Decentralised Energy Generation

Hundreds of off-grid communities, particularly in Uttar Pradesh and Bihar in India, as in other developing countries, are getting clean reliable electricity for the first time. Much of this is from the decentralised generation based on renewable energy sources. Decentralised generation is all set to leapfrog the central grid in many parts of the world. This can be attributed to several technology innovations – smart meters, mobile phones enabling banking solutions to the unbanked sector and financing mechanisms such as crowd funding. Entrepreneurs with varying business models are finding ways to reach electricity to far-flung villages and communities. While many of the entrepreneurial solutions are at market rates, there are several that depend on grants and loans to help with the steep capital costs. Overall there has been a paradigm shift from business as usual – central grids based on conventional fuels funded by large financial institutions – that has failed the rural poor.

The implications of this are enormous: the universal access to clean energy for lighting that has been elusive for decades might be finally available for many and is perhaps cheaper than kerosene that they are now dependent on. The off-grid solutions, predominantly based on solar photovoltaic (PV) lighting, are meeting the meagre demand of these households, by supplying safe and reliable electricity. At this juncture, what should be the role of the government? After all, providing access to energy to its citizens falls within the purview of the government. Hence, it has to ensure that these energy solutions are sustainable, affordable and equitable. However, as the cost of generation from decentralised generation is higher, for every unit of electricity consumed these new consumers are paying a higher tariff than their grid-connected fellow citizens.