International Workshop on

Financial and Institutional Challenges of

Off-grid Electrification

October 16, 2012

De Montfort University, Leicester

OASYS South Asia

Renewable energy mini grids – Indian experiences

Debajit Palit

Associate Director and Fellow

The Energy and Resources Institute, New Delhi

Email: debajitp@teri.res.in

What is TERI

A not-for-profit technology research and policy think tank; Established in 1974 in New Delhi; More than 1000 professionals, with centers spread across 5 cities

in India; Overseas presence in London, Washington DC, Tokyo, Dubai and Addis Ababa

Working Areas • Energy & Power • Regulatory practices • Habitats and transport • Environment • Water and NRM • Climate policy • Bio technology • Social Transformation

Addis Ababa *

People lacking access

Source: World Energy Outlook 2011

Number of people lacking

access to electricity

Number of people relying on

traditional use of biomass

for cooking

Africa 587 657

Sub-Saharan Africa 585 653

Developing Asia 675 1937

China 8 423

India 289 855

Other Asia 378 659

Latin America 31 85

Developing Countries* 1314 2679

World 1317 2679

Indian National RE Progress (2005-11)

89.86% of targeted un-electrified villages (120000) have been electrified (around 95% of total villages electrified);

60.95% of electrified villages (350 000) intensified;

74% of the targeted 23.3 million BPL households electrified;

103 079 rural electricity distribution franchisees in place

Around US$ 5312 million spend for rural electrification

Miles to go…. • Huge gap between access to electricity (as per RGGVY definition)

and actual connection of households • 74 million hh without connections ~ 45 % of total hh • Poor availability of supply in the connected areas (~ 8.3% av deficit)

Rural Electrification Framework in India

Mini-Grids in India

Pioneer of Mini-Grid system

First solar mini grid commissioned in 1996 in

Sunderbans Islands

State-of-the-art system designs & use of components

(converters & inverters), continuing till date

Cooperative model of service delivery

Involvement of local community from planning stage

Policy enablers from time to time

Around 5000 villages covered through mini-grids,

serving more than 50,000 HHs

Multiple technology adopted

Technology Transition

WIND HYDRO

GRID

Stand-alone Solar

Systems

Mini Hydro

Biomass

Wind

+ Solar

Solar Mini-Grid

1980 …… 1996 ……. 2010 …….

Smart Mini Grid Mini Grid

Why mini grids in India

Technically, mini-grids are preferred for remote areas

over other options such as solar home systems,

as mini-grids provide electricity services for lighting

& for powering various appliances, whereas SHSs

typically provide only lighting services

Can support small productive applications

Organisationally, managing mini-grids are easier compared

to individual systems due to their centralised operation

through a proper institutional arrangement

Solar PV Minigrid

Source: CREDA and TERI

Control Room, Battery Bank, Grid

Source: TERI

Biomass Gasifier Power System

Fuel Preparation

Biomass Gasifier

Cooling cleaning train

Engine – Alternator

Biomass drying

Power evacuation

Source: TERI

Managing Mini Grids: Earlier Model

FUNDING AGENCY

PIA

Power Plant VEC

System

Supplier

Consumers

Consultant (DPR, system

design, TA support)

Organize VEC

System Engineering.

System Owner

$

Installation &

Commissioning

• System custodian

• O&M

• LT line Maintenance

Electricity

Grant from Central Government

Equity by PIA/NGO or Beneficiaries

Revenue: Tariff,

billing, collection

Village Energy Committee (VEC) Model

Source: TERI

Lessons from early Mini grids

Decentralized, usually low

capacity, covering remote

areas

Usually domestic loads

served

Community as stakeholder

Tariff based on flat rate,

locally decided, depending on

fuel cost, O&M cost and WTP

(~ US$ 1 per point/month)

Non commercial in nature

Inability to meet increased

demand

Low plant load factor

Single energy resource catering

to fixed load for fixed time

Battery – Vulnerable, over drawl

by most consumers

Difficulty in O&M because of

remoteness

Limited technical knowledge of

VEC – frequent system

shutdown

Not linked to any productive

enterprise / irrigation pumpsets

Hybrid System

55 kW Solar and 3.5 kW Wind Electric

Generator based hybrid system

Wind Diesel Hybrid system

Source: TERI

Managing Mini Grids: Addressing low load

Source: TERI

Mini Grid – Private Sector

Husk Power System A for-profit entity - identifies suitable villages, builds the electricity supply, and

arranges for operations and maintenance, with the help of local partners.

Equity investments

Subsidy (optional)

• Generates, transmits and distributes

electricity

• Trains local people to operate gasifiers

• Negotiated tariffs

• Billing and revenue collection

• Grievance redressal

Equity

Investors

MNRE

Husk power

Systems

Consumers

Sells electricity on

light point basis

Technology

partner

Design,

I&C

Sign contract

with HPS

Coverage ~ 80 villages, 33 kWe systems,

300-400 households in a village

Tariff: ~ US$ 3/month/HH for 2 lights, 4hrs

Synergies created for co-benefits & viability

Solar Power : 50 households connected from 400 Wp

of solar panels. Panels are installed on the rooftop of a

village house at a central place in the village.

Battery Bank: 24 V 100 Ah of storage capacity.

Batteries are stored in a cabinet inside the same house

or distributed battery storage at HHs

Power Distribution: DC distribution lines run along the

rooftops from the battery bank to households within

the village. Power is distributed for 5-6 hours each

night at 24 volts.

LED: Each household having 2 or 4 LED lamps

Solar DC micro grid – New Development

Community vs. private sector led model

High sense of ownership and accountability

High probability of replicability and scalability

Better equipped to deal with local social problems

Competition and cost cutting goals encourage innovation

Tariffs are set based on ability to pay; tariff subsidy critical for success

Tariffs are set keeping in mind the financial viability of the project

Collection efficiency is usually low

Fragmentation of responsibilities

between operator and revenue

collector have shown better results

Collection efficiency is relatively better;

smart/pre-paid metering to check theft and pilferage

Capacity building is the very pre-condition for success of the project

Need for ‘socially motivated entrepreneurs’ to get into such a business

Poor revenue management Revenue management is better

Cluster approach more successful both in terms of O&M

Poor in handling social issues or poor grievance redressal mechanisms

Poor in dealing with technical matters Often produces inequitable outcomes

Providing access to population earning much less

than 1$/day!

Remote, tribal communities without cash disposable

income!

Subsidy vs financing – affordability ?

Subsidy for capital infrastructure

ensuing operational sustainability improved

quality of life

Mini Grids in Chhattisgarh

Demographic & physiographic attributes

Population : ~ 25 million

SC & ST population : about 43.4% of total population (national average ~ 24 %)

Rural-Urban ratio : 80: 20

Forest area : 44% of the total area (national average ~ 21 %)

All these have bearings on rural electrification

History of Rural Electrification

Creation of Chhattisgarh in 2000

Division of responsibility : CSEB & CREDA - CSEB - grid based rural electrification

- CREDA - off-grid renewable based electrification

CREDA made responsible for electrification of 2200 remote villages

Unique situation - there exist “ energy poverty in the midst of plenty

State has surplus power (e.g. 1.7 % energy surplus), however remote villages are un-electrified

22

Street lighting system (Nos.) 18000

Home lighting system (Nos.) 7233

Solar lanterns (Nos.) 3192

Solar power plants (KWp) >1400

Solar cooker (Nos.) 37464

Source: CREDA & Central Statistical Organization (CSO), GoI, 2012

Solar PV in Chhattisgarh

CREDA has reportedly electrified around 35,000 households

through renewable energy based mini-grid

Village Kouhabehra Rawan Mohda Latadadar Murumdeeh Surka Sapalwa

Year of

commissioning

2003 2004 2004 2004 2003 2007 2005-06

Capacity of the

plant (kWp)

3 7 4 3 5 4 5

Total number of

HHs

50 72 72 45 46 50 83

Supply duration

(hours)

6 6 6 5 6 6 6

Profile of surveyed projects

24

25

Some glimpses

Solar mini-grid model of CREDA

Financing

Capital cost ~ 25000 INR (500$) per household

Capital subsidy - 18,400 INR (368$) per HH – by MNRE

- Balance by state government

Tariff per connection = 30 INR/0.6$ (2x11 W CFL)

Tariff subsidy (by state government) - 25 INR (0.5 $) per HH connection

27

3 tier Maintenance System

Comprehensive Annual Maintenance Contracts (CAMC)

Three tier system of maintenance

- Project level – operator

- Cluster level – cluster technician

- For multiple clusters – Cluster supervisor

Parallel supervision by CREDA staffs

28

Partners

(Group)

Skills

(Organize)

Allocate

(Load)

Service

(Delivery)

> Install

> Operate

> Maintain

29

H V

V

V

V V

V

V

V

V

V V

V

H : Service Hub

( Base station )

-Technician / Helper

- Spares / Consumables

V : Villages in the Cluster

Village Cluster

-15 Villages

- 50 Customers / Village

…..The “GOLD” Model Cluster Based Service Delivery

CLUSTER based Service delivery

Total Number of villages covered 150

Revenue / month Expenses / Month / cluster

No. of Villages / cluster 15 NosRate Rate

No. of Customers / Village 50 Technician 1 8000 8000

Total No. of Customers / cluster 750 Helper 1 3500 3500

Collection per Customer 35 Conveyance 1 3000 3000

- Through CREDA 25 Others 1 1000 1000

- Direct 10 operators 15 700 10500

Total collection / cluster / month 26250 Expenses / month / cluster 26000

Total AMC collection / cluster 315000 Expenses / year 312000

No of clusters 10

Total collection under CBSD 3150000 Expenses / year 3120000

Financials

Source: CREDA

Key factors for success

Top-down approach /Organized delivery model

Driven and implemented by CREDA with support from state government & MNRE

Commitment and enthusiasm across all levels of CREDA

Opposed to popular approaches “let the community handle” - Each entity sticks to what it does best

Effective maintenance (post implementation)

Fruitful partnership between CREDA and System Integrators

Structured communication channel between CREDA and contractors

Strong govt. support and political will

Maintenance subsidy of Rs 25/household (benchmarked to household’s expenditure on kerosene & Ekal batti Yojana)

Strong political leadership

31

Key factors for success contd…

Creating an eco-system for solar electrification Solar shops Support to local manufacturing and development

Modular training and capacity building Different for different stakeholders depending on

need and requirements Learning from doing

Transition from ACMC to long-term CMC Introduction of fully commercial model in select

locations

Key Lessons

Service delivery models are to be structured

considering the uniqueness of the region within which

the plant is to be installed -Today off-grid, grid-

connected tomorrow

Decision on technology should be based on availability

of the technical know-how and skill-sets of local

people;

Contrary to prescribed models of off-grid

electrification, top-down approach/organized

structure seems to be working better than community

model

Key Lessons contd….

Designing variable tariff structures considering both

ability to pay as well as operational expenses

Access to electricity is merit good

Need to build local capacity and adopt clustering for

effective maintenance & viability of operation

Strong regulatory & policy regime supports

development of projects – Viability gap funding/

Results based aid

Framework for Mini Grid

Level 1- Basic needs • Lighting

• Communication • Cooking • Heating

Level 2 - Productive uses

• Agriculture (water pumping, mechanized tilling etc.)

• Public health centres

• Education (Schools, tu ition centres etc.)

• Street lighting

• Sewing, cottage industries • Grain grinding

Level 3- Modern society needs

• Modern domestic gadgets

and appliances for space cooling, heating etc.

• All productive applications for

24/7 usage • Transport

Small scale RETs

Ideal for isolated and vulnerable communities

Facilitate

Village-scale mini-grids Ideal for larger or more

developed villages

Facilitate

Mini-grids coupled the main grid

Ideal for cluster of

villages

Facilitate Creates the

market for mini-

grids

Could develop

into

Access + Availability + Quality + Sustainability

Ecosystem (AAQS)

Appropriate Technology

Innovative Financing

Local Skills

Enabling Policy

Not ‘how can we make community use the

mini-grid technology’, but

‘how can more & more people get access to and

sustainably benefit from this technology’

In conclusion

2012: International Year of

Sustainable Energy for All

Let us together make a change