“We need to increase our per capita energy consumption three-fold”

Jaideep Mukherji, CEO, Smart Power India (SPI), has been a strong advocate of access to reliable electricity for the last mile. SPI, a subsidiary of The Rockefeller Foundation, was established in 2015 to develop and scale sustainable models to accelerate electricity access and spur economic development amongst the rural underserved communities. In recent years, SPI has been actively engaged in working towards realizing the goal of 24 x 7 electricity for all through various initiatives, consisting of grid and off-grid solutions. We spoke to Jaideep on the developments and outlook for the sector.

1. Can we have an update on the status of SPI projects in India? Total projects, total capacity, impact on people, state-wise? Do mini-grids work out exclusively on rural areas, or have you had success in relatively connected but poorly served ‘urban’ areas too?

Smart Power India, a subsidiary of The Rockefeller Foundation, was established in India in 2015 with the aim of extending power to those without sufficient access to reliable and quality electricity. Our vision is to drive economic progress by ensuring reliable electricity is accessible for all, especially among the underserved communities in rural India. Today, more than 300 renewable energy mini-grids cumulating to 9.2 MW of capacity, supported by Smart Power India, have been set up across Bihar, Uttar Pradesh, and Jharkhand. This is the largest such cluster in India.

Our efforts and interventions in ensuring reliable and quality electricity for people have led to the following positive changes in the rural communities:

• Providing electricity to 321 villages in India across the states of U.P. Bihar and Jharkhand, impacting over 250,000 people
• Serving over 237 electricity-based micro-enterprises which have been directly incubated by SPI across these 321 villages
• SPI has also supported mini-grid sector’s policy engagement to align narratives between government, investors, and energy service companies.
• SPI is also now working towards improving the quality of on-grid electricity supply and services in rural areas in collaboration with the state governments and DISCOMs

Mini-grids have been set up to supply electricity to small, localized groups of customers and operates independently from the national transmission grid. Mini-grids can work both in rural and poorly served urban areas as well. However, mini-grids have been mostly set up in rural areas where grid-connected electricity has not reached yet. Our focus, in the last 5 years, has been on rural communities where, by providing access to reliable electricity, we also strive to spur economic development.

2. What is the revenue model for the mini-grid model currently? Does it consider households, or small enterprises as well? How does SPI itself fund its projects? Is there a breakup between owned and external funds?

The revenue model for mini-grids is similar to that of the traditional electricity suppliers. The mini-grid operators regularly bill their household and commercial customers as per the amount of electricity consumption. But in unregulated markets where a fixed tariff system does not exist, mini-grid operators determine the tariffs. An appropriate retail tariff ensures the commercial viability of mini-grid projects and also helps protect the interests of the consumers. However, there is no standard tariff system that can be applied to all contexts as technology, investment and geographical conditions vary from region to region. But it is preferred that mini-grid operators and regulators together should decide the tariffs that are suited to local economic and social situation. Both households and small enterprises are part of the mix.

SPI’s funds are channeled through The Rockefeller Foundation.

3. Are the mini-grids serving a supplementary tole as energy providers, or primary providers of energy access in your projects? 

A mini-grid is a set of small-scale electricity generators and energy storage systems interconnected to a distribution network with a capacity of more than 10kW. It supplies electricity to a small, localized group of customers and operates independently from the national transmission grid. Mini-grids help provide last-mile electricity in areas where traditional grids have not been able to reach, or where power supply is unreliable and unstable. They help serve a variety of customers including private households, small businesses, and agricultural loads.

While mini-grids have been used as an off-grid solution to provide energy, they can also be connected to the government grid and feed in their surplus renewables-based electricity. Integrated mini-grids are a cost-effective and timely solution for meeting the energy demands of India. In short, they can be both a primary provider of electricity where grid-connected power has not reached and play a supplementary role where electricity supply is unreliable.

4. How has Covid-19 impacted operations, plans, and funding?

As lockdown affected the grid-connected electricity supply, mini-grids provided reliable power. Even though mini-grid services remained disrupted in areas under containment, consumer satisfaction continued to be high. Despite the services, MGOs suffered major losses in revenue collection as many customers could not pay their electricity bills on time. The revenue collection in April was only 25% of the MGOs usual monthly average. We were fully aware that lack of employment and subsequent shortfall in income will definitely affect the customers’ ability to pay the electricity bills. As a result, all ESCOs deferred their bill collection during lockdown period and communicated with the consumers through their registered mobile numbers.

5. While the government is making real steps to privatize distribution, it seems to be keeping rural areas /agriculture out of such efforts for now. Does that augur well or poorly for such areas?

 I feel Government of India has made great progress in revolutionizing the power sector. India is today the third largest producer and consumer of electricity in the world. In 2018, it achieved universal household electrification. But there are a number of systemic flaws that continue to hold us back from providing reliable power for all. Distribution companies have been reeling under mounting financial stress for a long time in the country. A major part of the problem lies with the distribution companies. Privatization of distribution companies, to a great extent, will help us address these issues. For example, metros like Delhi, Mumbai, Kolkata, and Ahmedabad have privatized distribution companies. This has, over time, led significant improvement in electricity  supply.

Rural India continues to remain in the dark either because electricity has not reached yet or because electricity supply is unreliable. But privatizing distribution companies will address these issues, provide reliable electricity to millions of rural households at affordable rates and will help in spurring economic activities.

However, I believe that models of electricity service and delivery should be sustainable, scalable, and market-based, and engaging private sector companies based on the principles of true partnership – shared risks and gains to achieve a triple-win outcome: a win for the DISCOMs, a win for the franchisee, and a win for the customers.

6. How do you see per capita power consumption going up? Do you see that as a key challenge at all for SPI?

 According to International Energy Agency, India’s per capita consumption of electricity in 2017 stood at 1.12 megawatt hour, as against China’s 4.55 mwh and the US’s 12.57 mwh. India’s per capita energy consumption is very low as compared to the world average. The Economic Survey 2018-19 also pointed out that India lags behind significantly in energy usage. We need to increase our per capita energy consumption three-fold to realize our economic potential. China’s economy began to expand when its electricity consumption increased.

However, a major problem that holds us back from improving the per capita electricity consumption is the unreliable nature of electricity supply. Access to reliable power plays a key role in increasing the per capita power consumption and encourages prospective customers to take new connections. Mini-grids, to a great extent, have addressed this gap and are seen as provider of reliable electricity. A recent survey conducted by Smart Power India during lockdown showed that while rest of India faced challenges with electricity supply, mini-grid villages continued to receive reliable electricity. This is one reason that has endeared rural customers to mini-grid services.

I believe low per capita electricity consumption is a major issue that India is grappling now. At SPI, our efforts have been to provide access to reliable electricity for all. We aim to impact millions of lives by accelerating electricity access among the rural community. We believe that meaningful electricity access goes beyond provision of electric connection, encompassing the predictability and quality of power, as well responsive consumer service.

7. Do you see any scope for linkages between what SPI does and say, the PM KUSUM scheme, which has a huge component of off-grid solar pumps too?

The Union Budget 2020-21 emphasized the use of solar energy for agricultural purposes under the PM KUSUM scheme. The Finance Minister hinted at allowing 20 lakh farmers to set up standalone solar pumps, besides supporting 15 lakh farmers to solarize their grid-connected agricultural pumps. The scheme also encourages farmers to set up grid-connected solar power generation capacity on fallow and barren land. The new focus on off-grid solutions to meet the energy need in rural India is a great initiative. At SPI, we have been travelling in the same direction wherein we aim to provide reliable electricity to rural communities and help them meet their electricity needs.

In recent years, we have noticed that with the availability of reliable power, rural communities have been able to improve their economic performance, leading to increased agricultural output, small-scale business activities and improvement in healthcare facilities. Although there is no direct linkage between SPI’s work and that of PM KUSUM Scheme, both share a common objective, that is, providing reliable electricity to rural households and spurring economic activities.

8. With the electricity amendment bill failing to make it to parliament this session, do you see that as a major setback?

 India’s power sector is awaiting to start a new journey in the post pandemic world where the sector is expected to receive a lot of policy support. I believe the Electricity Amendment Bill 2020 will be a progressive step in this direction and help the sector improve its overall performance.

9. With mission water now taking center stage after power For All till 2019, do you see a need to align with or opportunities with the energy requirements bringing clean water to everyone will entail? If yes, what are you looking at? 

 I believe both the missions are interrelated in some way. In 2018, India achieved universal household electrification. There is a close linkage between clean drinking water and energy. A large number of the global population today does not have access to clean drinking water. An estimated 2.5 billion people drink contaminated water. However, today we have technologies and water filter systems that can purify water. This has led to many governments and businesses recognizing the close linkage between water and electricity. As one of the most populous country with a large number of people still deprived of clean drinking water and reliable electricity, it was the right time to shift the focus from electricity to water.

Grid-connected power is expensive and unreliable. As a result, we cannot rely on it for water purification processes. Water treatment requires steady supply of electricity that can be used for multi-step purification process. As a next critical step in its mission of providing clean drinking water to all, India needs to ensure access to reliable and affordable electricity. Reliable electricity will play a crucial role in providing safe drinking water for all.