agency implementing the foundation’s smart power initiative. SPI extends power to those without enough access, with the goal of ending energy poverty and transforming the livelihoods of the underserved. To this end, it is working to build and nurture ecosystems that promote sustainable and scalable models for delivering electricity access. SPI’s vision is “to spur economic development in villages through access to reliable electricity”. Over the past four years, SPI has worked closely with a wide range of stakeholders critical to developing the ecosystem needed to build, catalyse, create and scale up the decentralised renewable energy mini-grid market. SPI has supported mini-grids by:

  • Providing electricity to 220 villages in India across Uttar Pradesh, Bihar and Jharkhand, impacting over 93,000 people
  •  Serving over 185 electricity-based micro-enterprises, which have been directly inc-ubated by SPI across these 220 villages.

SPI has also supported policy engagement for mini-grids to align incentives across the government, investors and energy service companies. We are also now working towards improving the quality of on-grid electricity supply and services in rural areas in collaboration with the state governments and distribution companies.

What has been the company’s experience regarding distributed renewable energy? What is its potential in India’s rural electrification?

SPI works with a wide range of stakeholders to develop the mini-grid sector in India. Mini-grids, operated by private energy service companies, stand out as one of the few distributed solutions that provide electricity for both lighting and productive use. Today, more than 250 renewable energy mini-grids aggregating 7.3 MW of capacity, supported by SPI, have been set up across Bihar, Uttar Pradesh and Jharkhand, the largest such cluster in India. The electricity from these grids is transforming the lives of more than 200,000 people by not only providing electricity for lighting, but also powering fans, electric pump sets, appliances and motors for productive uses. India’s rural electrification stands at a crossroads. The government’s flagship Saubhagya scheme on rural electrification has enabled villages to have an electricity connection. However, this has not translated into access to reliable and quality services. We believe that demand-side issues are responsible for the gap in meaningful electricity access. Assessing customer behaviour is the key to load forecasting as well as addressing policy issues. Our focus is on developing and disseminating relevant knowledge in the rural electricity access and services space. We aim to promote research and innovation and impact policies on rural electrification. We partner with policymakers, practitioners and academic institutions to come up with actionable insights and innovative strategies. While our work covers the entire spectrum of supply and demand-side issues of rural electrification, our focus is on the last-mile customer.

How has the company’s business model and role evolved over the past few years?

The evolving landscape and narrative of electricity access in India has presented a unique opportunity for SPI to pursue its goals to enable rural electricity access at scale. Central and state governments have taken significant steps towards improving grid infrastructure in rural areas. Schemes such as UDAY and Saubhagya have improved village and household electrification. These are well-envisioned schemes and will be important for ensuring reliable and quality electricity.

The changing rural electrification scenario in India provides an opportunity for SPI to diversify its strategy beyond mini-grids, and conceptualise and develop models that can contribute to the government’s target of expanding the grid infrastructure to provide  electricity access and power for all. In doing so, SPI can leverage its know-how of last-mile connectivity and customer service to support government initiatives.

What are the various projects being carried out by the company in the distributed renewable energy space?

SPI believes that meaningful electricity access is dependent on the provision of electric connections, predictability of power availability, and quality of electricity and service. The goal of positively impacting lives and livelihoods through electricity can only be realised when power is reliable for a village entrepreneur who wants to shore up income or a household that wants to operate an electrical appliance. We are currently focusing on two key areas for providing rural electricity access.

Energy services model

SPI will be a key evangelist of private participation in the distribution of electricity in rural areas to improve electricity access, thus driving socio-economic development. SPI envisages the following role:

  • An independent and trusted adviser to the government: Identifying key areas for intervention, creating a baseline of key performance indicators such as aggregate technical and commercial (AT&C) losses, network condition, etc., defining benchmarks/standards for rural electricity access, envisaging business and financial constructs, and support in drafting contract documents.
  • Knowledge house of best practices for rural franchisees: Interacting with supply-side players to understand their challenges and pain points, and create buy-in for the ESF model.
  • Tangible on-ground support to supply-side players: Providing on-ground servicing and collection support to private players, including partnering with organisations to fund and create training programmes for service executives/women self-help groups, creating awareness and bringing about culture change in electricity usage and bill payment.
  • Convener of rural development players: Undertaking interventions in partnership with rural economic development players to incubate enterprises, productive loads and livelihood activities, which stimulate electricity demand and economic development.

We are already working on pilot projects with the Bihar and Odisha governments to improve the quality of electricity supply and customer service. Through these projects, we are trying to develop scalable ESF

models that can address the respective pain points in these states and be replicated across the state.

Mini-grids

Minigrids are a very important part of the strategy adopted by the Rockefeller Foundation and SPI to enable electricity access. It is based on the following measures:

  • Continuing support to current energy service companies to roll out committed plants; performance benchmarking to improve operating margins.
  • Undertaking technical innovations and business model innovations.
  • Supporting energy service companies through demand generation activities.
  • Policy advocacy support.

We have also partnered with Tata Power as rural businesses and households continue to rely on alternative sources to power their daily needs, with more than 40 per cent of rural enterprises in states like Bihar and Uttar Pradesh relying on non-grid sources of power such as diesel. Tata Power Renewable Microgrid Limited will provide a competitive and cleaner source of power, expanding access and lowering effective electricity costs. It will also reduce carbon emissions by 1 million tonnes per year and the amount of diesel burned by 57 million litres yearly. Over time, the opportunity to deploy grid-interactive solutions will materialise, creating a more integrated, stable and smart rural grid.

What emerging technologies is the company focusing on? Do you foresee greater uptake of energy storage systems in Indian mini-grids soon?

Technology is the key to executing our projects and some of the initiatives that we are implementing are as follows:

  • Smart metering hardware and analytics.
  • Next-generation customised mini-grid inverters.
  • Integration of plant electronics and optimisation of supply and storage.
  • Battery technology (advanced lead-acid and lithium-ion).
  • Data management systems as comprehensive operations and management tools.

Also, energy storage is at the heart of commercial mini-grid ventures, especially those based on renewables. Without storage, the sector would not exist in the first place. But until now we have been using basic, ill-suited, cheap energy storage. As costs of more advanced systems come down and markets grow, mini-grids are poised to be the first energy providers to adopt energy storage. There is a lot to gain from these systems in terms of long-term costs, as well as short-term performance.

In your view, what are the key issues hampering the growth of mini-grids in India? How can these issues be resolved?

SPI currently focuses solely on the use of mini-grids. A minigrid is a system having a renewable energy based electricity generator (with capacity of 10 kW and above), and supplying electricity to a target set of consumers (residential, commercial, industrial, institutional, etc.) through a public distribution network. A microgrid system is like a mini-grid but has a renewable energy based generation capacity of less than 10 kW. Micro-and mini-grids generally operate in isolation, independent of electricity networks of the grid, but can also interconnect with the grid to exchange power. If connected to the grid, they are termed as grid-connected mini/microgrids.

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