Indian villages are 100% electrified, but what’s next?

Government must introduce policies that focus on utility of quality electricity than just connections

By Vaani Khanna
Published: Monday 05 February 2024
There is a stark difference between the quality of rural and urban power supply. Photo: iStock

In April 2018, the central government, through the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya scheme) claimed to have achieved near-universal electrification in India. This news was celebrated as a step towards India’s development. 

The government went on to strive to achieve 24x7 electricity for all households in the country by 2022. While the first goal of reaching each household was somewhat achieved — villages were considered electrified if 10 per cent of the households in the village had received a connection — the factors affecting quality and the uptake of electricity in villages may need to be looked at again. 

In 2015, the World Bank introduced a new multi-tier framework in order to redefine energy access. The definition in the framework would now focus on reliability and quality instead of solely focusing on the availability of a connection. The availability, reliability, quality, affordability, legality, peak capacity and health and safety were all taken into consideration.

In the current scenario, rural households receive subsidised, unreliable electricity from debt-ridden discoms. Prices must rise to improve discoms’ financial position, which is not happening due to political constraints. As a result, rural areas must make do with a subpar supply of electricity. 

Read more: Union Budget 2024-25: Why India’s rooftop solar plan fails to spark interest

Between the years 2015 and 2019, Prayas Energy Group’s Electricity Supply Monitoring Initiative tracked the reliability and quality of electricity supply at several rural and urban locations in India. The findings from these figures show a stark difference between rural and urban supply quality. 

For example, in Uttar Pradesh, megacities experienced an average outage of 21 minutes, while rural areas’ average outage duration was 90 minutes. In various other instances, it has been noted that rural populations are not fully satisfied with their electricity supply because of its erratic nature and voltage fluctuations.

Currently, most areas get electricity through distribution companies or discoms. Most states have primarily one discom supplying electricity to the entire state. As a result, the distance from the nearest transmission grid increases by a lot for remote villages in rural areas, massively increasing discoms’ cost of supply.

There has been a long debate on the already debt-ridden discoms supplying more electricity to areas that cannot afford it since it comes at a cost. Discoms lose about Rs 4 per unit supplied to rural areas. 

For example, the technical losses in an efficient system lie in the range of only 1-2 per cent and vary between 9-12 per cent in inefficient systems. However, in the case of India, transmission and distribution losses in the power sector were about 15.8 per cent in 2022-23, found central public policy think tank NITI Aayog’s India Climate and Energy Dashboard.

This is the primary reason why rural areas far from the main grid experience power outages during peak hours. To combat this, the government launched the UDAY scheme in 2015 to help discoms cope with the load, but it was also ineffective in the long run. 

While the rates of electricity are subsidised for rural areas, that in itself is not enough motivation for communities to want a main-grid connection. Even with a free new connection and metres, studies have shown that the rural population is not as encouraged to take up a main grid connection if it is unreliable and erratic.

Read more: Decentralised renewable energy is bringing this Odisha village’s energy aspirations to life

Against this backdrop, people in rural areas also prefer decentralised electricity over the main-grid even if it is more expensive, as long as it is of better quality, two studies have found.

With quality electricity, remote communities can aspire to invest in more income-generating activities as well as have the security of knowing they will have access to electricity when they need it. It is often assumed that communities would be unwilling to pay non-subsidised rates of electricity, when it has been proven time and again that if communities get access to reliable, quality supply, they are willing to pay higher tariffs.

It has also been noted by the World Bank that the scale of development in India and Bangladesh through electricity depends highly on the quality of supply rather than just its availability. 

With respect to the above points, decentralised renewable energy has proven to be a reliable source of electricity for remote villages all across the world. The Saubhagya scheme itself has set up solar house systems in villages located in extremely remote areas. However, the focus of the government on grid-extension far outweighs the focus on off-grid technologies.

There have been international examples (in China and in Bangladesh) of off-grid systems successfully electrifying remote areas, showing that this way forward works. There have also been studies proving that off-grid systems powered by renewable energy are more cost-effective than setting up long wires and extra poles in order to get the main grid connected to remote areas.

The draft National Energy Policy 2017 proposed that tariffs for rural areas be determined by the cost of supply rather than heavily subsidising rates to encourage more rural communities to use main-grid electricity. 

Read more: Power for all—can it be achieved?

Discoms are also encouraged to collect bills on a monthly basis rather than once every 2-3 months, as is common in remote rural areas. Furthermore, in the case of subsidisation, direct beneficiary transfer can be used to help consumers be more conscious of their consumption. 

While the recommendations made by the Indian think tank are in line with the ground reality, there has been significant change between 2017 and 2023. The Saubhagya scheme has been implemented, with near-universal electrification. We have also passed the 2022 deadline set by NITI Aayog for achieving 24x7 electricity access. 

Ever since the latest reform, there has also been much debate on the cost-effectiveness of the main grid versus off-grid systems like mini-grids and microgrids. Another aspect that the draft National Energy Policy policy could have focused on is decentralisation. With the vastness of the country, it is extremely difficult to make blanket decisions especially when the topography of a place can make the cost of supply increase by a significant margin. 

While decentralised renewable energy systems are a way forward in terms of electricity access, they do have some limitations that need to be addressed. The main disadvantage of mini-grids and decentralised electricity is their cost. So far, the costs of electricity generated by such systems have had to be heavily subsidised or funded entirely through non-governmental organisations or corporate social responsibility projects by private enterprises. 

In order for this to be taken up on a larger scale, the government will have to come up with schemes and subsidies for manufacturers in order to incentivise them to invest more in the rural market.

The model of community-owned microgrids has been tested in several locations across the country, but it has not been entirely successful due to a lack of technical know-how among the rural population, as well as the immediate lack of necessary technical assistance in the event of a breakdown. 

Read more: ‘Separate power feeders can greatly improve rural electrification’

A more serious and enthusiastic introduction of micro-grids and mini-grids in policies can help rural areas get access to quality electricity with the discoms also getting relief from their financial burden. The focus should be on providing reliable, quality electricity to villages including the remote ones.

Keeping this as the benchmark, the central or state governments can make decisions on the areas that are suitable for centralised electricity versus areas suitable for decentralised renewable electricity.

Another way for the government to encourage the use of decentralised systems is to invest more in research and development and personnel training. The training can be on two levels, technical personnel and rural communities.

The government must now revise its definition of electricity access to focus on development through electricity as a result of high-quality supply, which is consistent with their goal of providing 24x7 electricity to all.

It is time for the government to look beyond connections and focus on the utility of quality electricity. More importantly, the rural customer should get their fair share of electricity, which will only happen if the focus is on equity than just availability.

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