Rural Energy Access Programs: contrasting private and public values (Part I)

In 2017, India still has a significant energy access problem. While official estimates indicate India is over 97% electrified, over 250 million Indians still lack access to reliable electricity. The discrepancy is explained by the definition of village electrification as specified by the Government of India, by which a “village is considered to be electrified if basic power infrastructure is provided in the inhabited locality as well as associated dalit bastis; electricity is provided to public spaces like schools, panchayat offices, health centres, dispensaries, community centres, etc.; the number of households electrified are at least 10% of the total number of households in the village. We can all agree that this definition is very limited, and in fact, conversations are ongoing to change the definition.

 

But beyond definitions, the lack of access is a result of low paying capacities on the consumer end, and uncertain financially viability of catering to areas with low and fluctuating demands and dispersed populations on the supplier side. With 2014-24 being declared as the Decade for Sustainable Energy for All, a number of international and local actors have begun to participate in the mission to enhance energy access in India and several other developing nations. There is wide variety in the programmatic structure and sources of financing that interventions have developed – from NGO drivengrant funded projects and programs; to private sector ledsale of solar home systems, batteries, and lanterns; to the development of micro-finance models for the purchase of power generating devices.

 

While there has been some success in the dissemination of small scale systems such as lanterns, home lighting systems, DC micro-grids, and so based on different sources of power, there are few examples of financially viable community or village scale systems. Some successful initiatives have benefitted from initial grant support which has aided in subsidising the high capital costs involved for installation. Subsequently, these companies have claimed a move to financial models that are independent of grant support. But without publicly available data, it is not possible to ascertain whether rural electrification projects operating on commercial or utility models are financially viable. Financial viability is of considerable importance with the increasing emphasis on private sector involvement and PPP modes of service delivery. If viability is uncertain, will the private sector really invest or partner on such projects? And secondly, a point which we come back to later, do we lose out on the bigger picture by focusing so narrowly on financially viability as key our indicator of “success”? How else can viability be measured?

 

Lookout for the part II of this blog for more details.