Switching on off-grid solar

Of the nations participating in the Doha Climate Change Conference, India holds an unenviable distinction—it faces what is probably the greatest challenge to electricity access in the world. About 75 million of its 226 million households are bereft of power, the largest such demographic globally.

This is a debilitating situation for an economy straining for growth. In its vast hinterland, agricultural demand is so high that about 20 per cent of India’s total power demand is accounted for by water pumps. And, the paucity in its households is so acute that Indian families spend about $2.2 billion to buy heavily subsidised kerosene every year, according to an International Finance Corporation report. Much of this is in rural areas, where the electrification rate hovers around the 50-per cent mark.

A solution, however, isn’t elusive. For some time, off-grid solar power has been proposed as a possible answer to India’s power-deprived rural hinterland. Yet, when the ministry of new and renewable energy brought out a road map for solar power in 2010, the target for off-grid generation stood at a mere two gigawatts by 2022. During the same period, grid-connected solar projects were mandated to generate 10 times the amount. (DOHA DIPLOMACY)

But in the much-vaunted race to grid parity, where the price of solar power is equal to that from conventional grids, it is off-grid solar power that is likely to win in India, says KPMG’s partner (energy & natural resources), Santosh Kamath. “In remote or rural areas, the cost of an alternative, mostly diesel, is higher. And, to get the grid up to those regions is very expensive….In some cases, grid parity is already there,” he says.

Even in urban India, soaring power rates mean off-grid solar, particularly roof-top generation units, could be cheaper than conventional grid electricity by as early as 2017. However, huge investments in India’s solar sector, amounting to $10.3 billion in 2011, have been in grid-connected projects. Nonetheless, Kamath believes this isn’t bad for off-grid. “We need to do both. So far, whatever has happened is right,” he says, adding, “The grid-connected projects are necessary for scale, as a result of which off-grid now stands to gain from a spill-over effect.”

On the ground, it’s a different story, primarily because of financing woes. Bangalore-headquartered SELCO Solar, which has brought off-grid power to about 1,40,000 households, mostly rural, says lack of coordination between the ministry of new and renewable energy, the National Bank for Agriculture and Rural Development and banks is stifling progress.

“Nobody in Karnataka has received any subsidy for any system this financial year,” claims Prasanta Biswal, SELCO’s senior manager (mission). The ministry of new and renewable energy provides 30 per cent subsidy for the benchmark costs of PV systems and loans at five per cent interest a year. “The banks are not confident and customers are waiting for the subsidy to come through,” Biswal says, adding as a result, it wasn’t possible to establish an off-grid ecosystem.

In eastern India, too, Vinay Jaju’s ONergy is contending with similar issues.

“The banks are there to finance the end-consumer, but they just don’t want to finance solar,” he says. “With MFIs (microfinance institutions), too, it is difficult.” ONergy works across about 150 villages and its institutional clients include the Kolkata Metro and the Indian Army.

Few, however, debate the utility of off-grid solar in changing India’s energy landscape. It’s time one puts money where the mouth is.