The Status of Mini-Grids in Rural India
The Status of Mini-Grids in Rural India
The Status of Mini-Grids in Rural India
OVERVIEW CONTENTS
1 Overview
On May 6, 2022, in Ranchi, WRI India and the Transform Rural India
2 Introduction
Foundation jointly organized the dialogue ‘Mini-grid Implementation in
3 Dialogue Outcomes
Jharkhand’. The dialogue included discussions on the economic sustainability
9 Next Steps
of mini-grids, the integration of productive-use-of-energy (PUE) applications
for enhanced mini-grid utilization, policy support and financial requirements 10 Participants
for scaling, and frameworks for measuring the ground-level impacts of mini- 11 References
grids. The dialogue was attended by 38 experts from various backgrounds in 11 Acknowledgments
the mini-grid sector who have implemented, financed and/or designed mini- 12 About the Authors
grids for electricity access in rural and remote parts of Jharkhand and other
Indian states (see list of participants). The content of these conference proceedings
reflects the views of the conference
During the discussions, experts highlighted the role of mini-grid participants and does not necessarily reflect
implementation in delivering access to electrification in rural and remote the views of the World Resources Institute or
parts of India, as well as its role in the country’s ongoing energy transition. other conference partners. These proceedings
aim to faithfully reflect the conversations
Equally important, the participants discussed the barriers to scaling mini-
and content generated at the conference
grid solutions in the present policy environment that has favored grid but for ease of readability some wording
extension to all households. Participants emphasized the socioeconomic has been edited.
benefits of mini-grids for communities: providing access to a reliable and
quality power source, improving productivity and generating income.
They stressed the need for an enabling policy environment to create
mini-grids that are sustainable and financially viable for unserved and
underserved communities.
Conference Proceeding | 1
Establish coordination mechanisms between mini-grid developers and electricity distribution companies
to provide reliable and affordable power in rural areas
Create a conducive regulatory environment for tariff-setting and promotion of mini-grids
Increase mini-grid capacity utilization by looking beyond household electrification and supporting uptake
of PUE applications for livelihoods
Integrate equity considerations into beneficiary selection and load management when
adopting PUE appliances
Develop impact frameworks to build evidence of mini-grid sustainability
INTRODUCTION
Access to electricity is a key driver and enabler of socioeconomic growth and improved livelihoods. In India,
the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (‘Saubhagya’) was launched in September 2017 to provide
energy access to all by providing last-mile connectivity and electrifying all unelectrified households in the
country. This target was achieved in March 2019, with the government declaring 100 percent electrification
of all ‘willing’ households. This has been a commendable effort, with over 26.2 million rural households
being connected to the national grid since 2017 (REC Limited 2022). This effort was aimed at extending
the reach of grid electricity, but it did not specifically address the quality and reliability of electricity supply.
While the expansion of the main grid has significantly improved electricity access, mini-grids have played
an important role in improving reliability of electricity services, particularly in rural areas which either have
been unelectrified under previous rural electrification schemes or face continuous reliability problems like
power outages and voltage fluctuations. This is one of the reasons why there were more than 14,000 mini-
grid projects and over 2 million solar home systems deployed in India as of 2019 (SPI and ISEP 2019).
On May 6, 2022, the Transform Rural India Foundation (TRIF) and WRI India jointly organized a
dialogue that brought together experts from civil society, financial institutions, government and the private
sector to discuss the progress of mini-grid implementation in Jharkhand and other Indian states, and to
reflect on the opportunities and barriers to scaling up mini-grid adoption. The dialogue was designed
to collectively reflect on the lessons learned from mini-grid implementation across the country, in terms
of system design, economic sustainability of mini-grids, integrating productive use applications, policy
frameworks and financing for scaling up the use of mini-grids, as well as frameworks and metrics to measure
mini-grids’ impact.
The dialogue was aimed at addressing some of the critical questions and lessons learned from past
implementation through conversations around the following themes:
What measures are being taken to ensure the sustainability of mini-grids, in terms of both community
engagement and operations and maintenance?
What approaches have been used to set tariffs for mini-grids?
How do consumers, implementing agencies and electricity distribution companies (DISCOMs) approach
the issues involved in interconnecting mini-grids with the national grid?
How do we create demand for PUE applications in mini-grids? How is load managed to ensure
optimal utilization?
How can the financing landscape for mini-grids be improved? How can measuring and monitoring
impact frameworks support the scaling of mini-grids?
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DIALOGUE OUTCOMES
Promote community engagement and ownership for the inclusive
growth and sustainability of mini-grids
Communities play multiple roles in the mini-grid ecosystem: as beneficiaries, as owners and as customers of
mini-grids, depending on the model of implementation and financing.
Experts argued that community involvement can increase the sustainability of mini-grid systems if
communities are empowered to operate, manage and take ownership of their systems. Given that these
are high-investment infrastructure, community buy-in right from the planning phase is essential to ensure
that the systems are deployed in locations where they do not quickly become obsolete—due to either lack
of utilization or inadequate management and servicing of the system. The community’s energy needs
must be properly mapped with aspirational loads (see Figure 1) while designing and sizing of mini-grids.
FIGURE 1 | Focus Group Discussion with mini-grid customers at Kurdeg Block, Simdega
District, Jharkhand
At the planning stage, community involvement informs developers about communities’ energy needs,
aspirations, socioeconomic conditions, crop production patterns, challenges, opportunities for storage
and processing within the village and willingness and propensity to pay for services. Experts noted that
formalized institutions formed within community, such as self-help groups, farmer producer organizations
and Panchayati Raj institutions, play an important role in ensuring the inclusion of all communities in
infrastructure planning for villages. These governance structures can ensure that no one is excluded from the
benefits of infrastructure, regardless of caste, gender, age or religion.
Where formalized structures do not exist, robust community institutions, such as village energy committees
(VECs), are created to oversee the management of mini-grids in villages. These VECs have decision-making
authority on matters across the spectrum of mini-grid operations—including planning, installation, tariff
determination and payment collection, operations and maintenance.
In 2022, Jharkhand released a new solar policy to reach a cumulative target of 110 megawatts for mini- and
micro-grids, in the form of solar villages, by 2027 (JREDA 2022). Geospatial analysis can help government
stakeholders map the right locations for implementation of solar villages. Geospatial tools like the Energy
Access Explorer (EAE), developed by World Resources Institute, can provide location-specific information
on resource availability such as solar irradiation, as well as data on infrastructure like road network, and
transmission and distribution networks, to show the current energy supply situation. Mini-grid developers
can also use the EAE to assess the level of available service, customer location, concentration of demand and
available resources such as water bodies. This can also help government and development finance institutions
direct the flow of capital into the right regions and communities to support electrification efforts.
While not all mini-grids provide 24-7 power supply to communities, two things differentiate the mini-
grids installed in rural and remote regions from the conventional grid: the predictability of electricity supply
(reliability) and the improved quality of power supply for larger loads (i.e., three-phase connection). For
this reason, some customers have continued to use mini-grid power in locations where grid power-supply
quality and reliability issues persist, and they have been willing to pay higher mini-grid tariffs (Rockefeller
Foundation et al. 2017).
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Moreover, meaningful integration of mini-grids with the main grid is plagued with technological challenges,
including unsafe interconnection with the grid at the correct frequency and phase, inconsistent frequency
and voltage regulation for both mini-grids and utilities, grid instability due to intermittent power production
on the mini-grids and the need for specialized hybrid inverters that can both export power to the grid and
run without using the grid as a reference (Greacen et al. 2013).
Complementing mini-grids with the conventional grid has been brought up in many policy dialogues, and mini-
grid operators have been provided with several options for access to national grids in rural areas. Specifically,
mini-grids can:
- Run in parallel to the conventional grid with separate distribution networks;
- Sell electricity to the conventional grid at a tariff approved by the regulators;
- Operate as an energy service company for the conventional grid in regions where the conventional grid is
deemed unfeasible; and
- Exit and transfer the assets to a DISCOM at a cost agreed to by the mini-grid operator and
the DISCOM (Energy Department, Government of Bihar 2017; OERC 2019; UPNEDA
2016; JREDA 2022).
This also extends to tariffs for productive use of energy (PUE) applications such as irrigation, where existing
operating costs (such as current pump capacity, time taken to irrigate a plot of land, costs for fuel and for
pump maintenance) are evaluated and tariffs are set to keep the operational costs lower than a diesel-based
pump equivalent. With the energy consumption per hour for commercial appliances being higher than tariffs
for domestic use, PUE consumer groups are charged higher, thereby cross-subsidizing household consumers.
Some mini-grids financed through grants or corporate social responsibility funding operate as a social good.
In these cases, customers are charged a nominal per unit cost (around 10 rupees [INR] per kilowatt-hour
[kWh]), irrespective of the type of load. This makes PUE appliances very cost-competitive compared to
existing diesel-based applications.
Currently, mini-grid developers charge relatively higher tariffs to sustain and expand their operations For
example, the energy charges per kWh charged by Jharkhand Bijli Vitran Nigam Limited (JBVNL) for
domestic rural connection is around INR 5.75/kWh, excluding fixed costs (JSERC 2020). In comparison,
dialogue participants estimated that mini-grid tariffs can range from INR 10/kWh to INR 45/kWh,
depending on time of use. For solar mini-grids, day-time power is charged less, and customers are
Choosing the right PUE application requires knowledge of the existing village environment and available
resources like land, water, forest produce, crops and small industries. In addition, any new PUE will depend
on new resources being made available to the users. For example, improved access to energy would allow
farmers to use electric pumps to irrigate their fields and cultivate new crops (e.g., growing mustard in rabi
season). This creates a new demand for processing of mustard seeds to produce oil, in addition to the existing
practice of bartering crops in exchange for mustard oil, which is a staple in many households in Jharkhand.
Developers should assess the economic viability of these PUE applications. Often community members
struggle to pay the full upfront cost of buying PUE appliances. The right last-mile financing options for
communities need to be created. These could take the form of government subsidies, low-interest loans to
procure appliances, innovative servicing models facilitated by mini-grid developers (e.g., pay-as-you-use)
or rental models.
For traditional loans for productive-use appliances, financiers will have to comply with Reserve Bank of
India regulations and will need to gauge the repayment capacity of the end-user community. VECs are often
not registered as legal entities, unlike farmer producer organizations or cooperatives. This makes lending to
VECs and the community members a challenge for financial institutions.
Creating market opportunities and linkages must be investigated once financing for PUE applications is
available. Communities should be supported in building market ecosystems that include good road networks,
transportation, storage and access to urban markets. The creation of these value chains should ensure that
maximum benefits are garnered by the community—the mini-grid’s primary beneficiary.
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In most cases, project developers can leverage the presence of local grassroots organizations, development
institutions and community member groups to promote awareness, outreach and mobilization in the
community and among consumers. In the planning stages it is important to identify the ‘early adopter’
beneficiaries. The early adopters are usually those who are experienced in running similar PUE applications
on a different energy source (such as using rice hullers powered by diesel engines). These early adopters
could be more open to innovation and taking risk, as they could be more familiar with the raw materials and
business economics of running such applications. Some of these early adopter entrepreneurs can emerge as
changemakers within the village and motivate others to build microenterprises with similar interventions.
This happens primarily when entrepreneurs begin to see the positive impact of mini-grid-powered PUE
applications in terms of reduced operation costs (fuel costs), greater processing efficiency, ease of operation
and maintenance and therefore higher income generation. In addition to among ‘early adopters’, PUE
applications need to be made feasible for socially and economically weaker households in the village.
Load management, critical for any mini-grid, is the joint responsibility of the developer, mini-grid operator
and consumer. Dialogue participants shared examples of mini-grids in Jharkhand’s Simdega district, where
irrigation pumps, rice hullers and pulverizers are scheduled to operate at different hours. Experts have
noticed that PUE applications, currently being powered by diesel generators, are usually oversized—due
either to limited market options at the time of procurement or lack of awareness as to the appliance capacity.
Moreover, the seasonality of produce makes the PUE utilization intermittent—where year-round mini-grid
utilization varies. This may discourage investment, as income generation for new customers is viewed as a
seasonal activity at times. Experts highlighted that recent years have seen an uptake of ‘combo machines’
which can process multiple products, such as the rice mill with pulverizer combination machine (as shown in
Figure 2). This allows the same PUE to be used across multiple seasons for commodities grown at different
times of the year. Participants recognized, however, that standardization is currently lacking in the PUE
appliance sector.
Participants agreed that mini-grid developers, the community and financial institutions all need to become
stakeholders in the M&E of these interventions. This ensures that M&E is not limited to the short
time frames that programs are designed for but becomes a mechanism that is regularly operationalized
throughout a project’s lifetime. Given the potential cross-cutting impact, the M&E plan should be designed
to have distinct key performance indicators (KPIs) for the various stakeholders—implementers, end users
(community), government and financial institutions. Currently, different mini-grid developers have different
ways of measuring and reporting their impacts on the ground. This wide variety of approaches need to be
streamlined for external audiences, such as the government or financial institutions.
NEXT STEPS
As the insights from this dialogue reveal, while there are several opportunities for providing reliable access
to electricity in rural and remote regions through mini-grids there are several challenges in creating an
integrated approach, which means coordinating among stakeholders across government agencies, electricity
providers, mini-grid operators, communities and development organizations. Based on the feedback and
reflections from the dialogue, WRI India and TRIF will work with stakeholders across the mini-grid
ecosystem in pursuit of the following activities:
Utilize geospatial mapping tools to aggregate electricity access and development indicators across states
to prioritize regions where model villages powered by mini-grids
Amplify the need for policy support to bridge the gap between the perspectives of distribution companies
and those of the mini-grid ecosystem. Assess the need for government incentives and tariff regulation to
achieve cost-parity by studying other countries’ examples of integration with the utility grid.
Explore financing instruments and innovate business models to scale farm- and non-farm-based PUE
applications in rural India.
Support enhancement of mini-grid capacity utilization through research and development for energy-
efficient PUE applications, build community awareness regarding time-of-day usage and explore
emerging solutions such as electrification (and charging) of rural transport vehicles like electric scooters.
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Reduced Drudgery
Gender
Greater participation of women in mini-grid-powered livelihood activities
Quality of Improved quality of life patterns for all sections of society (safer streets, better
Life learning outcomes from enhanced study hours, entertainment, etc)
When designing mini-grids, standardize field assessment guides to map current energy needs (i.e.,
those of households, productive-uses and social loads), as well as the community’s aspirations in terms of
electric appliances and microenterprise development.
Foster dialogues among government, regulators, DISCOMs, mini-grid developers, academia and civil
society to promote the sharing of knowledge and reflections on the creation of a collaborative ecosystem
where different energy-supply options to target unserved and underserved regions can coexist.
Design measurement, monitoring and evaluation frameworks to capture the socioeconomic impacts of
mini-grid installations.
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REFERENCES
Energy Department, Government of Bihar. 2017. “Bihar Policy for Promotion of Bihar New and Renewable Energy
Sources 2017.” https://www.breda.bih.nic.in/Uploads/Policies%20_Act%20_%20Regulations/RENEWABE_ENERGY_
POLICY_2017.pdf.
Greacen, C., R. Engel, and T. Quetchenbach. 2013. “A Guidebook on Grid Interconnection and Islanded Operation of Mini-
grid Power Systems up to 200 KW.” LBNL—6224E, 1171616. doi:10.2172/1171616.
JREDA (Jharkhand Renewable Energy Development Agency). 2022. “Jharkhand State Solar Policy 2022.” Ranchi:
Department of Energy, Jharkhand. https://jreda.com/upload_files/Jharkhand-State-Solar-Policy-2022.pdf.
JSERC (Jharkhand State Electricity Regulatory Commission). 2020. “Order on True-Up for FY 2018–19, APR for FY 2019–20
and ARR & Tariff for FY 2020–21.” Ranchi. https://jbvnl.co.in/upload/0IOKV9.jbvnl%20tariff%20order%202020-2021.pdf.
OERC (Odisha Electricity Regulatory Commission). 2019. “(Mini-grid Renewable Energy Generation and Supply)
Regulations, 2019.” http://www.cbip.org/regulationsdata/Odisha/Mini_Grid_RE_November_2019/Orissa%20Mini%20
Grid%20Regulations%20Summary.pdf.
Rockefeller Foundation, Asha Impact, Shakti Sustainable Energy Foundation, and Okapi Research and Advisory. 2017.
“Beyond Off-Grid: Integrating Mini-grids with India’s Evolving Electricity System.” https://www.rockefellerfoundation.org/
report/integrating-mini-grids-indias-evolving-electricity-system/.
SPI (Smart Power India) and Initiative for Sustainable Energy Policy (ISEP). 2019. “Rural Electrification in India: Customer
Behaviour and Demand.” SPI. https://www.rockefellerfoundation.org/report/rural-electrification-india-customer-
behaviour-demand/.
UPNEDA (Uttar Pradesh New and Renewable Energy Development Agency). 2016. “Uttar Pradesh Mini Grid Policy 2016.”
Lucknow. http://upneda.org.in/mediagallery/Mini-Grid-Policy-2016.pdf.
ACKNOWLEDGMENTS
The authors would like to thank all those who helped shape this proceedings document. We are especially thankful
to all the participants who gave their time and valuable inputs during the dialogue.
We are grateful to Ashok Kumar (TRIF), Harsha Meenawat, Namrata Ginoya and Nitya Kaushik (WRI India) for
their feedback on the proceedings document. Our special thanks to WRI India’s Energy Team, notably Abdul
Khalid, Mantok Yanlem, Masfick Hazarika, Rishikesh Mishra, and Vandita Sahay, who supported us with notetaking
throughout the various sessions and Sarah Hasan for proofreading. The authors appreciate the support provided
by Bharath Jairaj, Anamika Dutt, copyeditor Alex Martin, designer Garima Jain, and the production team led by
Romain Warnault.
This conference was made possible thanks to the extensive support of Transform Rural India Foundation (TRIF),
in convening multiple stakeholders across the state.
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ABOUT THE AUTHORS
Lanvin Concessao is a Senior Program Associate for the Energy Program at WRI India. He works on Energy for
Development projects and provides guidance to development sector partners working in rural areas to plan, design,
implement and assess the impact of clean energy solutions.
Contact: [email protected]
Dheeraj Kumar Gupta is a Senior Program Associate with WRI India’s Energy Program. He leads engagement with
stakeholders in the state of Jharkhand to improve reliable, sustainable, affordable energy for all. His works involves
designing and implementing energy interventions for development.
Contact: [email protected]
Copyright 2023 World Resources Institute. This work is licensed under the Creative Commons Attribution 4.0 International License.
To view a copy of the license, visit http://creativecommons.org/licenses/by/4.0/
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