Analysis of the Electrification Programme in India Using the “Energy Plus” Framework and the Key Lessons

TERI has recently completed a GNESD-funded project that aimed to analyse the rural electrification program in India and its achievements, with a special focus on the co-benefits and productive usage of electricity in line with the “Energy Plus” approach. The study also attempted to identify the key factors responsible for the success and limitation of the rural electrification policies and programs in India. It also strive for the implementation of such policies and programs for enhancing electricity access and creating economic and income-generation opportunities for the rural poor to enhance their local income and alleviate poverty.

Objectives

Specifically, the objectives of the study were:
  • To evaluate the rural electrification programs using the “Energy Plus” framework (Box 1) to understand and examine how the Indian electricity access programs have addressed these issues;
  • To assess the overall impact of rural electrification on local economies including their contribution to sustainable livelihoods, income, newly-developed micro-industries, living standards and poverty reduction, and to identify the key factors that contributed to their success and/or failures;
  • To analyse relevant issues and suggest recommendations for strengthening the rural electrification program to foster sustainable electrification in the context of “Energy Plus” approach to contribute to the SEFA goal of universal energy access by 2030.

The Research Questions

The study attempted to focus on some of the key issues listed here:
  • What is the current status of rural electrification in India and how effective has been the trend in enhancing access since the last decade?
  • What is the definition/understanding of electricity access in the country among the policy makers and what is the efficacy of the definition in enhancing access?
  • What economic and income generation opportunities have resulted from enhanced electricity access in the rural areas, either through grid electricity access or off-grid programs that have helped in alleviating the poverty and/or enabled the poor to pay for the energy services?
  • Has there been any change in livelihood practices or changes in consumption, expenditure and savings because of rural electrification?
  • What capacity development strategies have been adopted by the energy access projects for enhancing electrification as well as for achieving synergistic effects?
  • What are the enabling or inhibiting factors that may have come as opportunities or barriers to implement the “Energy Plus” approach for rural electrification?
  • What are the main challenges and issues (e.g. technical, financial, institutional, political etc.) for improving electricity access by following the “Energy Plus” approach?
  • Whether the current rural electrification model(s) is an appropriate solution to ensure enhanced electricity access and its sustainability?

Key Findings

  • The study found that the average income of an electrified household is higher than the average income of an un-electrified household for both grid and off-grid areas. Further, electrification results in increase in income (also in real terms) for both electrified and un-electrified households for both grid and off-grid area.
  • Electrified households in grid-connected areas reap more benefits over time (change in income is higher) as compared to un-electrified households. Thus, grid supply probably generates better livelihood options for electrified households as compared to households connected with off-grid systems.
  • Income change is higher for electrified households with business as a primary source of earning as compared to electrified households with other sources of earning. Thus, the usage of electricity in productive/income-generating activities helps the households in having better income opportunities.
  • Institutions are the fundamental non-energy inputs that can ensure sustained non-energy inputs for households and enterprises.
  • Institutionally channelized non-energy inputs for households or enterprises can trigger productive usage of electricity and enhance income augmentation.
  • Households with access to electricity and receiving non-energy inputs have higher income and consumption than households with relatively lower non-energy inputs.
  • Electrical appliances are seen as potential livelihood generation assets by households receiving relatively higher non-energy inputs.
  • Access to channelized sustained non-energy inputs develops the potential of taking risks in households in the form of entrepreneurship.
  • Institutions, affordable and timely finance, continuous impetus on training, market linkage and supply of good quality raw materials have been regarded as the significant non-energy inputs essential for enterprises.
Sponsor(s): Global Network on Energy for Sustainable Development (GNESD)
Duration of the project: September 2013 – October 2015
Policy Recommendations
  • Challenges in poverty eradication and in livelihood generation can be eliminated by packaging the rural electrification program with sustained impetus of non-energy inputs channelized through local institutions.
  • Policies that focus on rural electrification and productive usage of electricity should focus on developing last mile community-based organizations such as SHGs and energy committees. These are fundamental to develop a link between the village economy and rural electrification.
  • Access to affordable start-up finance, continuous skill building, market linkages, good quality raw material channelized through community-based organizations in partnership with public and private players, may be required to trigger entrepreneurship and to provide a platform for graduating towards the productive use of electricity.
  • States with recent rural electrification program implementation or states that are in the process of saturation of rural electrification should emphasize on entrepreneurship and productive usage of electricity through institutionally channelized non-energy inputs.
  • States with good coverage of rural electrification should initiate policies to develop institutions that can channelize non-energy inputs and drive the village economy through productive use of electricity.

For view the full report, please click here.

Posted on: 24 July 2015