A free market business model for distributed power generation (DPG) for electrification of villages and generation of employment opportunities

Abstract

India is the 6th largest energy consumers in the world with a share of 3.4% of global energy consumption. As the economic activities are increasing day by day per capita consumption of power has doubled in last ten years. With the largest rural population in the world, India is facing a huge electrification challenge. Today, 64.5% of India is electrified, with an electrification rate of 93.1% in urban settings but only 52.5% in rural areas (IEA, 2009). To keep the pace of economic growth stable, government has envisioned an ambitious plan to provide the Power for all by 2012. Strong political will and sufficient funds have, since the beginning of the 11th Five Year Plan, accelerated the speed of electrification. But India is currently faced with insufficient electricity generating capacity, which is seriously hindering the implementation of future rural electrification programs and undermining their viability. Setting up of coal and gas based power plants to fulfill the needs of fast growing economy would increase the concentration of energy related CO2 emission and put the world on catastrophic trajectory. It requires us to shift from coal and gas based power generation to an efficient and clean energy mix to work out a sustainable energy path. Also it requires huge investment to create vast transmission and distribution network to have grid based power coverage of entire country. In India power transmission and distribution losses are extremely high and vary between 30 to 45%. It makes the task of rural electrification and providing quality power even more difficult in remote villages. At present while 80% of villages have electricity line, just 44% of rural households have access to electricity. This has been achieved mainly through grid extension or small-scale renewable energy systems. All these make it a natural choice to plan and construct independent distributed power generation (DPG) systems using renewable energy sources such as solar, wind, biomass, geothermal and biogas to have a more efficient and reliable source of power in rural areas. Another huge problem facing the Indian growth story is the crowding out of cities with a mass exodus of people from villages into urban areas. This is mainly due to the unavailability of a rural job market that can keep the rural populace in the villages. Additional employment opportunities would also be created with the setting up of distributed power generation systems in every village.