Discussion Paper - Energy Technology Innovation Policy Project, Belfer Center
Modern Energy Access to All in Rural India: An Integrated Implementation Strategy
Expanding energy access to the rural population of India presents a critical challenge for its government. The presence of about 364 million people without access to electricity and about 726 million who rely on biomass for cooking indicate both the failure of past policies and programs, and the dire need is for a radical redesign of the current system that will address the need to expand energy access for these people. In this paper, we propose an integrated implementation framework with recommendations for adopting business principles with innovative institutional, regulatory, financing and delivery mechanisms. The framework entails the establishment of rural energy access authorities and energy access funds, both at the national and the regional levels, to be empowered with enabling regulatory policies, adequate capital resources, and the support of multi-stakeholder partnership. These institutions are expected to design, lead, manage and monitor the rural energy interventions. At the other end, the trained entrepreneurs would be expected to establish bioenergy-based micro-enterprises that will produce and distribute energy carriers to rural households at an affordable cost. The energy service companies will function as intermediaries between these enterprises and the international carbon market both in aggregating certified emission reductions and in trading them under clean development mechanism. If implemented, such a program could address the challenges of rural energy empowerment by creating access to modern energy carriers and global climate change mitigation. Additionally, it could provide economic/livelihood benefits to the rural population while simultaneously earning handsome profits for the entrepreneurs.
India faces energy challenges on three fronts: the presence of majority energy poor lacking access to modern energy carriers; the need for expanding the energy system to bridge this access gap as well as to meet the requirements of a fast-growing economy; and the desire to partner with global economies in the effort to mitigate the threat of climate change. The best possible outcome would be to achieve all the three objectives without compromising on any one. In this context the most critical question India needs to answer is just how to expand access to basic energy services for the large number of energy poor while at the same time being able to make contributions to climate change mitigation. The next most critical question India needs to answer is just how climate change mitigation might become a stimulus for expanding rural energy access in India. In this paper, as a response to these questions, an integrated implementation framework to guide the process of providing universal energy access in rural India is proposed.
Lack of access to modern energy carriers has implications for the economic, the social, and the environmental well-being of humanity. The implications could be in the form of income poverty, primitive lifestyles, loss of dignity, physical hardship, health hazards, lack of employment, and a polluted environment. Many stakeholders including national governments, international organizations, and non-governmental organizations (NGOs) have recognized these linkages and have recognized as well the need for expanding energy access. However, experience suggests that the gap between recognition of the need for expanding energy access and action toward accomplishing it is very wide. In part, this is because energy governance is always biased towards "supply-side" and suggested solutions always revolve around "hardware" aspects. The "demand-side" aspects of energy have always been neglected. Energy service for sustainable development has never been the focus of energy planning.
The findings of the National Sample Survey suggests that though 74% of the Indian villages were electrified as of 2005; only 55% of the rural households had access to electricity and the remaining 45% of the households were depending on kerosene lamps for lighting (NSSO, 2007). Also in 2005, only 9% of the rural households had access to liquefied petroleum gas (LPG) and about 84% of the rural households were still depending on biomass for their cooking energy needs with only 1.3% having access to kerosene. This is the equivalent of about 364 million people relying on kerosene for lighting and about 726 million relying on biomass for cooking out of a total rural population of about 809 million in 2005. Thus, a major challenge for India is to bridge this access gap in modern energy services both for cooking and for lighting. The above data indicates the failure of prevailing policies, governance, and institutions. The changing global situation, along with existing untapped capabilities, has provided many new opportunities for India to bridge this energy access gap:
- First, India has an adequate renewable energy resource potential, especially biomass resources, to produce adequate quantum of modern energy carriers to meet the energy needs (Ravindranath and Balachandra, 2009). The current annual usage of woody biomass is estimated at about 200 MT and the potential for additional production has been estimated at 255 MT. The quantity of cattle dung produced in India is about 1,190 MT/year and the non-fodder dry soft biomass available is estimated to be between 300–600 MT/year.
- Second, advanced biomass energy technologies, which are versatile and robust enough to perform at various scales and in rural regions, have reached near commercialization. India has sufficient experience and expertise in developing and deploying biomass gasifier technologies for power generation and bio-methanation technologies for biogas production. The above resources could produce 50,000 MW of power and 120 billion m3 of biogas per year (Ravindranath and Balachandra, 2009).
- Third, global climate change mitigation imperatives have resulted in market mechanisms that, in turn, have created a demand for carbon credits, which then can be translated into revenue opportunities for reducing the cost of energy access. The Clean Development Mechanism (CDM) is a particularly important market for developing countries like India. The estimates suggest that the annual GHG mitigation potential could be as high as 213 million tonne by 2030.
- Fourth, medium, small and micro-enterprises (MSMEs) are an established concept in India. These enterprises have been the major source of employment and income generation. About 52% of the MSMEs are located in the rural areas and about 91% of enterprises are of a proprietary type indicating the entrepreneurial qualities of the individuals (MSME, 2010).
- Fifth, the wrongly-targeted energy subsidies, having failed to provide affordable access to modern energy services, can now be re-launched as operational incentives for energy access projects. The current burden of subsidies and under recoveries (losses due to selling petroleum products below market prices) due to the sale of kerosene and LPG is estimated at about Rs. 485 billion in 2008-09 (MOPNG, 2009, PPAC, 2009) and the subsidies on account of electricity sales were approximately Rs. 415 billion in 2005–06 (IEA, 2007).
Effective combination of these opportunities could be used to create workable mechanisms to produce multiple products — for example, modern energy services, carbon credits, livelihood opportunities and rural employment — thus becoming an effective rural energy access program.
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