Rural Electrification- a distant dream !

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Rural_Electrification.jpegRural Electrification has been one of the key focus areas for the current government.The vision of “Power for All” has been shining brightly in the eyes of government and it aims to electrify all villages by May 2018.The following post will look at the current status of Rural Electrification and various initiatives taken by the government to achieve this target.

Meaning of Electrification

As per the earlier definition of Rural electrification “A village is classified as electrified if electricity is being used within its revenue area for any purpose what. so-ever..” However, the definition needs some revision and the overall purview of Electrification is currently amended definition of Electrification as follows :

Thus,as per the above definition it requires only 10 % of the households in a village to be connected for it to be classified as “electrified”. This implies that even if a large number of households remain un-electrified after covering 10%, still the village will qualify to be called as “Electrified”moreover, the definition doesn’t specify the minimum number of hours of electricity supply in the villages.

Initiatives/Schemes in Rural Electrification

Prima-facie, a couple of major steps have been taken by the earlier government and the current government.Some of these are :

  1. Establishment of REC (Rural Electrification Corporation) : REC was established in the 1969 with the objective of providing finance and promoting finance and promoting rural electrification across the country.Its main objective is to finance and promote rural electrification projects all over the country. It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them.
  2. RGGVY (Rajiv Gandhi Grameen Vidyutikaran Yojana) It was launched in April 2005 for attaining the National Common Minimum Program  goal of providing access to electricity to each and every household within a period of 5 years.The scheme was to officially end in 2009 ,however, due to non-attainment of the targets, certain allocation were made for the continuation in the 12th plan period (2012 -17). In terms of achieving the targets of lighting up unelectrified villages, the performance was much better in the initial years than in the last three years of the program.
  3. DDUGY(DeenDayal Upadhyaya Gram jyoti Yojana) : In Dec’14, the government announced DDUGY with some modification to the RGGVY scheme already in progress.It aims feeder segregation and strengthening of sub-transmission and distribution infrastructure in rural areas including metering of distribution transformers/feeders/consumers part from electrification of unelectrified villages,household.
    Villages Electrified
    Source :DDUGJY


    Current Status

As per the revised targets set by REC vis-a-vis government of India , 2,21,424 villages to be electrified out of which 95,977 have already been electrified ( Dated 20.04.2016 ) . Nine states (AP , Goa , Haryana, Kerala,Maharashtra,Punjab,Sikkim and Tamil Nadu) have achieved 100 % of the village electrification.Bihar is the worst performer in terms of household electrification. While 97 percent of the Bihar’s village are electrified, only 12 percent homes have electricity connections.

Targets 31.03.16
Targets of Balance Un-electrified Villages as on 31.03.2016
 Dilemma of Electrified and “Electricity”
As mentioned earlier around 98 % of the total inhabited villages have been electrified in India till dated but only around 64 % of he households have electricity connections. Many institutions have come up with independent research reports targeting the reality checks of the rural electrification program. A recent report by CEEW states in its report namely “Access to Clean Cooking Energy and Electricity, Survey of states” that only 4-5 % of households get supply for 20 hours or more.  This implies that a large part of electrification and energy access are superficial and the same needs to be cross-verified by third party agencies.
The benefits of energy access and security are no doubt immense as the electricity to distant villages has lead to significant improvements in the living standards of the villagers.In impoverished and undeveloped areas, even small amount of electricity have freed up large amounts of human time and effort.With the advent of rural electrification, use of kerosene oil has seen a significant dip in the recent years ,leading to and environment friendly solution.To ensure energy security in rural areas , a strategy needs to be evolved targeting :
  • Location specific technologies like solar,wind,mini-hydel so that target of electrification reach the granular level of society.
  • Technological improvement required at the micro level so that the systems are well maintained over longer duration with requisite maintenance strategies.
  • Last but not the least, there are still so many villages across India which have not experience the word “Electricity” and they are to be helped with utmost priority.

Solar Energy – World’s Future??

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Solar Energy has changed its face in the recent times in a big way,Talking about its expansion,it has transformed itself from a cottage industry to 100 billion $ company within the span of few years in Germany.Solar PV (Photo Voltaic- refer price is decreasing alongwith the total Installed capacity has increased to a staggering figure of 65GW. Cost may decline to $2/ wp (Watt Peak) and leading for further developments in various OECD(Organisation for Economic & Non Cooperation development) countries across the globe.Both the downstream as well as upstream players are looking to tap its potential that will ultimately lead to their growth.

The transition has surely occurred in Solar Energy whether its cost or its installed capacity.

Cost dropped from 4$/pw to 1$/pw whereas installed capacity has increased from 4.5GW(2005) to 65GW today.Subsidies that related to Solar Power has attracted various players into the market leading to rise of competition.With the advent of Chinese manufacturers,market has become oversupplied & thereby mismatching the demand supply gap. Government is trying to reduce the subsidies levied in this regard in order to balance the situation. Number of companies have filed for bankruptcy in this case.(In India too Mosaer Baer Solar has posted losses in the 5th consecutive year). MAC Global Solar Energy index fell to 65% in 2011.Various companies like GE,SAMSUNG,Hanwa(Korea) are planning to enter in the field of the Solar PV manufacturers making a way for sustainable development for solar energy in the near future.

Annual Solar PV capacity will keep on increasing day by day and may even compete with other renewable sources of energy in the longer terms.As expected Solar PV cells will increase around 50 fold in 2020.

Some of the potential areas for Solar Power Development can be summarised as below:

  • Off Grid Applications; These are the high demanding areas for solar power such as Irrigation department,telecommunication towers,remote industrial sites,military area units etc.The dearth in local distribution area has led to its growth and is expected to grow by a figure of 15-20 GW by year 2020.
  • Residential as well as commercial retail consumers: Many small scale as well as medium scale industries are already generating their power using solar applications.Distributed power generators may take some steps in order to make Solar Power generation as unattractive.Companies have also opted for taking financial help from the World Bank in this very regard.Moreover there are some nations which has adequate potential of solar energy but retail electricity prices are on a high.
  • Isolated Grids: Small Grids fueled by D.G has an average LCOE(Levelised Cost of Energy- Refer require around $ 0.32 to 0.40 /KWH.This area has vast potential of Solar Energy.
  • Peak Capacity in Growth Markets: Various emerging markets are having a huge potential for the peak energy demands and thereby adequate are being taken too.Demand in this particular segment is exoected to grow by 175 -200GW by 2020.
  • New Large Scale Power Plants: New solar-power plants must reach an LCOE of $0.06 to $0.08 per kWh to be competitive with new-build conventional generation such as coal, natural gas, and nuclear.Steps are being by the government as well as Solar PV Companies to meet this target with the technological improvements they are trying to implement.Distributed Rooftop solar will be the major criterion in this regard.

How to Tackle the existing problems?

Key Factors for Upstream Players:

Various steps/options need to be explored by the players and should have around 50-100MW to compete in the solar market.

  • Development of scalable technologies:  Companies like MEMC,REC are opting for Fluidised Bed Reactor mechanism to reduce the energy intensity of  polysilicone manufacturing process thereby leading to the drop of price of Polysilicon.Manufacturers are also opting for copper indium gallium selenide manufacturing process.
  • Drive operational excellence in manufacturing: Employing an efficient workforce will help the manufacturers in this very regard to fulfill the objectives.This will help manufacturing companies to increase their capacity to more that 30-40 %.
  • Balance of Systems to be addressed : Balance of system(wires,switching, invertors) need to seriously taken by the Solar power manufacturers that can significantly reduce their costs.

Key success factors for downstream players:

Downstream players need to identify their customer choices and their aspirations:Some of the various options which can be taken up by the downstream players are

  • Develop targeted customer offerings.
  • Minimize customer-acquisition and installation costs.
  • Secure low-cost financing.
The solar industry is undergoing a critical transition. The rules of the game are changing, and many current players could face significant challenges as the industry restructures.But adequate steps are being taken to overcome these challenges.

Ref: Mckinsey Report on Solar Sustainability 2012.