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Solar Microgrids: A Solution for Rural India

Charlie Hewitt's picture
Principal Sarsen Energy Group

Charlie Hewitt currently serves as the principal for Sarsen Energy Group and is the founder of ElectricityMatch. He has more than 20 years of in-depth experience in the energy industry having...

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  • Jun 4, 2015


rural india energy

Rapid population growth, one of the world’s fastest growing economies, and an expanding appetite for energy; all of these things are placing a huge strain on India’s power generation capabilities.  India’s population grew by over 200 million between 2004 and 2012.  Forecasts predict an 8% growth in India’s 2015 GDP.  This would place India ahead of China in terms of economic growth rates and cement their status as an emerging player on the global stage.


India’s Position within the Global Energy Market


In terms of energy consumption, only China and the USA use more electricity than India each year.  The nation holds an 8% market share in global coal production ranking as the third largest in the world.  Coal-fired steam electric plants account for 60% of Indian installed generation capacity.   While India boasts 4.1% of the world’s oil refinery capacity, it relies heavily on crude oil imports.  In 2013, India imported about 1.3 billion barrels of oil representing 82% of its annual consumption.

Yet India has an energy problem.  While India is the third biggest consumer of electricity in the world, distribution is sporadic across its growing and geographically dispersed population.  Residential electricity consumers in the United States average almost 11,000 kWh per year, the average Indian uses about 900 kWh per year.  While Indian electricity rates are in the very affordable neighborhood of  7 cents/kWh, the cost of electricity takes a back seat to availability and reliability.

India’s Energy Gap

An estimated 400 million Indians, representing roughly 31% of the country’s population, lack access to electricity in their homes.  The residential sector only consumes 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.

Urban areas like the financial powerhouses of Mumbai and New Delhi are helping to drive India’s burgeoning economy.  These areas generally enjoy the benefits of reliable electric service.  Meanwhile, it seems as if large swathes of India’s rural population have been left by the wayside.

India’s energy problems, however, are not limited to domestic issues.  While India consumes less electricity each year than China or the USA, the South Asian nation’s contribution to global carbon emissions is still considerable.  As India continues to grow and develop, this contribution to the already high levels of global pollution will only worsen.  For India, the challenge lies in curbing those carbon emissions without stifling economic growth or industrial development.

India and Renewable Energy

India is no stranger to renewable forms of energy.  Since the 1980s, the nation’s government has been experimenting with greener and more sustainable methods of producing energy, with a reasonable degree of success.  As of 2015, grid-connected renewable energy sources account for 35,777 MW of India’s installed capacity.  Of that total, approximately 66% was derived from wind power with biomass/cogeneration (12%), small hydropower (11%) and solar (10%) making up the balance.

While renewable energy only accounts for 12% of India’s total installed capacity, it represents the Indian government’s commitment to exploring new ways of producing energy for its ever-growing populace.   India has exceeded its projected targets for wind, hydro and solar power production.  However, it still has a long way to go if it is to meet the ever-growing energy demands of its people.

One of the ways that the Indian government could surpass targets during its next phase of development is by focusing on distributed solar power.  By encouraging investment and innovation in photovoltaic solar generation and by rolling out these systems on a wider scale across the country, the Indian government could succeed in making distributed solar power a major player in its energy generation portfolio.

India and Microgrids

Many believe that solar microgrid technologies hold the key that will enable India to satiate its expanding appetite for energy.  These microgrids are sustainable energy production centers, which are capable of providing power to the rural districts where the need is greatest.

Estimates are that microgrids currently provide around 125,000 rural Indian households with power.  Most of these solar-powered microgrid networks are located in remote communities where connecting to India’s central power grid is difficult, expensive or impractical.  This number may only be a drop in the ocean, but it is at least a step in the right direction, not only for India but also for rural areas throughout the world.

However, solar microgrids do pose a conundrum; just how can this technology be scaled-up to meet the needs of millions of Indians and reduce the country’s energy shortfall?

Companies like Simpa Networks may have the answer.  Simpa focuses on providing affordable distributed solar generation systems to rural Indian communities.  To overcome the bad debt risk associated with traditional solar financing programs, Simpa designed a financing plan reflective of how Indians are accustomed to paying for energy. 

Rural Indians are used to purchasing purchase kerosene, batteries, and phone charging on a pay-as-you-go basis.  The payments are typically small and irregular as dictated by available funds.  Simpa replicates that purchasing behavior by remotely unlocking the solar system for delivery of a specified amount of kilowatt-hours.  The system then locks and remains disabled until the consumer makes additional payments.  The system permanently unlocks upon full recovery of the equipment cost.

In concept, this is identical to prepaid electric plans in the United States that leverage smart meter technology and operate under the same “coin-operated” approach.  By transferring this usage-based payment scheme to solar microgrids, rural Indians who would not qualify for traditional financing can now have access to electricity.  Recent financing to the tune of $4 million from the Overseas Private Investment Corporation (the U.S. Government’s development finance institution) and GDF Suez will allow Simpa to bring renewable electricity to approximately 200,000 Indians.

Proliferation of solar microgrids is a feasible and sustainable way to bring to electricity to rural areas of India.  It is also as great way to provide supplemental electricity to grid customers plagued by blackouts and unreliable service.  Access to electricity is essential for job creation and wealth distribution in this country polarized by caste and communal divisions.  Whether India is able to meet and surpass its next round of renewable energy goals will likely hinge on the continued deployment of microgrid technologies.  Support from the government as well as the international community is critical to the success of bringing light to people of India.

Phto Credit: Rural Electrification in India/shutterstock


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Nathan Wilson's picture
Nathan Wilson on Jun 5, 2015

Solar micro-grids are more like a stepping stone (to real grid power) than a final solution.  Solar+batteries is a great solution when the power demand is just a few LED lights and a cellphone charger (i.e. energy poverty).  

But once demand reaches the kWatt scale or higher, combining solar+batteries with a fuel powered generator will be cheaper, and give better reliability (where fuel could be fossil or biomass).  As the village demand grows higher still, it quickly becomes time to connect to the regional power grid.  Grids provide supply agregation that is extremely helpful with wind power integration, and also provides access to dispatchable sustainable energy (e.g. hydro, geothermal, nuclear); grids also allow more cost effective and fuel efficient use of fossil fuels (via preferential dispatch of the most efficient plants).

We must not let excitment over micro-grids slow down the much needed deployment of traditional grids, which are much better suited to the applications of job creation and poverty eradication (which require higher power levels than mere cellphones).

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