On the subject of
Decentralized Distributed Generation in villages, I had the opportunity to
attend a one day Conference on 2nd June, 2010, which was organized by
the Rockefeller Foundation and Decentralized Energy Systems India (DESI) Pvt.
Ltd. I participated in the Panel discussions and had the opportunity to share
my thoughts. Mr. Gupta, Secretary (Ministry of New and Renewable Energy), also
participated in the Panel discussion and made a number of observations. Before,
I outline the points I made, it is relevant to briefly discuss a very important
concept, that the Rockefeller Foundation and Decentralized Energy Systems India
(DESI) Pvt. Ltd. have come out with, to make the local generation through new
technologies more economical and workable.
situation would gradually improve with the progressive increase in rural
economic activities, leading to a more balanced electricity demand pattern over
the 24 hour period, immediately tapping the demand potential which is already
available from the Telecom Towers in rural area seems to be a good part solution
to the problem.
It is estimated
that there are over 2,50,000 Telecom Towers and the number is increasing at the
rate of 10,000 per month.
each of these Towers needs uninterrupted power supply equal to 10-15 KVA. For a
group of villages, from a number of Towers, the aggregate demand, when met from
local generation, has the potential to make all the difference in the load
It is also
estimated that at present because of unreliable power supply from the Grid,
these Towers are serviced by diesel supported generation systems and the amount
of diesel consumed is of the order of 2 billion litres annually.
It needs to be
appreciated that replacement of diesel by other means of supplying power, not
only addresses the issue of import of petroleum fuel, but also the concerns of
global warming. The high cost of electricity generation through new energy
generating systems has to be evaluated keeping in view both these
Apart from the
Telecom Towers providing the anchor loads, a few other anchor loads which may be
considered include pumping for irrigation and local economic activities
(existing or to be developed).
pattern needs to be examined in detail in terms of hours of the day, so that the
profile of demands could be appropriately matched with generation to be made
available from technology mix. Sophistication associated with optimization of
load has to be harmonized with a mix of diesel supported generation (the
proportion to be drastically reduced), Photo Voltaic Systems, and Bio-mass based
I have written, in the past,
a few articles on the subject of supply of electricity in rural India. The
thrust of these papers has always been that in spite of large scale expansion of
power generation capacity, which is currently under progress, perhaps the rural
areas will continue to suffer the shortage of power. Even in the long term
perspective of next 25 years, which projects the installed capacity at over 800
GW, the power availability may not be sufficient to take care of the ever
increasing demands. China is an example in case, where even though the
installed capacity has crossed 800 GW with their accelerated capacity addition
programmes over last 30 years, they do experience shortages. When the power
supply system is faced with the situation of shortage, it is the rural area
which gets the last priority. Therefore, in all the previous papers I tried to
articulate that only the Decentralized Distributed Generation systems of smaller
capacity will be able to mitigate the problem of rural electricity supply.
If the country had abundance
of gas supply, and even the rural areas had been networked with national gas
grid, local grids and spur pipelines, perhaps small micro-turbine, fuelled by
natural gas, could have been an answer to the decentralized generation approach
for reliable electricity supply in rural areas. Unfortunately, India does not
have that much of gas and, therefore, this programme, atleast in the foreseeable
future, does not appear to be possible. Even the LNG to supplement the domestic
gas production may not be adequate to meet such needs.
Apart from the cost of new
and renewable technologies being comparatively much higher than the conventional
power generating systems, one of the other major problems which escalate the
cost of power supply to such small decentralized generation systems is the
highly unfavourable load profile in rural areas. Most of the villages need
electricity supply for limited hours mainly for lighting. It is precisely for
this reason that when the Ministry of Power was conceptualizing the Scheme of
rural electrification, which ultimately was launched as Rajeev Gandhi Grameen
Vidyutikaran Yojna (RGGVY), the objectives included not only lighting but also a
number of rural economic activities viz. small agro-based industrial
establishments, cold storage etc.
The goal of inclusive growth
cannot be met just by providing electricity in rural areas for lighting.
Extensive rural based economic activities would not only enable the small local
power generation systems to cater to a more evenly placed demand pattern
throughout the day and night, but, in fact, it will also lead to acceleration of
economic activities, leading, in turn, to overall development and empowerment of
rural India. This is obviously going to be a long drawn process. Rural
electrification programmes, therefore, must be suitably integrated with overall
rural development programmes. Bharat Nirman, no doubt, has captured some of
these issues, but it mainly focuses on rural infrastructure. These are
necessary, but not sufficient to directly promote rural economic activities. We
need to go beyond infrastructure.
The RGGVY, no doubt, focuses
on creation of Rural Electricity Distribution Backbone and also household
connectivity for the poor families. But, the scope of this Scheme goes beyond
the distribution infrastructure. The grant funding to the extent of 90%, which
is available under this Scheme, is also available for Decentralized Distributed
Generation. What is required is an organized response from industry and
corporates. Somehow, business groups have not focused their attention to this
important need of the country. We need Hindustan Livers for rural electricity.
In the initial stage, small and medium entrepreneurs could make a big
difference. But, very soon we need active involvement of corporates in this
major national endeavour.
While dedicated generation
and distribution system is an appropriate concept and will work with the
exercise of matching the load profile with generation mix, as mentioned above,
in many cases option of Grid connectivity could also be used to take care of
uneven load profile in rural areas. The distribution system, which could work
off-the-Grid, but, when needed, also have the compatibility of being connected
with the Grid, would be most appropriate.
All the rural generation
systems, which are renewable in nature, will qualify for CDM benefits.
Individual generating organizations, particularly if they are in small and
medium enterprise group, may not have the ability to access the concessions and
incentives which may be available under CDM Schemes. An institutionalized
arrangement, which could support all these entrepreneurs and get them these
benefits, would lead to improving the economics of power generation. Once large
corporates get motivated to enter this field, perhaps they may be on their own
for these tasks.
In the Rural Electrification
Policy (2006) of the Ministry of Power, a number of facilities for decentralized
generation systems upto 1 MW have been envisaged. Many of these have to be
coordinated and provided by the concerned State Governments. The process needs
to be catalyzed. Regulatory Commissions could play a significant role by
bringing out greater degree of clarity on facilitation by the State Governments,
on pricing, and on use of local area distribution systems were needed. In the
RGGVY, since the distribution network is mostly grant funded, the wheeling
charge could be almost zero. This could make the economics of power supply
through such systems even more affordable.
Financing of these projects
is also an important area to be addressed. Long term finance with softer terms
on interest will further enable in reducing the cost of generation. Power
Finance Corporation and Rural Electrification Corporation, could consider
accessing fund from various national and international agencies, which could
make less expensive capital available for such renewable energy generating
systems. In turn, PFC and REC could evolve schemes to provide loan for a period
of 25 years or so with lower interest rates.
State Governments and State
Regulatory Commissions could evaluate the positive impact of such decentralized
systems on economics of their conventional power supply, which entails high
amount of transmission and distribution loss and poor bill collection
efficiency. The benefit derived due to local generation could be shared for
reducing the cost of generation through such non conventional systems. In many
States, in villages, if we include the T&D loss and bill collection gaps, the
revenue realized is not even 40 percent. Local generation, in such cases, will
lead to tremendous amount of savings to the State distribution companies.
Involvement of Panchayats in helping bill collection etc. will be very useful.
At present, more than 350,000
villages (more than 50% of total) use kerosene oil for lighting. The Government
subsidy on this fuel is huge. The local decentralized generation will obviously
reduce the subsidy burden. A part of such savings could be shared to reduce the
cost of generation in these systems. A suitable mechanism will have to be
worked out to incentivize the Decentralized Distributed Generation by deploying
savings out of the reduction in subsidy.
Finally, just like Ultra Mega
Project Scheme, Ministry of Power may consider playing a catalyst's role to
launch, on an all India basis, the Decentralized Distributed Generation
development. It could coordinate with Ministry of New and Renewable Energy and
State Governments to provide the required support, so that the industry is
brought into this opportunity in a big way.