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Council on Energy, Environment and Water Integrated | International | Independent
Paper

The Adoption and Use of Solar Mini-Grids in Grid-Electrified Indian Villages

Anjali Sharma, Shalu Agrawal, Johannes Urpelainen
February 2020 | Energy Access

Suggested citation: Sharma, Anjali and Agrawal, Shalu and Urpelainen, Johannes. 2020. ” The Adoption and Use of Solar Mini-Grids in Grid-Electrified Indian Villages.” Energy for Sustainable Development.. Available at SSRN: https://ssrn.com/abstract=3531200

Overview

This paper analyses the adoption and use of mini-grids among rural communities living in grid-electrified villages. The findings are based on the primary data of 2648 households and 544 non-farm enterprises from 54 villages in the Indian states of Uttar Pradesh and Bihar. Based on the findings, it provides insights about the factors that affect the acceptance of mini-grid electricity and the overall operation of mini-grids. It also argues that grid-interactive mini-grids could be used to serve rural enterprises as they value reliable power supply.

Distribution of grid and mini-grid users

Source: Author's analysis

Key Highlights

  • Decentralised solutions such as mini-grids present an important opportunity to provide electricity access in rural areas that generally remain under-served.
  • In India, mini-grids are being developed for not only electrifying remote villages but also in grid-electrified villages in states which have a highly unreliable power supply.
  • The primary focus of rural electrification programs has been on extending the central grid across the country. No efforts have been made to promote productive uses, especially non-farm uses, under grid-based rural electrification programs.
  • While grid remains the most common source of electricity among rural households, rural enterprises do take up mini-grids as an alternative to grid-electricity when the option is available, and grid-electricity is not reliable.
  • Among households, over 60 per cent reported using grid-electricity, and only about 8 per cent relied on mini-grids. In contrast, grid electricity and mini-grids were found to be almost equally popular among rural enterprises.
  • Mini-grids are used only for meeting basic lighting and cooling loads in most cases, primarily due to affordability concerns. It highlights the need to understand better the drivers of technology adoption, customer profile, and cost dynamics.
  • In the surveyed villages, users perceived mini-grids more favourably even though the average daily hours of power supply from mini-grids were about 6-8 hours/day, in comparison to 12 hours/day supply from the grid. It is likely because mini-grids provided uninterrupted power supply when it was most needed, i.e., during evening hours.
  • Both enterprise and households users held negative perceptions about the affordability of mini-grids. The per-unit cost of off-grid solar solutions can be twice or thrice that of grid-based electricity. Among those using grid-based power, only less than 20 per cent perceived mini-grids as affordable.
  • Around 1/3rd of the households and enterprises reported that they used neither grid-electricity nor mini-grids. It highlights the critical issue of low productivity and the profitability of rural enterprises in India.
  • Continued growth and development of rural enterprises are not solely dependent on electricity provision, but also requires complementary services and infrastructure.
  • Mini-grid-based solutions can play a role in serving rural enterprises in grid-connected areas, especially in the short term, although concerns about their long-term sustainability remain.

Key Recommendations

  • Use grid-interactive mini-grid technologies to serve rural enterprises as they value reliable power supply.
  • Promote electricity-based income-generating activities through credit facilities, skill development, and awareness programs.
  • Link rural electrification programs with rural development plans to increase electricity demand in Indian villages that, in turn, can improve the financial viability and quality of electricity services.
  • Analyse the current and potential demand for electricity in rural areas and plan development-oriented rural electrification policies.
  • Assess the potential of solar mini-grids under different conditions of grid power supply.
Solar mini-grids can play an essential role in providing last-mile electricity access in villages where grid-electricity is available but not reliable.

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