Decentralized Off-Grid Electricity Generation in Developing Countries: Business Models for Off-Grid Electricity Supply


To find appropriate local solutions which are techno-economically viable, institutionally feasible, socio-politically acceptable, and environmentally sound for sustainable off-grid electricity supply.

Globally, there are 1.3 billion people who do not have access to electricity. The problem of electricity access requires solutions which are techno-economically viable, institutionally feasible, socio-politically acceptable, and environmentally sound. Such solutions need to be identified in order to propel a conscientious and collective effort aiming to improve the quality of life of the energy-impoverished population. The 'Off-Grid Access Systems for South Asia' (OASYS South Asia) project implemented by The Energy and Resources Institute (TERI) and a consortium of research partners including TERI University, University of Manchester and Edinburg Napier University, and led by De Montfort University, the United Kingdom, aimed to develop a systematic analysis and research foundation to find appropriate local solutions for sustainable rural electricity supply.

Research Questions

To begin with, the following questions were considered for conducting research:
  • Are there cost-effective, secure, and reliable local off-grid electricity supply solutions that can meet the present and future needs of people, and are socially acceptable, institutionally viable, and environmentally desirable?
  • Do these local solutions have the scaling-up and replication potential, and can these solutions be brought to the mainstream for wider electricity access in the developing world?

Project Methodology

In order to find answers to the above-mentioned research questions, the project focussed on the four main angles of research, i.e., techno-economic analysis, governance mechanisms, socio-political dimensions, and environmental aspects, cutting across four themes-capacity building, cross-referencing, cross-learning, and dissemination for policy translation.

The efforts thus entailed a thorough review of the prevalent off-grid electrification sector, a detailed investigation of a suite of alternative decentralized business solutions, and corresponding institutional frameworks for rural electricity and energy supply, along with a special focus on South Asia as the targeted region, for the evaluation of case studies and applied academic research, respectively.

The OASYS South Asia Project also systematically analysed off-grid delivery model framework(s) and implemented them through demonstration projects across different geographies in India in order to find appropriate local solutions for sustainable rural electricity supply.

The Demonstration Project(s)

The demonstration project(s) used different techno-institutional models to deploy mini-grids, micro-grids, and pico-grids, providing either Alternate Current (AC) or Direct Current (DC) power, to electrify households and shops/micro-enterprises in the project areas across different parts of India. Demonstration projects have thus been implemented in four different locations situated in three Indian states, i.e., Odisha, West Bengal, and Uttar Pradesh, through three distinct business and institutional models aligning with site-specific conditions. The models demonstrated innovative ideas that could create enabling environments for different stakeholders working within the rural energy access space. The projects focussed not only on technology, but also on other critical aspects such as building ownership, skill augmentation, inflow and outflow of revenue, income-generating linkages, and robust monitoring for sustained electricity access. The Rural Electrification Corporation (REC) of India also provided additional financial support for the initiative.

Models employed under OASYS South Asia Project

  • A community-managed model with an NGO (AC and DC micro-grids of different capacities in five villages) in Dhenkanal District, Odisha. It serves around 150 households.
  • A community-managed model with district administration (18 kWp AC mini-grid in one village) in Kandhamal District, Odisha. It serves around 350 households.
  • Privately-operated (micro-utility) model: Selected through a competitive bidding from eligible project developers. This model implements the following:

    • Solar DC micro-grids in Uttar Pradesh implemented by Mera Gao Power (MGP) to serve around 3,000 households.
    • Solar AC pico-grids in West Bengal implemented by Mlinda Foundation. They serve around 700 households and shops.

Future Relevance of the Project

Various outputs produced from the OASYS South Asia project will find wider use in the future. The books and the journal papers will remain as important reference documents, especially for academia and practitioners. The policy briefs will also potentially contribute to policy making in the off-grid electrification space. The demonstration projects at different locations offer the potential for further service integration and experimentation, thereby contributing towards rural sustainable development agenda. These sites can also be used to showcase the effectiveness of mini- and micro-grid based electrification. The large participation of stakeholders and experts in the annual workshops (organised as part of the project) can be potentially organised to form a network of off-grid electrification stakeholders to advance the agenda of off-grid electrification in South Asia and other developing countries.

Achievements of the Project

The main achievements of the project include the following:

  • Large number of high quality research publications in academic journals;
  • Dissemination of the research in number of conferences and workshops;
  • Impact-generating applied research through demonstration projects;
  • International research collaboration with a large number of institutions;
  • Capacity building by training researchers, interns, practitioners and local project teams;
  • Strong stakeholder engagement by organising workshops and events

Sponsor(s): Engineering & Physical Sciences Research Councils, UK and DFID, UK
Project partners: De Montfort University, the UK (lead); TERI, India; TERI University, India; University of Manchester, the UK, and Edinburg Napier University, the UK
Duration of the project: September 2009 – April 2015
Key Stakeholder/Beneficiaries: Off-grid energy practitioners and academicians; project developers (Mera Gao Power, Mlinda Foundation); District Administration of Kandhamal and Dhenkanal districts; project beneficiaries of the Hindol Block, Dhenkanal District, Daringbari Block, Kandhamal District; Sunderbans Region, West Bengal, Laharipur Block in Sitapur District, UP.
Watch the Solar Chronicle film on the demonstration projects at three different sites.
Finding of Our Research
  • Mini/micro-grid based off-grid electrification can offer a viable alternative to grid extension;
  • Renewable energy-based off-grid electricity solutions can compete with fossil-fuel based electricity supply;
  • Alternative delivery options exist for providing decentralized local grid-based solutions;
  • Careful system design and maintenance plays a key role;
  • Electrification generates significant economic, social, and environmental benefits;
  • Local capacity is a constraint and capacity building remains a key issue;
  • Regulatory uncertainty hinders private sector involvement;
  • Mainstreaming of decentralized mini/micro-grid options requires some standardization, organizational learning innovative supporting mechanism and end-user finance.

For summary and policy recommendations from OASYS South Asia project, click here.

Project Outputs
  • Working papers - 25
  • Peer reviewed papers in journals - 17
  • Conference papers - 32
  • Book chapters - 4
  • Books and journals (special issue) published - 5
  • Policy Briefs - 7
  • Thematic workshops organized - 14

To download the working papers, workshop proceedings, and recommendations from the project, click here.

Posted on: 5 May 2015