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What is ‘Energy Poverty’ and how does it affect the poor in India?
It is believed that up to 400 million people in India today don’t have access to reliable electricity. This accounts for one third of the Indian population. While we’ve made remarkable progress in bringing electrical power to our people over the last many decades, it is still unacceptable that one in every three people in India do not have access to electricity. Non-access to electricity is a particularly pernicious form of poverty as it impacts health, education, livelihoods and also has a disproportionate negative impact on women.
How do you think the Indian government is managing the problem?
The government of India is aware of this problem and has been acting upon it. There has been steady progress in bringing electricity to more and more people, but too many people are still left out. We also need to be careful about how the government defines electrification. Non-access to electricity is a particularly pernicious form of poverty as it impacts health, education, livelihoods, and also has a disproportionate negative impact on women.
Can alternative energy be a solution for universal access to energy?
Power grids can solve the energy access problems, but they can be sub-optimal as the whole grid electricity production process is highly polluting, expensive, and inefficient with average technical losses of up to 30 percent during transmission. The state electricity boards have been accumulating losses for years.
There are alternatives that are less expensive, more immediate, and comparatively less harmful. A good alternative energy could be solar power, especially distributed solar power. These localized reliable, scalable solutions meet both equity and aspirational needs of our populace and unleash a virtuous circle of social and economic activity that positively feeds upon itself, positively impacting the communities, the households, and the enterprises. There is a huge market of 400 million people with unmet demand.
What are the major challenges in implementing the innovative solar solutions?
The biggest challenges in implementing any innovative solution are finance, technology, human resource, and policy. All of these together or in parts can either facilitate or impede the success of the solution. Solar solutions are no different.
What role does finance and policy play in the success of solar solutions?
Solar solutions have a characteristic associated with them. While the actual running costs are very low, the biggest costs are incurred up front during the installation stage.
We need different and innovative payment models for this. Emerging models like prepaid power or pay-as-you-go are good models. Equally important are risk assessments associated with investments and mitigating mechanisms like insurance, which are still fairly immature in India.
On the policy front, as electricity is a state subject in India, we need the states to develop a robust regulatory and policy framework. The state should address the gap between the price at which the electricity is produced and the price at which electricity needs to be bought by consumers, such that it protects both individuals and enables this business to operate as well.
The mini-grid system should be looked at as a complement to overall grid planning and not as a substitute so that mini-grid operators can work as franchisees to the main grid and act as a component of the system. My team at Shakti Foundation works with the policy makers to address these challenges.
What role does technology play in the solar solution business?
Technology has steadily helped in bringing down the costs of solar solutions. On the demand side, technology has made a significant impact on energy efficiency. However, we still need to improve on efficiency as we go up the energy consumption ladder and go beyond the basics of having two lightbulbs. We need more efficient fans, refrigerators, televisions, and agricultural equipment. The one area in technology that still needs a breakthrough is the storage of renewable power.
What are the human resource challenges in the solar solution system?
Capacity building is a key challenge in the energy sector. We need capacity at all the levels: We need a ground-up approach to build capacity for people managing innovative solar solutions, such as basic level trained technicians who can service and install such systems. We also need to equip village level enterprises to not only take ownership, but also understand a business and obtain the finance and financing they need. This is the biggest capacity gap in this space – ‘illiteracy’ in the financial community. To make matter worst, our bankers do not understand the risks involved in such projects. They need to be trained to understand how the risk works, and what structures and processes should be put in place so that the risks are at acceptable levels.
CEO, Shakti Sustainable Energy Foundation
(Reproduced with permission from Mr Krishan Dhawan)