Energy Access Introduction

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Energy Consumption and Distribution

The rapid growth of India’s economy in the past two decades has resulted in an equally fast increase in the country’s demand for energy, which doubled between 1990 and 2009 and now represents the third highest demand in the world. On a per capita basis, India’s electricity consumption is very low for such a large nation. The average energy consumption across all countries is about 2,782 KWh per capita, while India’s population consumes on average only 734 KWh per capita. This number is far too low for a nation with a rapidly growing population, a burgeoning economy, and a desire for a higher standard of living among its people. In order to maintain economic growth and meet the basic needs of its growing population, it is imperative that India find a way to meet its energy demands.

That being said, the current emphasis by the government on grid expansion and fossil fuels may prove to do more damage than good. Despite its low per capita consumption, India is the third largest emitter of CO2 in the world. In 2009, India emitted about 1,548 megatons of CO2, accounting for over 5% of total global emissions. If India were to meet the energy demands of 100% of its population with conventional fuels, the country’s carbon emissions would skyrocket. Nevertheless, only 12% of the nation’s installed capacity is derived from renewable energy sources. Furthermore, 86% of added capacity during the most recent five-year plan was conventional thermal energy.

Despite India’s large and expanding grid, about 400 million people still live without access to electricity. Even those who are connected to the grid may only have intermittent access as the demand for electricity still far outweighs the supply and networks are plagued by fuel supply issues and theft.

The majority of people living without access to electricity reside in rural areas where the landscape makes infrastructural expansion difficult and the high incidence of poverty prevents communities from being able to afford energy.  Between states, there is a great disparity in terms of access. The table below, taken from the 2011 census, indicates the percentage of rural houses that have access to electricity.

StateTotal Population% Rural Population% Rural Households Electrified*
National Captial Territory of Delhi167532006.897.8
Chandigarh105470010.297.3
Himachal Pradesh685650090.296.6
Pondicherry124450033.495.8
Goa 145770037.895.6
Punjab2770420066.195.5
Kerala3338770074.092.1
Tamil Nandu7213900056.090.8
Sikkim60770088.990.2
Andhra Pradesh8466550072.789.7
Haryana2535310071.187.2
Karnataka6113070066.086.7
Gujarat6038360062.685.0
Uttarakhand1011680074.383.1
Jammu & Kashmir1254890075.280.7
Nagaland198060082.875.2
Maharashtra11237300057.673.8
Chhattisgarh2554020079.970.0
Mizoram109100050.468.8
Manipur272180074.961.2
Tripura367100082.959.5
Rajasthan6862100076.658.3
Madhya Pradesh7259760073.558.3
Arunachal Pradesh138260079.255.5
Meghalaya272180080.451.6
West Bengal9134770072.040.3
Odisha4194740085.035.6
Jharkhand3296620077.832.3
Assam3116930087.128.4
Uttar Pradesh19958150079.223.8
Bihar10380460089.510.4
*Based on the number of households in which the main source of lighting was electricity

With the exception of Himachal Pradesh, which is blessed with many rivers for hydropower and some of India’s lowest levels of corruption, generally states with large rural populations tend to have lower electrification rates. In terms of access to lighting, over 92% of urban households use electric lighting compared to only 55% in rural areas. This is a pattern seen across the country and rural households continually bear the burden of India’s energy deficit, having to rely on dirty fuels like kerosene.

Considering the many environmental problems surrounding conventional energy and the logistical challenges associated with reaching rural populations, there exists a huge opportunity for enterprises that provide off-grid renewable energy solutions that can reach rural people.

Status of the Grid

India generates nearly 900 TWh of electricity every year. The country also has the fifth largest installed capacity with about 200 GW. Coal power plants provide over two-thirds of the electricity in India, followed by hydropower and natural gas. Both the government and the private sector have contributed to grid expansion with the overwhelming majority of new projects being conventional thermal power stations.The Indian grid is made up of five regional grids, which are interconnected. Transmission and distribution via the grid are still largely state run operations with only one private/public joint venture between POWERGIRD, a state owned transmission utility and TATA Power.

GRID2

A schematic showing the five regional grids in India and the power exchange that occurs between them in GWh. (Source: IEA work based on CEAm 2012d and CEA, 2012e)

Environmental concerns are not the only reason why the expansion of a fossil fuel based grid is not the one-sized-fits all solution. Like many developing nations, India has faced many obstacles in terms of grid proliferation:

  • Capacity: energy demand in India far outweighs the supply, resulting in extended blackouts, which can bring income generating activities to a halt.
  • Fuel: the availability of fossil fuels like coal and natural gas will continue to influence the growth of the national grid. Fuel shortages make expansion difficult and mean that existing power plants run at sub-optimal levels or not at all.
  • Infrastructure: the expansion of the grid requires reliable power lines, distribution facilities, and service equipment. Indian companies producing these products face stiff competition from Chinese companies that can produce these traditionally expensive products at a far lower cost.
  • Billing and Payments: pricing mechanisms and subsidies intended to help those in need and change the behavior of those who can adjust their consumption are unsuccessful because of faulty billing and payment systems.
  • Theft: theft through grid tapping can significantly limit the capacity of the grid and cause it to lose money to non-paying illegal users.
  • Private Investment: not only is private investment particularly low in the power sector in India, but it is also highly concentrated in a few regions. Private investment is greatest in the west, while being very low in the east and northeast, where it is needed most. Logistical issues such as fuel supply as well as a general lack of incentives in these areas means that private companies have a much harder time getting a foothold (See the Investment and Trade section for more info).

Despite the growth of the grid in the past several years, the amount of money and resources it would take to reach the entire population via the grid are enormous. Furthermore, many remote villages have been classified as unreachable by traditional means, indicating that the grid is unlikely to meet the needs of the underserved communities in India. Therefore, distributed energy projects can help to fill the gap that the large power utilities cannot.

STATUS OF RENEWABLES

Including hydropower, renewable energy accounts for 26% of India’s energy capacity. The total installed capacity of renewable technologies in India in 2012 was 23 GW. 16 GW is generated from wind power with the rest coming from hydro, solar, and biomass. Solar power accounts for just about 500 MW of total installed capacity. Fortunately for India, the country’s high solar irradiance in some regions makes the potential for expansion promising. The country has over 300 days of sunshine and an average irradiation of 200 W/m2. Unfortunately, the areas that are most in need of energy investment are not the areas with high solar irradiance.

solar

Image showing the annual solar irradiance for india in kWh per square meter. Note the higher irradiance levels in the south and west of the country

Unlike conventional power generation and grid expansion, the level of private investment in renewable energy is much higher. Private companies own about 86% of all renewable energy projects in India. The federal government, including the Ministry of New and Renewable Energy does not own a single renewable energy plant, although some state level governments have made some progress. Despite efforts by the government to expand the renewable sector, most targets have not been met. With the exception of Solar, nearly every renewable sector failed to meet expansion goals established under the most recent five-year plan. Issues including land acquisition problems and other regulatory problems hindered this growth.Like conventional energy, renewable energy is not evenly spread throughout the country. Nearly half of the country’s wind capacity is located in the southern state of Tamil Nadu, with nearly all other wind plants being located along the west coast. This disparity can be explained by the high concentration of wind turbine manufacturers and government initiatives in Tamil Nadu. In terms of solar power, over 83% of capacity is located in Gujarat and Rajasthan. Again, this can be explained by different statewide government policies as well as the availability of solar resources.Aside from geographic differences, the government and private investors face a variety of problems when attempting to promote renewable energy technologies in India:

  • Infrastructure: Even though India has abundant solar resources, the success of solar operations is dependent on the ability of producers to either store or transmit the energy. Like with conventional power utilities, a sub-optimum transmission network hinders growth and will require a lot of money to expand.
  • Land: Difficulties acquiring land include high costs and long approval periods that can stall or deter new projects from being established.
  • Domestic Manufacturing: Renewable projects that source their components from Indian manufacturers have access to more programs and funds, such as the Jawaharlal Nehru National Solar Mission, than projects using Chinese made or other foreign products. This can deter new projects because of higher costs and issues surrounding the supply deficit of Indian made solar products.
  • Knowledge: Many Indian energy organizations simply do not have the expertise or experience to create efficient, cost effective, renewable solutions.

Although both the conventional and alternative energy sectors have experienced rapid growth over the past few decades, hundreds of millions of people in India live without access to reliable affordable energy. Furthermore, environmental concerns and resource scarcity may doom India if it continues to proceed on its current trajectory toward a fossil fuel dependent nation. Although large scale renewable energy projects may be better than putting more coal plants online, the fact of the matter remains that grid expansion is both expensive and slow and no matter where the energy comes from, it may be decades before the grid can reach the entire Indian population. This means that many people, mostly living in rural areas will continue to suffer from energy scarcity in the foreseeable future regardless of how many large-scale renewable power plants are brought on line. In light of these realities, there exists an opportunity for energy entrepreneurs who can reach isolated rural communities and provide clean, affordable energy solutions.

 

Next Section: Government and Policy Overview