This document discusses issues and opportunities for rural energy access in South Asia. It notes that large populations in Sub-Saharan Africa and South Asia still lack access to modern fuels. While electrification rates are improving, achieving universal access by 2030 will depend on progress in the top 20 deficit countries, three of which are in South Asia. Key challenges include ensuring cooking energy access, inequities between urban and rural access, and policy uncertainties. Barriers to the adoption of cleaner cooking technologies include income constraints, lifestyle changes required, and supply chain issues for modern fuels in remote sites. The document also examines opportunities and challenges for mini-grids and off-grid solutions to expand energy access.

1. Creating Innovative
Solutions for a
Sustainable Future
Issues and opportunities for rural energy access
for development of South Asia
Debajit Palit, Associate Director, TERI
debajitp@teri.res.in

2. Creating Innovative
Solutions for a
Sustainable Future
People Lacking Access to Energy
Urban/Rural
Electrification rate (%)
Number of people
lacking
access to electricity
Number of people relying on
traditional use of biomass
for cooking
Africa 71 / 28 634 793
Sub-Saharan Africa 63 / 19 632 792
Developing Asia 96 / 79 512 1875
China 100 0 453
India 96/ 74 244 819
Bangladesh 84 / 51 60 142
Nepal 97 / 72 7 23
Pakistan 90 / 61 51 105
Latin America 98 / 85 22 65
Developing Countries 92/ 67 1185 2742
World 95/ 71 1186 2742
Source: World Energy Outlook, 2016

3. Creating Innovative
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Electricity Access - Recent advances
 Access situation improving over the years
 Annual growth in access to electricity during 2010-2012
o has reached 0.6 %,
o approaching target growth rate of 0.7 % for universal access by 2030
o and much higher than growth of 0.2 % registered over 2000–2010
 Global progress majorly driven by advances in India & South Asia
o 155 million people in India gained electricity access during 2009–14
o 35 million people in Bangladesh gained access during 2009 - 14
 Achieving the goal of electricity access for all by 2030 will depend
critically on the top 20 access-deficit countries
o 3 countries are in South Asia – Bangladesh, India & Pakistan
Source: Global Tracking Framework, 2015

4. Creating Innovative
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Challenges remain!
 Sub-Saharan Africa and South Asia have the most population
w/o modern fuels access
 Large inequities in energy access - urban/rural; sub-national;
Men/Women
 Ensuring cooking energy access is more challenging
o Fuel stacking & transition from biomass to modern fuels
 Pico solar – not recognised by most governments as means for
electricity access (till 2010 BGD figure were exclusive of SHS)
 Many micro-grids are underperforming or prematurely failing
 Policy uncertainty – grid/off-grid distribution
 Institutions – mostly small, resulting in high transaction cost

5. Creating Innovative
Solutions for a
Sustainable Future
“Some” Key Challenges – Electricity Supply Side
 Long break even for investors due to poor tariff structure (set
mostly in line with current expense on fuels)
 Sector not regulated leading to several problems – consumers
paying much higher than fair price / supplier monopoly
 Financing mini-grids - low cost, long tenure debt is critical
 Supply-chain for hardware – Quality issues
 Uncertainty - transition/grid integration planning by
operators/investors
 Inability to diversify the consumer base
 Lack of demand aggregation at the sub-district level;
 Lack of evidence on long term business viability–IRR profile

6. Creating Innovative
Solutions for a
Sustainable Future
 Considered as a fill gap / temporary arrangement by consumers
leading to limited buy-in
 Pricing vs. limited availability of power (duration/threshold
consumption )
 Market failure at the bottom of the pyramid (due to lack of
demand and limited ability to pay)
 Perceivably higher upfront investment by consumers vis-à-vis
alternative fuels
 Consumer retention in absence of a robust business model and
perceived higher price than grid electricity
“Some” Key Challenges – Electricity Demand Side

7. Creating Innovative
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Sustainable Future
Income (in)elastiticty
 Influences Willingness to Pay for better and higher
level of service
100
110
120
130
140
150
160
170
180
Kerosene Off grid Grid
Average WTP: INR/kWh
 As users move from basic lighting
to paying for additional services,
the slope of WTP reduces as
income poverty comes into play.
 This income constraint reduces
the elasticity of the user to pay
more even for slightly better
services (fan, TV. Etc.)

8. Creating Innovative
Solutions for a
Sustainable Future
“Some” Key challenges – Cooking energy
 Large population w/o clean cooking fuels access in SA region
 Biomass continues to be the dominant fuels – Why?
 Current improved biomass stoves do not always provide cleaner
environment for cooking
 Barriers to adoption of cleaner efficient biomass stoves
o Overemphasis on technology, under emphasis on the user-friendliness
o Lifestyle change may be required to use improved cookstoves
o Purchasing patterns (men tend to take decision, while women are users
 While technologies exist for better options (LPG, Induction top),
income (in)elasticity key to their adoption
o E.g. Hourly likely expenditure for LPG & Induction stoves is INR 5-7/hour
vs. INR 2-3/hr in improved biomass stoves
o Supply chain of modern fuels is challenge in remote sites
o So, most rural households resort to “fuel staking”

9. Creating Innovative
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Sustainable Future
Key challenges - Gender & Social Inclusion
 Electricity policies rarely address gender issues explicitly
o Even when addressed, they do not appear to translate into
practice in a systemic way
 International initiatives & national policies for electrification
often are gender-blind in terms of anticipated benefits,
o assumes benefits will trickle down & be of equal use to women
& men; or they primarily focus on women’s domestic role
o do not explicitly acknowledge the differentiated needs of
women, men, girls and boys for creating equal outcomes
o very few cases to observe where women have actively involved
in decision-making processes, policy formulation or in
electricity supply chain

10. Creating Innovative
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Sustainable Future
Key challenges - Gender & Social Inclusion
 Much of this stems from lack of understanding & documented
evidence of the merit of including gender elements in energy
policies or programmes
 Recent growth in private sector off-grid sector appear to show
some interesting anecdotal evidence towards gender inclusion
& women’s empowerment, although varied in ‘pace’ and ‘depth’
o This may be due to the fact that these initiatives are usually
designed through demand-driven “bottom-up” approaches
 Wider legislations - land rights, inheritance rules etc. - affects
women’s degree of empowerment through electrification
o Lack of pressure from grassroots level act as a barrier for
realising gender goals

11. Creating Innovative
Solutions for a
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Challenge for Policy:
how to link the two SDGs?
SDG 7: Ensure access to affordable, reliable, sustainable and
modern energy for all
SDG 5: Achieve gender equality and empower all women & girls
Sustainable Energy for All & Global Tracking Framework (GTF):
Golden – but missed – opportunity to start collecting
gender sensitive data?

12. Creating Innovative
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Sustainable Future
Scarcity amongst plenty in India
 Installed power capacity in India > 300 GW
o But PLF of thermal power plants ~ 60%, Max 158 GW Peak
o Electricity available at INR 3.0 (5 cents) at Power Exchanges
 Still 50 million HH w/o electricity access
 Brown outs and black outs continues
 Losses are high, many discoms continue to bleed
o Though new UDAY appears to bring some hope
 The key issues is: Inefficient Distribution Sector
Management /Operational Inefficiency of DISCOMs

13. Creating Innovative
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Sustainable Future
India - Where are the unconnected households?
 Households in un-electrified remote villages
o Balance Un-electrified villages as on Feb 28, 2017 – 5169
 Villages to be electrified through grid (DDUGJY) – 2328
 Villages to be electrified through off-grid (DDG) – 2821
 Households in unconnected hamlets of villages with grid
o No specific number available, crude estimate is 50,000 hamlets
o Opportunities for smart mini-grids for such locations
 Un-electrified households in grid connected villages
o MoP is proposing EMI scheme to connect to APL households
o Opportunities for standalone DRE solutions/Sola Home Systems

14. Creating Innovative
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Off-grid Market Opportunities in India
TCG
Estimated the
market size for
solar home
systems to grow
at 60% per year
to reach a market
size of US$200-
250 million by
2018.
Estimate that
annual SHS sales
would reach over
3 million units by
2018 resulting in
a market worth
over US$215
million.
IFC
Assumed that the
criteria for
transfer of the
cash subsidy
would be
possession of a
Below the
Poverty Line
(BPL) card, an
estimated 50-55
million
households
which currently
enjoy the
kerosene subsidy,
are likely to be
excluded from
the scheme
cKinetics
USD 82 million
would be
available for
developing the
rural DRE mini-
grid sector in
India, of which
USD 71 million is
grant/donor
capital and only
USD 11 million is
available from
non-grant
sources.
WRI
Estimate off-grid
energy access
market includes 114
million households
who are at the base
of the pyramid
(BOP) earning less
than $2/day.
Specifically,
decentralized
renewable energy
enterprises (DRE)
offer an annual
market opportunity
of $2.04 billion
while the solar
home lighting (SHS)
market is estimated
to be $27.4 million a
year.
IEA
The IEA estimate
that the 400
million people
without access to
electricity in the
country spend
over $60 billion
annually on
energy (primarily
inefficient and
antiquated
sources such as
kerosene).

15. Creating Innovative
Solutions for a
Sustainable Future
Major Commitments in India
 GoI Mini-grid programme/RESP–10,000 minigrids/500 MW in 5 years
 DFID - £0.5m Energy Access Policy Fund (EAPF) with MNRE
 ADB - $30 million Clean Tech Fund for private sector DRE/mini-grids
 Rockefeller Foundation - $75 million initiative to establish 1,000 mini
power grids by the year 2018. First 100 mini grids reportedly set up
 GIZ- supporting UPNEDA to promote 100 private sector mini-grids
 IFC - Clean Technology Innovation Fund, a $60 million to invest in early
stage, clean-tech companies;
 TCG – Off-grid debt fund to finance projects
 USAID/Santa Clara Barbara University- Providing technical assistance
to raise and leverage $40 million for clean energy projects in India
 Others – World Bank, Shakti Sustainable Foundation, etc.

16. Creating Innovative
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Exposure to & satisfaction of grid vs. micro-grid

17. Creating Innovative
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What models of Mini-grid may be viable?
 Distributed Generation and Supply/Mini-grid set up in un-
electrified habitations of grid connected villages; Grid
arrives later
o No interconnection – Distributed Generation and Supply ;
operates PDN in parallel to grid (G+D)
o Interconnection – Distributed Generation and Supply - operates
PDN in parallel to grid and may export excess power, if available
during off-peak hours to the grid (G+D)
o Interconnection – Distributed Generation and supply - no longer
operates on grid extension; exports all power generated to grid at
FIT (G only)
o Interconnection – Distribution Generation and Supply; continues
to operate and imports power from the grid as demand increases
or become franchisee of the utility (G+D)

18. Creating Innovative
Solutions for a
Sustainable Future
What models of Mini-grid may be viable?
 Grid connectivity exists in the village, Many un-
electrified households or power availability is
inadequate
o No interconnection – Distributed Generation and Supply;
operation in parallel to the existing grid (G+D)
o Interconnection – Distributed Generation and Supply -
operates PDN in parallel to grid and may export excess
power, if available during off-peak hours to the grid (G+D)
o Interconnection – Distributed generation without supply;
utilizes available renewable energy resources in the village,
generates and exports all power to grid at FIT (G only)

19. Creating Innovative
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What interventions will be required
Smart Policy
and Regulatory
architecture
Smart
Technology
Smart
Finance and
Markets

20. Creating Innovative
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Sustainable Future
The Challenging decision
 What government policies could increase the support (such as
availability of low cost/priority capital, regulatory certainty, etc. for
private sector to improve access ?
 What kind of returns & payback period the company should expect?
 Smart/flexible subsidies
 How viability can be enhanced
 Anchor Loads, Niche Applications - pumps, Swarm electrification
 Micro-grid vs. aggregated/interconnected micro-grids
 through mission support (CSR, volunteering etc.)
 What should be the role of different stakeholders- community,
companies, donor agencies, government?
 Building capacity - what and how long
 Technical Assistance support

21. Creating Innovative
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Thank You
debajitp@teri.res.in