Beatrice Lang
In 2018, the Indian government announced that all of India's 597,464 census villages had been electrified. However, the definition of 'village electrification' is controversial, as it is defined by the government as having power cables from the grid reaching a transformer in each village and 10% of its households, as well as public places. By this definition, 90% of people living in India's villages may still be without electricity in their homes. While electrification has been achieved in some villages, challenges remain in ensuring reliable and affordable electricity supply on a sustained basis, particularly in remote rural areas.
| Characteristics | Values |
|---|---|
| Electrification of all villages | Achieved in 2018, 12 days ahead of the deadline |
| Electrification of households | 7.3% of villages have 100% household connectivity |
| Households without electricity | 31 million |
| States with the most unelectrified households | Uttar Pradesh, Assam, Bihar, Jharkhand, Odisha, Madhya Pradesh, and Rajasthan |
| Government schemes for electrification | Pradhan Mantri Sahaj Bijli Har Ghar Yojana–Saubhagya, Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Revamped Distribution Sector Scheme (RDSS) |
| Challenges | Grid reliability, long and frequent power cuts, high costs of supply to remote areas, inefficient systems |
| Solutions | Micro-grids, mini-grids, decentralised renewable energy systems, improved distribution infrastructure, better billing practices |
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What You'll Learn
Electrification of remote villages
The issue of electrification in rural India is complex. One of the main challenges is the distance from the nearest transmission grid, which increases the cost of supply for discoms (electricity distribution companies). This has led to debates about the cost-effectiveness of the main grid versus off-grid systems like mini-grids and microgrids. Off-grid systems have been successful in electrifying remote areas in countries like China and Bangladesh, and studies show they may be more cost-effective than long-range grid connections.
To address the issue, the Indian government launched the Pradhan Mantri Sahaj Bijli Har Ghar Yojana–Saubhagya scheme, with a $2.5 billion program to provide power connections to nearly every household by the end of March 2019. However, the scheme faced challenges due to the emergence of new households and inconsistent official data, with some states reporting un-electrified households even after the deadline.
To achieve consistent round-the-clock power supply in remote villages, improvements are needed in the operational efficiency of distributors through extensive change management and capacity-building programs. Strengthening electricity sub-stations and the sub-transmission network is also crucial. Additionally, the government should focus on providing reliable and quality electricity to remote villages, with decisions made on a case-by-case basis for centralized versus decentralized renewable electricity systems.
While India has made remarkable progress in electrifying its villages, the journey is not yet complete. The government must now focus on addressing the remaining un-electrified households and improving the reliability of power supply in remote areas to ensure that every Indian has access to this basic amenity.
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The financial burden on discoms
In 2018, Indian Prime Minister Narendra Modi announced that every village in India had access to electricity. However, this claim has been scrutinized, as the Indian government's definition of "electrified" is when power cables from the grid reach a transformer in a village, and 10% of households, as well as public places such as schools and health centers, are connected. According to this definition, 90% of the people living in India's 18,452 villages still do not have access to electricity in their homes.
Providing electricity to remote rural areas has placed a significant financial burden on power distribution companies (discoms). Discoms are mostly state-owned and are the primary electricity suppliers in their respective states. As a result, they incur high costs when supplying electricity to remote villages, as the distance from the nearest transmission grid is much greater. Discoms lose about Rs 4 per unit supplied to rural areas, and transmission and distribution losses in the power sector were about 15.8% in 2022-23.
The financial woes of discoms have been exacerbated by the COVID-19 pandemic, which disrupted billing and collection operations and increased costs. Delays in subsidy disbursals by state governments have also contributed to the financial burden on discoms, with the tariff subsidy burden increasing by 140% between 2014 and 2019. As of 2022-23, discoms have accumulated losses of Rs 68,832 crore, and outstanding debt worth Rs 6.61 lakh crore, which is 2.4% of the national GDP.
To address the financial burden on discoms, the central government announced measures in May 2020 to alleviate liquidity stress, including the release of INR 46,000 crore. Additionally, seven states have taken steps to reduce revenue gap targets and Aggregate, Technical and Commercial (AT&C) losses, and to initiate pilots on Direct Benefit Transfers (DBT) of electricity subsidies to farmers. However, the pass-through of interest cost burden remains unclear, and regulatory intervention is still needed to guide discoms on loss management.
To promote financial sustainability, discoms and governments can implement a five-pronged strategy that includes improving the operational efficiency of distributors, strengthening electricity sub-stations, and introducing decentralized renewable energy systems, such as micro-grids and mini-grids. While these systems can help provide reliable and quality electricity to remote villages, they also come with limitations and higher costs.
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The limitations of decentralised electricity
In 2018, Indian Prime Minister Modi announced that every single village in India had access to electricity. However, a closer look at the official definition of "electrified" reveals that only 7.3% of villages have 100% household connectivity, with around 31 million homes still lacking access.
Despite this, India's progress towards universal electrification has been significant, and the country has since passed the 2022 deadline for achieving 24x7 electricity access. With the vastness of the country, it is challenging to make blanket decisions regarding electrification, especially considering the varying topography that can significantly impact the cost of supply.
Decentralised electricity systems, also called distributed energy resources (DERs), have been proposed as a solution to the challenges of universal electrification. These systems generate electricity close to the consumption point and are often based on renewable energy sources. While these systems offer multiple benefits, they also come with certain limitations.
One of the main disadvantages of decentralised electricity is the cost. Setting up decentralised systems, such as mini-grids and microgrids, can be more expensive than simply extending the main grid to remote areas. This is particularly true in the case of India, where transmission and distribution losses in the power sector are relatively high, making it difficult for debt-ridden discoms (electricity distribution companies) to supply electricity to rural areas at an affordable price.
Another limitation of decentralised electricity is the need for new technology to link the various components of the system. A reliable internet connection is crucial for the effective functioning of decentralised energy systems, as real-time data provided by smart meters and digitised electricity generation assets are essential for balancing power grids and managing renewable energy sources.
Furthermore, ensuring accountability in decentralised electricity systems can be challenging. As energy sources and technology evolve, electricity governance is shifting from centralised models to include multiple decentralised and multi-level sites. This transition requires new approaches to governance and accountability to ensure that societal needs and expectations are met.
While decentralised electricity systems offer benefits such as reduced carbon emissions and improved energy security, addressing their limitations is crucial for successful implementation. These limitations include high costs, technological requirements, and the need for effective governance and accountability structures. By overcoming these challenges, India can continue to make progress towards providing reliable and consistent electricity access to all its citizens, including those in remote rural areas.
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Household connectivity
Electrification of India's villages is a significant achievement, but the focus now shifts to ensuring consistent and reliable electricity supply to all households within these villages. As of 2018, only about 7.3% of India's 18,452 villages had 100% household connectivity, leaving approximately 31 million homes without electricity. This discrepancy is due to the government's definition of "village electrification," which is met when power cables from the grid reach a transformer in each village and supply electricity to 10% of households and public places like schools and health centers.
The Saubhagya scheme, launched in October 2017, aimed to provide power connections to nearly every household by the end of March 2019. The government also launched the Revamped Distribution Sector Scheme (RDSS) to ensure connectivity to any left-out habitations or households. Despite these efforts, achieving total electrification and providing a consistent power supply remains challenging due to the vastness and varied topography of the country.
To address these challenges, a more serious introduction of micro-grids and mini-grids in policies can help remote areas access quality electricity. Decentralized renewable energy systems, such as off-grid systems powered by renewable energy, have proven successful in other countries and can be more cost-effective than extending the main grid to remote areas. However, the main disadvantage of mini-grids and decentralized electricity is their cost.
To achieve consistent round-the-clock power supply, improvements in the operational efficiency of distributors and strengthening of electricity sub-stations and sub-transmission networks are necessary. Upgrading local distribution infrastructure, including metering and billing systems, is crucial to the success of total village electrification schemes. Additionally, the government should revise its definition of electricity access to focus on development through consistent and reliable electricity supply.
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The future of electrification in India
Electrification in India has come a long way, with the country achieving 100% village electrification. However, a closer look at the definition of "electrified" reveals that there is still a lot to be done. As of 2018, only about 7.3% of villages had 100% household connectivity, leaving approximately 31 million homes without electricity.
Upgrading local distribution infrastructure, including metering and billing, is crucial to achieving round-the-clock power supply. This includes improving the operational efficiency of distributors and strengthening electricity sub-stations and sub-transmission networks. The government has implemented various schemes, such as the Saubhagya scheme, to provide power connections, but the challenge of ensuring reliable and affordable supply remains.
India is also embracing the electrification of its transport sector, with a focus on electric vehicles (EVs). The government has introduced various initiatives, such as the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme, to promote EV adoption and sales. While the sales of electric two-wheelers have already reached over 3%, the country is still far from its envisioned EV revolution due to high prices and a limited charging network. However, with the government's continued support and the projected expansion of affordable EVs, India's EV market is expected to grow rapidly.
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Frequently asked questions
Yes, all of India's 597,464 census villages have been electrified. However, this does not mean that all households within these villages have access to electricity.
As of 2018, about 31 million homes were without electricity.
The Indian government has implemented the Saubhagya scheme, which aims to provide power connections to nearly every household. They have also launched the Pradhan Mantri Sahaj Bijli Har Ghar Yojana–Saubhagya for the electrification of the remaining households. In addition, the government is encouraging the use of decentralised renewable energy systems, such as mini-grids and microgrids, to improve access to quality electricity in remote areas.
