By Sudhir Sharma
The New Prime Minister has taken the reins of India with the hopes of many behind him to make a change to put India on the path of growth again. I would like to add my small little wish to the long list Mr Prime Minister you already have. I am encouraged by energy being one of the 10 priorities you have listed for yourself.
My scepticism arises from my perception that the Gujrat model was not inclusive, and for inclusive growth it is must be a more sustained and robust long term development plan mapped for this country. A key corner stone of that inclusive growth is access to energy given the minimum electricity made available across vast stretches of rural India.
Almost 16% of villages of India are un-electrified, approximately 95,000 villages. Each of these households require a minimum of 1 .5 KWh to 2KWh per day, and is just 3% of the world average per capita electricity consumption of 58 kWh per day. The average population of a village is around 1300 or 300 households. So this implies a total demand of 450 to 600 kWh, not big a demand but a significant one of approximately 57 GWh per day.
These people have waited long enough and my little wish is that Mr PM, you would make it your priority that these people have access to a minimum level of electricity within the first term . It is not that big a task if you could put the government juggernaut to work. It may not be that difficult either to achieve this in a short time frame of five years. As my other wish is that these villages are provided electricity through a clean and renewable source, primarily solar, of which is available in abundance.
Decentralised solar is the best way forward as extending the grid to these villages might take significant time. Moreover, our grid in any case is energy deficient, so even if they are connected to grid, they too would just have the grid but not the electricity. Further setting up coal or nuclear plants takes long and your term will be over by then, thus not being able to fulfil this little wish of mine. Decentralised solar plants of the size of a village can be commissioned in much shorter time. To enable this model, conducive policy framework is needed to introduce incentives for such businesses, soft loans and availability of technology.
There are two challenges: cost of installing the plants and finances to operate the plants (covering cost of replacing batteries and other parts during course of operation). Extending the grid, as per one of the World Bank Study, costs between USD 8000 to 10000 per km in developing countries. This is a cost that the government would have incurred in providing access to electricity. Per village requires a system with 600 kWh per day and on average with 5 hours solar availability. At today’s prices this may cost around USD 300,000 USD (INR 18 million). It is roughly the same if the grid extension required to electrify these villages (around 30 KMs or more). Setting up decentralised solar plants implies a total cost of around USD 28.5 billion. This indeed is a big challenge and no small amount. This is roughly twice of what the government spends on health in a year.
The challenge is how to pay for the upkeep and maintenance of the equipment, especially given that most of these villages are expected to have a low levels of income. Kerosene is the main source of lighting in rural areas and people spend about INR 45 (USD 0.75) per month on kerosene. Assuming this is spent on lighting alone, each village (300 households) could pay about INR 13,500 a month or about INR 0.16 million a year. This will of course not cover the cost of installation but surely can provide enough money for operating the system and its maintenance. But this implies that the government has to bear the full cost of installing the decentralised solar power plants.
The previous government already established a National Solar Mission plan to provide solar lighting systems under the ongoing remote village electrification programme of the Ministry of New and Renewable Energy to cover about 10,000 villages and hamlets. The request essentially implies funding and energising this programme to ensure access to clean and sustainable energy by 2019.
The programme will not only provide access to electricity but also better standards of living, creating more employment opportunities. But even more importantly it would create a tremendous push for solar industries and an increased work force. This would also contribute to about 16 million tonnes of GHG reductions compared to fossil fuel based electricity.
I make this wish fully aware that raising resources of USD 28 billion is a big challenge and that too only for 5% of villages that are without electricity. Knowing very well that the total allocation for rural electrification for a 10 year period was only USD 6 billion and the annual budget for the whole of energy sector was USD 13 billion. Hoping Mr Prime Minister you would find resources to make this wish a reality.
Sudhir Sharma is a Senior Climate Change Specialist at the UNEP Risø Centre with over 15 years’ experience in Climate and Sustainable Development in developing countries, Sharma comes from an engineering background and a PhD in Development Economics. His work has focused on mitigation issues in developing countries in the context of sustainable development. He has over 10 years’ experience in the Clean Development Mechanism (CDM) working both in developing projects and developing methodologies. His present work at URC is focused on NAMAs, both, in terms of supporting capacity development in developing countries as well as analytical work on creating a better understanding of NAMAs. He is presently coordinating the country work on assisting seven countries in developing NAMAs.