India’s renewable energy industry can improve electric supply quality, but it faces four challenges
Policy, technology, finance and data have to talk to each other to find sustainable solutions.
India has achieved nearly 100% household electrification, but the story does not end there. In the hinterland, poor power quality continues to affect service delivery organisations in the health, education, and livelihood sectors. Where electricity is unreliable, diesel backup is used.
This gap seemingly provides a perfect business opportunity for the renewable energy or RE industry, but the uptake has been poor. Why is this the case and what can help the organisations leverage RE resources to access reliable, sustainable and affordable sources of power?
There are four key challenges related to adoption of RE by service delivery organisations working in remote parts of India.
- Policies do not always reflect needs as they are often designed by the Central Government in New Delhi for implementation at the state level, without taking into consideration the local context and actual requirement. Because of this disconnect, service delivery providers face entry barriers to avail government schemes. It is often impossible for the doctor or the head of a training institute to decipher these policies and write an application that is in line with the priorities identified by policymakers in New Delhi.
- Technology is not a black box anymore, but health, education and livelihood experts face challenges in finding the right solution for their specific energy needs. For example, the loads in a hospital are variable and critical in nature, and a few seconds of unreliable power may translate into loss of life. Many of these locations endure severe weather conditions like high humidity, temperatures and wind speeds, floods and landslides. And given the voltage fluctuations and expanding grid infrastructure, the system’s capacity to absorb these fluctuations and integrate with the grid in the future needs to be ensured. These concerns continue to bother the service delivery providers.
- Adequate finance is not available for not-for-profit organisations working in the hinterlands. As they cater to the bottom of the pyramid population, they are themselves starved of resources. And given the high upfront costs of RE, there is limited capacity to make these investments. While there are a few grant-based models like corporate social responsibility, such funds are sparsely available in far-flung areas. Less than 1.5% of the total CSR funds were invested in the entire North East region and Jharkhand in Financial Year 2018. Government subsidies and debt is equally difficult to access for the private not-for-profit organisations.
- Data are critical but not available. Data on energy demand, policies, technologies, vendors and funding sources are the building blocks for scaling up RE. To customise the energy solution, data on the performance of equipment has to be accessible to the vendor. Similarly, in order to generate demand and market activity in remote areas, the vendor must be able to visualise the opportunity. The doctor or the head of an institute needs to know about the vendors and solutions. And to ensure maintenance of the system, they would like to tap into the locally available skilled labour pool. But such data are currently unavailable in the public domain.
As a result of these challenges, areas which are lacking in electricity infrastructure are also the least attractive for RE solutions. A few measures can support the adoption of RE and improve service outcomes:
- Policy cannot be designed in silos. The Centre has to talk to the state. At the same time, the departments also must interact with each other to understand the need for integrating energy into health, education and livelihood development plans and vice versa.
- Greater engagement is required from the vendor community to help the doctors and the teachers understand the existing technologies, their limitations and possibilities. The energy requirement must be accurately captured. As in the case of policies, vendors located away from where the need is, cannot do justice to the doctor’s requirement of developing an optimal backup system for the operation theatre.
- Innovative financing models are required given the lack of resources and collateral in most of the cases. Grant-based models can catalyse initial investments, but in the long term, the model has to be sustainable. For this to be possible, private and public funding agencies must work together along with the support of national and international development agencies and donors.
- Data consolidation must be undertaken, given the number of organisations working in silos to collect and analyse information. Together, they can build capacity and train people to collect the data at various administrative levels and across sectors before and after implementation.
Policy, technology, finance, and data have to talk to each other in order to find solutions that are applicable in the context of the organisations working in remote areas. A one-size-fits-all approach does not work for hospitals and training institutes. And vendors, policy makers and financing agencies have to appreciate this fact as they try to contribute towards bridging the gap.