This study assesses the viability of renewable-energy powered mini-grids to both drive and support economic growth in India from the perspective of augmenting the current electrification of rural areas. The study employs a dual approach comprising a qualitative “on the ground” assessment of the social benefits in three rural communities in India, combined with a techno-economic analysis to determine the factors that affect the economies of scale of mini-grids (specifically solar-powered mini-grids) and their suitability for supporting socio-economic development in rural areas of India. This approach is chosen to ensure transferability of the case study findings obtained for rural India. Data and test variables used in this study are India-specific and are drawn from detailed stakeholder engagements, and are in alignment with local conditions (at the time of compiling this report). This study focuses strictly on solar-powered-mini-grids in India to represent the term “mini-grids” within the Indian context.
Key policy message 1: Solar-powered mini-grids of high installed power capacity can remain economically viable and cost-competitive with the centralised grid in rural areas of India. Solar mini-grid systems greater than 100 kW with interest rates as low as 8 % and a 15 % return on equity can achieve grid parity and a low cost of electricity supply to the rural consumer.
Key policy message 2: Solar mini-grids are effective for improving rural education in India, as most schools in remote areas of India experience continuous power cuts which impede the quality of education that the students receive. The mini-grid can provide electricity at schools or education centres consistently during the teaching hours to help stimulate better educational outcomes for the students in rural India.
Key policy message 3: To drive the growth of higher power capacity mini-grids that are essential for reliable 24/7 rural electrification, mechanisms are needed to be developed (in collaboration with the private sector) to make it suitable for the mini-grid developer to transfer the system‘s assets to the state-owned utility when the central grid arrives at the area served by the mini-grid. This mechanism must be developed in collaboration with the private sector.
Year of publication: 2019
Editors: Ayodeji Okunlola, David Jacobs, Laura Nagel, Sebastian Helgenberger, Arunima Hakhu
and Sarah Kovac – IASS, IET, TERI and UfU
Technical implementation: Bigsna Gill and Rashmi Murali – The Energy and Resources Institute
Suggested citation: IASS/TERI. Secure and reliable electricity access with renewable energy mini-grids in rural India. Assessing the co-benefits of decarbonising the power sector. Potsdam/New Delhi: IASS/TERI, 2019.
This study is part of a 2019 series of three studies assessing the co-benefits of decarbonising the power sector in India, edited by IASS, IET, TERI and UfU: