24×7 Power for All: Post Rural Electrification Roadmap

In March 2019, India achieved nearly 99% rural electrification status. The electrification scheme also known as Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya electrified more than 45,000 households every day for last 18 months. This showcased India’s commitment towards progress, understanding electricity as one of the basic requirements of life. Considering that more than 68% of people in India live in rural parts of the country, this was a decisive action and the journey from the drawing board to success has given India a very realistic idea of how to lead the country towards wholesome growth.

However, electrification of households do not necessarily mean uninterrupted power supply 24×7, which was targeted to succeed by March 2019. Unfortunately, there is still a major gap between electrification and receiving reliable power supply in major states like- Odisha, Bihar, Jharkhand, Madhya Pradesh, Uttar Pradesh and West Bengal. Therefore, in order to consider 24×7 power for all a reality in the near future, we need to identify hurdles and find solutions.

Challenges in Sight

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With impetus on rural electrification, initiatives and measures have been taken through the country that has translated into a better accessible electrical grid. Currently, median hours of electricity supply have increased from 12 hours/day in 2015 to 16-17 hours in 2019. Although, we should appreciate the government for making changes and walking in the right path, however, it may be too early to call this a success. The only modification I would like to suggest in the plan is to reset the milestone so that the country can set better and achievable goals, leading towards 24×7 power for all.

I believe current challenges that have limited the success rate of country wide power supply are-

  • Lack of efficient transmission system
  • Lack of supply monitoring systems
  • Lack of Infrastructure maintenance by DISCOMs
  • Lack of a better payment management system

Each of these issues have played a part in restraining Power for all initiative to reach targets. And green energy adoption promising better results to electrify the country the nation was hopeful of Government’s focus on the renewable energy sector. And although, the new budget for 2019-20 hinted towards prioritization of promising sectors, by proposing to make India a PV Cells and module manufacturing hub; But, the recent budget lacked clarity and focus on making soft loans, export credits available and making solar manufacturing sector competitive.

The Road Map to Success

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The word ‘success’ does not really do justice to India’s achievement of 24×7 power for all. To a growing yet energy-starved country, this can be the stepping-stone to social, economic, and industrial revolution, a real turning point for the country.

However, that can only happen when the government of India makes aggressive attempts at solving challenges that have been plaguing the electricity sector and implement appropriate solutions that are fortunately already available.

Bringing Flexible Payment Mechanisms– Unavailability of electricity grid in rural areas makes Off-grid and Mini/Micro grid solar solutions best choice to provide electricity. However, small customer base and modest revenues of companies that take on these projects, high distribution and customer acquisition costs, weak payment capacity of rural customers, less than 5% margins for solar companies across the segment, and lack of consumer financing makes it difficult for Off-grid projects to find financing solutions. The Government needs to bring forth sizable, scalable business models and new policies to tackle off-taker payment default risk to help off-grid solar. Additionally, offering direct cash transfer instead of subsidy and making smart meters, pre-paid meters available can provide rural India with a simple payment system while reducing AT&C losses, better health of DISCOMs, and incentivisation of energy conservation thus helping rural Indians to easily avail electricity.

Monitoring Supply and Maintenance of Energy Infrastructure– Monitoring energy supply can help in demand estimation leading to accurate management of power procurement. I feel this can fight off the load shedding and energy deficit issues India is facing. Also, in regards of infrastructure maintenance, DISCOMs would have to find cost-effective methods to handle this. A few states like- Odisha and Maharashtra have already taken progressive steps with help of local franchisees. These steps can serve as guideline for DISCOMs in other states.

Payment Management– Research shows that nearly 27% of electrified households in 6 states of India have avoided paying for electricity. This presents legitimate concerns regarding sustainability of the initiative. As loss of revenue will eventually make DISCOMs incapable of servicing consumers and make the project unviable.

Therefore, an effective metering system and payment collection process have to be established and enforced in order for this initiative to succeed.

Transmission Issues- Lack of capable electricity transmission has created gaps between energy generation and consumption in India for decades now. Although, Government has allocated nearly, INR 1.6 lakh crore to build better energy transmission network, the T&D loss is still at 15%.

Poor repair and maintenance of infrastructure, delays in system upgrade, low metering/billing efficiency, commercial & technical losses, overloading, absence of energy accounting etc are the reasons behind transmission issues. And India needs to invest money and time in building a better energy infrastructure, otherwise the ‘big picture’ will remain incomplete.

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DISCOM Issues– Ujwal Discom Assurance Yojana (UDAY) scheme was initiated to rework the Rs 4.3 trillion (~$64 billion) debt of utility DISCOMs. And within 18 months, near about 75% of DISCOM debt was transferred to the state Governments, reducing the burden of debt and interest as well. This has helped DISCOMs across the country to purchase more renewable energy, restoring the financial status of DISCOMs.

However, there is still a lot of gaps in energy supply and revenue realization due to lack of effective billing procedures, poor measurement of power consumption, and ineffective monitoring of power theft, which needs to be looked into for a better result.

Supporting Growth of Solar– Offering 24×7 Power for all is a step towards the future. And when thinking about the future of a country and its people, we need to think long term. Since solar is more viable, affordable, and widely accepted Green energy source that can save consumers and the Government money on electricity bills in the long run, Government of India needs to focus on encouraging rural India to adopt solar.

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Although, Government of India has already made incredible strides at supporting solar in the rural areas through initiatives like-Kisan Urja Suraksha Evam Utthan Mahaabhiyan or KUSUM, and Solar pump scheme, however, the recent budget’s muted focus on green energy and tepid hike in allocation (Rs 5255 crore from Rs 5147 crore) for the Ministry of New & Renewable Energy (MNRE) has failed to offer an easy solution for 24×7 power for all initiative. More effort in increasing investment for solar, making financing available, raising awareness, investment in energy storage, building green energy corridor, implementation of policies, and simplification of approval procedures are needed to see real and impactful changes.

Way Forward

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Changes through policy reformation in India are clear and initiatives like 24×7 Power for All have come in the perfect time as world started leaning towards green energy shift. However, India needs to focus on solving internal challenges through policy enforcement and prioritize the green energy revolution to reach and even surpass energy targets.

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