Is mi­cro­grid an an­swer to ru­ral In­dia’s power woes?

Power Watch India - - GREEN AHEAD - By Ru­dranil Roy Sharma The au­thor is GM and Head (En­ergy Prac­tice), Feed­back Busi­ness Con­sult­ing.

Mi­cro­grid can be de­fined as a small net­work of elec­tric­ity users with a lo­cal source of sup­ply that is usu­ally at­tached to a cen­tralised na­tional grid, but is able to func­tion in­de­pen­dently. From In­dia’s con­text, ru­ral mi­cro­grid is a small elec­tric­ity net­work im­ple­mented at a vil­lage level with its own gen­er­a­tion unit and the elec­tric­ity gen­er­ated thus sup­plied pri­mar­ily to the vil­lage house­holds and in some cases, to some com­mer­cial load cen­tres. These mi­cro­grids are of­ten not con­nected to the na­tional grid and have been set up in the vil­lages where there is no grid con­nec­tion or even if there is a grid, power sup­ply is highly er­ratic.

Ru­ral mi­cro­grid is not a new con­cept for In­dia, which has been a pioneer in ru­ral mi­cro grids since 1990s through par­tic­i­pa­tion from the pri­vate en­trepreneurs. These en­trepreneurs took the ini­tia­tive to light up the vil­lages which were un­der the curse of dark­ness since ages. In those days, when so­lar power was not avail­able or was not an af­ford­able tech­nol­ogy, biomass or husk based gen­er­a­tion was a tech­nol­ogy of choice. With the ad­vent of tech­nol­ogy, so­lar power based mi­cro­grid has now be­come an ob­vi­ous choice for the de­vel­op­ers due to var­i­ous rea­sons. These so­lar plants are mo­du­lar in na­ture; ca­pac­ity can be scaled up eas­ily; eas­ier and faster to in­stall; fuel avail­abil­ity is not an is­sue and O&M is sim­pler. Ca­pac­ity of these so­lar mi­cro­grids vary from less than a KW to as high as 10-12 KW. In­dia En­ergy Stor­age Al­liance (IESA) es­ti­mates that In­dia has in­stalled over 2,000 AC mi­cro­grids of over 5 kW by 2016 and over 10,000 DC mi­cro­grids with the ma­jor­ity sized at less than 1 kW.

A so­lar mi­cro­grid will typ­i­cally have a set of so­lar in­di­vid­ual mod­ules with ca­pac­ity of 150–400 W, a set of so­lar bat­ter­ies with stor­age ca­pac­ity of 75–150 Ah, con­trollers in some places, in­vert­ers for DC to AC con­ver­sion for big­ger mi­cro­grids, and fi­nally, a set of ca­bles car­ry­ing elec­tric­ity to the house­holds and other com­mer­cial load points. The house­holds gen­er­ally get to light 2–3 bulbs and a plug point for charg­ing mo­biles. In most of the cases, power from the mi­cro­grid is con­sumed be­tween 6–11 pm. In most of the vil­lages, there is no meter in­stalled to mea­sure the con­sump­tion and vil­lagers pay a fixed sum ev­ery month, ir­re­spec­tive of their con­sump­tion.

In 2014, the World Bank ranked In­dia as home to the world’s largest un­elec­tri­fied pop­u­la­tion. Power was ei­ther un­af­ford­able, in­ad­e­quate or non-ex­is­tent for 240 mil­lion peo­ple, ac­cord­ing to data from the In­ter­na­tional En­ergy Agency. The res­i­den­tial sec­tor con­sumes only about 22% of In­dia’s net gen­er­a­tion com­pared to 37% in the United States. Many In­di­ans with ac­cess to elec­tric­ity, par­tic­u­larly in ru­ral ar­eas, ex­pe­ri­ence chronic rolling black­outs, power out­ages, and cur­tail­ments. The present gov­ern­ment, af­ter com­ing into power has de­cided to en­sure power for all by 2019 and elec­trify the bal­ance 18,452 un­elec­tri­fied vil­lages within 1,000 days. Till date, it has been able to elec­trify 12,699 vil­lages. It is im­por­tant to know the def­i­ni­tion of elec­tri­fi­ca­tion from the In­dian con­text. A vil­lage is called elec­tri­fied if only 10% of its house­holds and other com­mon places like schools, etc. have ac­cess to elec­tric­ity. Thus, though most of the vil­lages in the

coun­try are now elec­tri­fied, some 47 mil­lion ru­ral house­holds are still with­out elec­tric­ity, and even those con­nected to the grid, suf­fer fre­quent out­ages.

Ex­perts be­lieve that busi­ness op­por­tu­nity is huge in the field of ru­ral mi­cro­grid in In­dia. This is why, in re­cent times, not only the pri­vate en­trepreneurs, but also some of the global tech­nol­ogy giants have shown their busi­ness in­ter­est in the In­dian ru­ral mi­cro­grid sec­tor. They have al­ready par­tic­i­pated in some of the ru­ral mi­cro­grid projects in In­dia and have tried to show­case the tech­nol­ogy for such ap­pli­ca­tions. So far, these ru­ral mi­cro­grid projects have been funded through var­i­ous routes – We have seen par­tic­i­pa­tion from pri­vate en­trepreneurs, cor­po­rates, NGOs, dis­coms and tech­nol­ogy com­pa­nies. Some of the de­vel­op­ers have even been able to get fund­ing from out­side agen­cies like Asian Devel­op­ment Bank, USAID’s Devel­op­ment In­no­va­tion Ven­tures, In­ter­na­tional Finance Cor­po­ra­tion, etc. The gov­ern­ment also pro­vides sig­nif­i­cant sub­sidy to these mi­cro­grid projects. De­vel­op­ers have also worked out var­i­ous busi­ness mod­els in or­der to make the ven­ture sus­tain­able. Some de­vel­op­ers have fo­cused on the vil­lages where there are tele­com tow­ers nearby in or­der to en­sure con­stant load, while some have iden­ti­fied a vil­lage level en­tre­pre­neur (VLE) who has been made the owner of the as­set to bring more ac­count­abil­ity at the vil­lage level. On sim­i­lar lines, some de­vel­op­ers have made the com­mu­nity the even­tual owner of the so­lar mi­cro­grids that have been set up. How­ever, it will take some time for the de­vel­op­ers to fig­ure out the per­fect busi­ness model for ru­ral mi­cro­grids, and we ex­pect some con­sol­i­da­tion to hap­pen in this in­dus­try in the com­ing days.

The in­dus­try is nonethe­less plagued with some chal­lenges. The big­gest chal­lenge in op­er­at­ing a mi­cro­grid is the un­cer­tainty around tar­iff pay­ment and the ab­sence of large com­mer­cial loads in vil­lages. The de­vel­op­ers want to en­sure steady re­cov­ery of their cap­i­tal in­vest­ment and money to fund the main­te­nance ex­pen­di­ture. This un­cer­tainty in­creases the risk pro­file of the pro­ject sig­nif­i­cantly. The sec­ond chal­lenge is the sus­tain­abil­ity of the ven­ture in case the grid reaches the vil­lage and vil­lagers de­cide to switch to the grid net­work due to lower tar­iff. This has been in the minds of most of the de­vel­op­ers and no­body has a proper exit strat­egy if this hap­pens. Most of the de­vel­op­ers are ex­pect­ing a reg­u­la­tion from the gov­ern­ment for the mi­cro­grid vil­lages to sus­tain their busi­ness over a long term. The third chal­lenge is the avail­abil­ity of fund­ing at con­ces­sional rates to the de­vel­op­ers. Most of these projects are high risk and ma­jor­ity of the de­vel­op­ers are small time pri­vate en­trepreneurs, hence, loan should be avail­able to them at a lower in­ter­est rate. In view of this, the gov­ern­ment may think of in­creas­ing the sub­sidy for such projects. The fourth chal­lenge is to en­sure se­cu­rity of the as­sets. Many de­vel­op­ers have re­ported cases of theft of as­sets, break­age of so­lar pan­els, etc. How­ever, they are un­able to main­tain an op­er­a­tor for the as­sets as this may in­crease the op­er­a­tional cost. Other than these, there are other chal­lenges like get­ting ap­provals for lay­ing un­der­ground ca­bles when the net­work crosses any high­way, low or no growth in elec­tric­ity de­mand from the vil­lagers and lim­ited scope of ex­pan­sion to other vil­lages, etc.

The chal­lenges are plenty, how­ever mi­cro­grid has been a sil­ver lin­ing in the long history of dark­ness for ru­ral In­dia. It is time for all the stake­hold­ers to come to a sin­gle plat­form, en­gage into dis­cus­sions and come out with a model which is prof­itable and sus­tain­able, and can be eas­ily repli­cated and scaled up. Sup­port from the gov­ern­ment as well as the in­ter­na­tional com­mu­nity will be crit­i­cal in this jour­ney of bring­ing light to each and ev­ery house­hold of In­dia.

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