Improving Lives and Livelihoods: Enabling role of decentralised renewable energy solutions in rural areas

Enabling role of decentralised renewable energy solutions in rural areas

In recent times, renewable energy has become an enabler of lives and liveliho­ods. Improving access to clean en­ergy is a crucial objective of India’s various en­ergy policies. It is also a global sustainable development goal. While India has made significant strides in improving clean energy access through various projects and policies, there is still significant scope for growth and improvement.

Decentralised renewable energy (DRE) is an effective way to improve energy acc­ess while enhancing community welfare. DRE applications provide an effective me­ans of income generation, especially in ru­ral areas. These applications include so­­lar dryers, solar mills, solar- and biomass-po­w­ered cold storage/chillers, solar char­kh­as and looms, and small-scale biomass pellet-making machines.

These solutions present immense opportunity in India. Several pilots as well as full-fledged projects of DRE livelihood applications have been successful in the country. These pertain to sectors such as agriculture, agro-processing, dairy, poultry, fi­sheries and tailoring. Not only do these applications provide a sustainable means of income generation, but they also contribute towards India’s goal of self-reli­an­ce in energy production. These solutions have the potential to reduce and effectively eliminate the reliance on diesel in various sectors. Furthermore, distributed projects can supplement the existing grid infrastructure in the country.

A recent McKinsey Global Institute report titled “India’s Turning Point”, states that 90 million workers are expected to join India’s non-farm jobs by 2030. These workers can integrate and adopt DRE applications to improve their income generation capacity. Therefore, at present, there is a significant need to scale up the existing DRE liveliho­od applications as well as promote new projects in the sector.

Current status of DRE in India

CLEAN, a non-profit organisation with a network of over 200 DRE-based members across India, put together a report titled, “State of the DRE Sector in India – Insights from CLEAN”, annually. The report uses annual surveys conducted with members and key stakeholders such as enterprises, financial institutions, non-government or­ga­nisations and civil society organisations to present insights on the present environment and outcomes in the DRE sector in India. As per the report, 79 CLEAN member organisations participated in this year’s survey. As per the latest report published in 2021, more than 10,000 dryers, 3,560 solar water pumps and 5,600 other livelihood ap­plications were de­plo­yed in financial year 2020-21. Of the 3,560 solar water pu­mps, 3,000 were implemented under the Kisan Urja Suraksha evam Utthaan Maha­bhiyan sche­me. In terms of sales, solar lights, solar home systems and improved cook stoves were the top three DRE appliances sold, as per the survey. This highlights that the demand for basic lighting and clean cooking methods continues to be at the forefront.

DRE appliances can play a crucial role in supplementing the government’s various initiatives for clean energy access. The report also highlights the contribution of DRE service providers in energising the ed­ucation and healthcare sectors by providing decentralised clean energy solutio­ns to primary healthcare centres, anganwadi centres and panchayat buildings. Over 2,500 such centres have been energised solely by DRE members in the previous financial year.

A cumulative mini-grid capacity of 1.32 MW was also established during the period by nine service providers surveyed under the report. Further, over 134,000 energy efficient biomass cookstoves were sold by the members of CLEAN, while six members installed over 7,000 biogas plants, the ma­jority with a capacity 2 cum. However, res­pondents in the survey have reported im­pediments in the logistical strength of DRE service providers as well as reduced financial strength of end-users. These limitatio­ns have increased due to the Covid pande­mic. Despite a limited sample size, the outcomes of the report suggest that DRE ap­plications can drive the country’s clean energy endeavour, while engaging people at the grassroots level.

Framework for the promotion of DRE livelihoods

Recently, the Ministry of New and Rene­wable Energy (MNRE) released a draft policy framework for DRE livelihood applications. The framework aims to facilitate an enabling ecosystem for the adoption of DRE projects on a large scale. A similar fra­mework was released in March 2021, however, it did not emphasise certain as­pects of DRE such as end-user finance. The revised framework is intended to promote and achieve well-established de­ce­n­tralised and distributed renewable energy supply in the country. The scope of the framework is not limited to DRE applications. It also in­clu­des projects operating in hybrid mode, which may be connected to the grid, as long as the system has the capacity to function on a standalone basis in the off-grid mo­de as well. Decentralised applications su­ppor­ted by mini/microgrids are also within the scope of the gui­delines.

Under the framework, the MNRE has proposed the formation of a committee to monitor the progress of DRE projects. The committee will meet at least once every six months. Within the committee, each member ministry will nominate the main point of contact for inter-ministerial collaboration. As per the requirements of the scheme under implementation, the committee will be allowed to co-opt additional ministries and departments as membe­rs. To raise aw­areness among va­ri­ous sta­keholders, the ministry will also ma­ke ava­il­able a digital catalogue of DRE-powered solutions to be used for different DRE applications.

Developing DRE livelihoods among rural populations with little or no access to power is at the core of the framework’s ob­jectives. Other objectives include en­abling a market-oriented ecosystem to attract private sector investment for DRE-based livelihood applications; encouraging R&D to develop efficient and cost-effective technologies; establishing energy efficiency benchmarks for high-potential DRE livelihood products; and leveraging quality control standards and a strong monitoring and evaluation framework to ensure long-term performance sustainability of DRE-based livelihood so­lutions. The framework also aims to link end-users to existing financing sc­he­mes or new innovative financial in­stru­ments to improve their accessibility to DRE solutions. The impact of DRE ap­pli­cations on diverse populations inclu­ding marginalised groups and women will also be monitored and assessed un­der the framework.

Key challenges

DRE applications hold immense promise for establishing sustainable livelihoods. How­ever, these applications come with certain challenges. The DRE sector lacks a strong foundation or established eco­system. Currently, DRE solutions deploy­ed in the country are scattered and there is no effective ecosystem that binds th­em. Collaboration and partnership bet­ween individuals/enterprises that pursue DRE applications are not very well established. Collaboration will go a long way in improving the efficacy and socio-economic outcomes of  projects in the long run.

Also, the majority of DRE organisations do not have the capacity to carry out market research due to the lack of affordability of third-party consultancy services. The report by CLEAN states that 78 per cent of DRE organisations did not conduct market research to carefully assess and ana­lyse the changing market environment amid the Covid-19 pandemic. Under­ta­king market research is crucial to understand the application of various business models and adopt new strategies conditional to the state of the market. Bridging this gap is thus crucial for DRE enterpri­ses. Supply chain management, warehousing and storage are also major challenges faced by such organisations.

Moreover, skill gaps need to be filled to improve the poor after-sales service network. The initial investment in technologies is often too high to bear without acc­ess to necessary funding. Govern­ment su­­bsidies are also limited in this regard. There are limitations from the consumer side due to lack of avenues for end-user finance. Further, the lack of standardisation, lack of an established market and lack of consumer awareness conti­nue to be crucial challenges.


The Covid-19 pandemic halted large-scale growth in the sector, thereby demanding government intervention in providing incentives to promote its growth. The government has taken several steps to promote the decentralisation and distribution of renewable energy applications. These include the assessment of demand in the market, research and development efforts, adoption of standards, provision of finan­ce as well as skill development and training. For DRE applications to penetrate the market, the creation of an enabling eco­system would be crucial. Such an ecosystem would entail greater access to funds, promotion of innovation, greater collaboration and investment. With these steps in place, the sector can significantly contri­bute to achieving India’s clean energy go­als, while promoting economic growth at the grassroots level.

By Kasvi Singh