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Cover Story | April 2016

Illuminating villages

Rural electrification programmes have proved big, expensive, and geographically and institutionally complex in India, but they are giving large benefits as the experience shows.
India has always had a large rural economy with most of the people eking out their living from these areas and as such, since independence successive governments have tried to improve rural infrastructure, including that of power connectivity. Though a lot is said to have been achieved on several fronts in several villages mostly those are closer to urban centres, a lot is yet to be achieved to give real impetus to the rural economy. Electrification of villages and hamlets closer to urban conglomerates have happened decades back as they are accessible to cities through roads and rail networks. However, the same is not true with villages at far flung places, particularly those in hilly and forest areas.

Remote villages are becoming even more remote, in the wake of rampant migration of people to urban centres for various reasons, including in search of employment. Such villages or hamlets are the most neglected on many infrastructure metrics, thus affecting their livelihoods. Village electrification of these remote, hilly and forest areas seems to be the only solution for bringing these islands of darkness into the country´s economic and social mainstream.

Several studies conducted across India and abroad found that rural electrification has a strong and robust impact on both economic and educational outcomes. The gain in total income due to electrification could be as much as 30 per cent, according to some studies. Electricity also leads to a significant improvement in study time and educational performance for children in rural households.

Rural electrification is rightly considered to be the backbone of the rural economy, for it can open up innumerable possibilities of developmental activities, including improvement in health and education, communication and leads to overall economic development through creation of employment by encouraging investments in cottage and agro-based industries and adoption of improved means of farm production, through irrigation.

While the need for rural electrification was recognised in 1950s, the first major initiative was the establishment of Rural Electric Corporation (REC) in 1969. Under various schemes implemented since then and up to September 30, 2015, works in 1,11,060 un-electrified villages and intensive electrification of 3,26,958 partially electrified villages have been completed and 223.99 lakh free electricity connections have been provided to BPL households, according to the government data. As on April 1, 2015, a total of 18,452 villages were not electrified. By September 30, 2015, six states viz., Andhra Pradesh, Arunachal, Gujarat, Punjab, Telangana and Uttarakhand were fully electrified, while states like Uttar Pradesh, Bihar, Madhya Pradesh and Chhattisgarh were leading the pack with at least 1000 villages each yet to be electrified.

Rededication
The Prime Minister Narendra Modi in his Independence Day address to the Nation last year has announced that the remaining villages will be electrified within the next 1000 days, which ends on May 1, 2018. This announcement spurred the government machinery in general and the Ministry of Power officials in particular into action with a renewed vigour to accomplish the target well in advance. As on April 1, 2015, a total of 18,542 villages were lacking electricity connectivity. Taking cue from this announcement, Finance Minister Arun Jaitley provided Rs 8,500 crore for the year for Deendayal Upadhayaya Gram Jyoti Yojna (DDUGJY) and Integrated Power Development Scheme (IPDS), the nodal schemes implementing this initiative.

Ratul Puri, Chairman of Hindustan Powerprojects Pvt Ltd appreciated the Finance Minister Arun Jaitley´s plan on 100 per cent electrification of villages across the country, stating that it would increase demand for power and would further boost investments.´This proposal of rural electrification has raised the bar of expectations amongst Indians, be it at the receiver´s end or that of the service providers, this is a bucket full of expectations and hopes,´ said Puri while reacting to the budget. This, along with UDAY could drive a significant change in the Indian power sector, he feels.

VP Mahendru, Chairman, Eon Electric Ltd said, ´The proposal to provide 100 per cent village electrification by May 1, 2018, is indeed very welcome as it is in line with the nation´s overall vision to provide 24X7 electricity.´

Changing Winds
The Ministry of Power, in an office memorandum issued on Dec 3, 2015, notified that the proposal for subsuming Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) into the newly introduced scheme called, Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), had received the presidential assent.

´RGGVY as approved by CCEA for continuation in the 12th and 13th plans will get subsumed in the DDUGJY as a separate rural electrification component (component III above) for which CCEA has already approved the scheme cost of Rs 39,275 crore, including a budgetary support of Rs 35,447 crore. This outlay will be carried forward to the new scheme of DDUGJY in addition to the outlay indicated in para 2 above,ö read the notification.

The new government´s scheme made the basic difference in the pace of implementation of the scheme putting it in a ´Mission Mode´, which has picked up over the last one year. A total of 323 villages have been electrified across the country under DDUGJY during the week ending March 13, 2016. Piyush Goyal, Minister of State (Independent Charge) for Power, Coal and New & Renewable Energy, cited it as the highest ever for a week.

´The pace of rural electrification has been accelerated and the results are coming fast. We have been able to electrify 6,397 un-electrified villages (as on March 11, 2016) which is more than the cumulative achievement of past three years,´ said Dr. A K Verma IFS, Joint Secretary, Ministry of Power, in an exclusive interview to Power Today.

DDUGJY aims at separation of agriculture and non-agriculture feeders; strengthening and augmentation of sub-transmission and distribution infrastructure in rural areas including metering of distribution transformers feeders/consumers; and rural electrification as per CCEA approval dated August 1, 2013 for completion of the targets laid down under RGGVY for 12th and 13th Plan (2017-22). However, later, the scheme was expedited and the official deadline was advanced to May 1, 2018, in line with the PM´s wishes.

The scheme also tweaked the funding mechanism for rural electrification projects vis a vis RGGVY. RGGVY, which was launched in April 2005, used to provide a Central grant of 90 per cent, while the remaining 10 per cent was provided as a loan from REC to the states. Under DDUGJY, the Centre´s grant is about 60 per cent, discoms´ contribution 10 per cent, loan component is 30 per cent and additional grant for milestone achievement is 50 per cent of loan component (or 15 per cent of the project cost), taking the maximum Central grant component to 75 per cent for the state. It created a new category called Special Category of States (All North Eastern states and including Sikkim, J&K, Himachal Pradesh and Uttarakhand), which are eligible for Central grant up to 90 per cent.

The new Rural Electrification Policy also changed the definition of electrified villages. According to REP, a village would be classified as electrified based on a Certificate issued by the Gram Panchayat, certifying that - a) Basic infrastructure such as distribution transformer and distribution lines are provided in the inhabited locality as well as a minimum of one dalit basti/ hamlet where it exists; and b) Electricity is provided to public places like schools, panchayat office, health centres, dispensaries, community centres etc.; and c) The number of households electrified are at least 10 per cent of the total number of households in the village.

Achievement
Of the 18,452 inhabited un-electrified villages brought under DDUGJY, 6,479 villages were electrified during 2015-16 (up to March 13, 2016), bringing the un-electrified villages down to 11,973, according to the figures provided in the presentation made by Dr Dinesh Arora, IAS, Executive Director, REC on March 15, 2016. However, not all electrified villages are getting quality power and it is estimated that nearly one-third of the population may be facing under-electrification, accessing less than 50kWh of electricity per month/household.

Of the un-electrified villages, 8,060 are to be electrified through grid and 3,433 are to be electrified through off-grid, while 480 villages are to be electrified under state plans. REC is also confident that the target of electrification of 7000 un-electrified villages set for 2015-16 would be achieved by March-end, and electrification of all the remaining 11,973 un-electrified villages by December 2016. The scheme is also expected to help in expediting the process of providing 24x7 ´Power for All´ by 2019 as envisaged by the current government.

´The key initiatives taken up under the scheme to ensure electrification of all remaining villages within the given timeframe, includes, (i) Deployment of qualified engineers ´Gram Vidyut Abhiyanta´ (GVA) at District / Block level (ii) 12 stage milestones-based monitoring with defined timelines (iii) Off-grid solutions for villages in difficult/ far-flung/ hilly areas and (iv) Regular review and monitoring by REC, the Ministry of Power and the Cabinet Secretariat,´ said Verma.

During the 11th plan period (2007-12), under RGGVY, Karnataka has electrified 16 un-electrified villages, 3714 habitations and 2,66,075 BPL households free of cost. Under the 12th plan it is targeted to electrify 1,30,785 below poverty line (BPL) households. Presently, 14,216 BPL households have been provided with electricity, while the other works are in progress. For the areas where electrification is not possible from conventional grid, the Centre under Decentralised Distributed Generation (DDG) of RGGVY has sanctioned 93 projects in the state for electrification of habitations through off-grid solutions.

´Electrification of 9 un-electrified villages, 144 hamlets and 3993 BPL households under this scheme is in progress,´ said Rajkumar S Biradar, Executive Engineer-2, EMC, Energy Department, Karnataka.

Problems of Reach
Connecting remote villages in difficult terrain that too in a country as big as India by conventional electricity grid is always a challenge. Reaching the requisite equipment like poles transformers and conductors to the remote and difficult terrains like snow-bound hills or deep forest and erecting them through traditional means would be a challenge.

Biradar of Karnataka has identified obtaining forest clearance, high cost of the project and maintenance as the main problems for installation and execution of projects in difficult terrains.

´In case of rooftop/ field-based solar or other renewable sources, maintaining these systems on a sustainable basis in long term is something that needs to be tackled adequately. Requisite service centres and training local youth for maintaining such systems can help in this regard,´ said Verma.

Renewables
The government had initiated rural electrification projects using renewable sources such as solar PV, biomass, small hydro power in early 1980s, with focus on street lights and solar lanterns, to start with. Evolution of renewable energy technologies and products over the last three decades have enabled renewable energy based rural electrification using solar lighting products, DC and AC mini-grids, smart micro-grids, and eventually grid interactive micro- and mini-grids, which can complement the grid extension programme or as standalone generating units.

Renewable energy based decentralised systems offer unique advantages like faster implementation and reliable electricity supply; utilisation of locally available resources to bring in energy security and energy independence; pollution free and sustainable; and reduced T & D losses. Many private companies have deployed mini-grids and micro grids in rural India.

It is not just providing connectivity, the technology used must be able to address cost, security and 24-hour supply concerns of the prospective user. Considering all these factors Jaideep N. Malaviya, Chief Executive Officer, Malaviya Solar Energy Consultancy says, ´Solar photo voltaic (PV) in decentralised as well as in hybrid mode with diesel generator is the best option to provide assured power. However, new storage technologies developed need to be adopted in order to store the daylight for further use in dark hours. My safe bet would be powering all the islands of India 100 per cent through solar using the state-of-the-art storage batteries.´

Even the state governments are considering going solar in remote villages. Responding to a query, Biradar said, ´Yes. Presently all the 39 un-electrified villages in Karnataka, which are located in remote forest areas are proposed to be electrified through standalone solar systems. At present, the tender is under process.´

Even the Centre proposes to electrify about 3500 villages located in remote areas through renewable technologies, mainly Solar PV. Imparting some flexibility to the concept, the Centre is adopting both standalone systems for individual households as well as Solar PV-based generation system with mini-grid depending upon number of households in a village and their spatial distribution. ´Renewable energy based projects for these villages have been sanctioned this year under Decentralized Distributed Generation (DDG) component of DDUGJY and electrification of 180 un-electrified villages with off-grid solar power systems has been completed by March 11, 2016,´ Verma said.

Affordability
However, experts feel that some of the renewable energy sources may not be commercially viable as yet. ´Solar infrastructure is costly, besides the cost to be realised may not fetch from a villager to make business sense,´ said Malaviya.

Prasad Chaporkar, Head-International Business, Waaree Energies Limited concurs with Malaviya´s view, when he says ´Despite the advantages of micro-grids for communities, they have been scaling up at a slow pace, mainly due to financial and operational challenges in developing a functional commercial model. An ideal model would be one that generates sufficient revenue from end-users to cover upfront capital expenditures and also ongoing maintenance costs, while delivering a financial return.´

Though some private players have entered village electrification in the past, barring a few, these models are yet to become commercially viable and sustainable.

Conclusion
Rural electrification programmes have proved big, expensive, geographically and institutionally complex in India, but they are giving large benefits as the experience shows. Despite the path being strewn with several difficulties, India has embarked upon this challenge in right earnest. The scheme´s implementation is in the last lap, if I may say so.

And evolution of renewable technologies and particularly solar power available at grid parity prices, village electrification has assumed the centre stage as an idea whose time has come.

But the field realities may be different in this developing country where still over one-third of the population live below poverty line and find it difficult to make both ends meet. Thus, electricity connectivity is of secondary importance for most of them, so subsidising not just the capital cost, but usage with a consumption cap is an essential component as is done now. This makes it impossible private players to make inroads into this segment in the near future, except as service providers. However, expansion of electricity coverage will have significant developmental benefits ensuring a semblance of equitable growth. For rural electrification to be achieved in a sustainable way, we need a clear focus on creation of income generation activities in rural areas.

Power consumption is highly correlated to human development. In the recently published Human Development Report 2015, India has been placed at 130th position in the 2015 Human Development Index (HDI) among 188 countries. That reflects a sorry state, whatever the underlying parameters are. Village electrification is a pre-condition for increasing India´s position in HDI. The next step is´Power for All´, that is targeted for 2019. Let´s hope for the best.

Sanction Details of Un-electrified Villages
• All 18452 Villages have been sanctioned including in-principle sanction
• States to indicate if any village/villages left un-sanctioned

State Villages Sanction

Grid Off-Grid Total

ALL INDIA 14813 3639 18452
1 Odisha 3199 275 3474
2 Assam 2371 521 2892
3 Bihar 2699 48 2747
4 Jharkhand 2116 * 409 2525
5 Arunachal Pr. 402 1176 1578
6 Uttar Pr. 1491 38 1529
7 Chhattisgarh 504 576 1080
8 Meghalaya 700 212 912
9 Rajasthan 343 152 * 495
10 Madhya Pr 293 179 472
11 Manipur 276
276
12 J&K 134
134
13 Nagaland 82
82
14 Uttarakhand 61 * 15 76
15 Mizoram 58
58
16 Karnataka 1 38 39
17 Himachal Pr. 35
35
18 Tripura 26
26
19 West Bengal 22
22

ALL India 14813 3639 18452

Electrification of Villages in FY 2015-16
• 6479 villages (92%) electrified upto 13.03.2016 against targeted 7000


State Target Achievement Balance
1 Odisha 1563 1175 388
2 Uttar Pradesh 1314 1228 86
3 Assam 900 798 102
4 Manipur 174 70 104
5 Chhattisgarh 400 328 72
6 Jharkhand 700 674 26
7 Madhya Pradesh 225 193 32
8 Uttarakhand 32 -
9 Meghalaya 28 1 27
10 Himachal Pradesh 20 -
11 Rajasthan 151 147 4
12 Karnataka 5 -
13 Tripura 13 9 4
14 West Bengal 9 8 1
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