The lush green Sundarbans district in WestBengal, the busy Mehboobnagar district inAndhra Pradesh, the remote Leh andLadakh region in Jammu and Kashmir, orthe sleepy Nawanshahar district in Punjab,all have one thing in common. They haveall reported success stories of how renewableenergy (RE) has brought about a change in

the social and economic fabric of theseplaces. In quite a few rural places such asthese in India, RE is being embraced withopen arms. Solar lanterns are now a com-mon sight in rural India. Community bio-gas plants are being installed to meet theneeds for a cluster of houses. Small wind-mills are dotting the skylines in coastalregions. And, solar pumping systems arereplacing electric pumps and cattle-drivensystems in the farms. The switch to renew-ables has removed dependency on ever-so-elusive grid electricity.

The socio-economic gains are indeedabundantanly visible. Children, who couldnot earlier study after dusk, now have nosuch constraint. The quality of life for thewomen folk has improved immensely. Nolonger do they have to trudge over longdistances for collection of fuel wood, orcook in smoky kitchens. In some villages,women engage themselves in weaving andstitching in the nighttime to earn extramoney. In addition, jobs are being createdin local industries engaged in manufactureof these systems. Many locals are deploy-ing such systems and acting as mainte-nance staff.

Current status of REContribution of RE is a meager 3.5 percent to the total energy supply in the coun-try, translating to just over 3,800 MW. Theactual energy generated is even less as such

technologies do not have high efficiencies.Of this, wind and small hydro have animpressive installed base, of 1,870 MWand 1,509 MW respectively. While windgets several fiscal and financial incentiveswhich are unsustainable in the long run(already some states have stopped suchincentives), the mega-wattage in smallhydro looks attractive due to the changes inits definition (in 2001) which enlarged itsscope to capacity under 25 MW from 3MW. In growth terms, the last three years(2000 to 2003) saw capacity addition ofabout 320 MW, 500 MW, and 350 MWrespectively. This is clearly nowhere nearthe potential.

Even the achievements of the much-hyped rural electrification drive are nothingto write home about. Of the 587,000 vil-lages in India, a good 95,000 villages are yetto be electrified and one fifth of these arelocated in remote and far flung areas wheregrid electricity cannot reach for another tenyears. And even though over 80 per cent ofthe villages are declared electrified, in reali-ty only about 44 per cent have an electricconnection. Much of the electrificationcould have been conveniently achieved ifrenewables had made sufficient inroads.When the potential is so great (see Table 1)and the benefits so evidently proven, whyhas the renewable movement in India fal-tered? It is certainly not due to lack of real-ization. India is perhaps the only countrywith a dedicated ministry taking care ofrenewable energy (Ministry of Non-con-ventional Energy Sources, MNES). Thoughnot adequate, sizeable funds are kept asidefor the renewable development in the coun-try and there is no shortage of technicalexpertise in the area either. What's lacking isa national policy that has the "flexibility"and "ingenuity" to stimulate the growth ofthe sector, and the country's ability toimplement effectively such initiatives.

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RE policy inIndia The need for local sensitivityWhile at a local level renewable energy success stories abound in

India, at the national level, the RE gains seem almost unnoticeable.

That is because most of these success stories are due to adoption

of renewable energy products - mainly solar systems - by individual

households. When it comes to exploiting renewable potential for

setting up distributed generation projects that can cater to masses,

the country has not scored well. Refocus correspondent, Sunil Puri,

India provides his perspective on the current RE situation in India.

1471 0846/03 ©2003 Elsevier Science Ltd. All rights reserved.

Solar Cookers: improving quality of life in India

Policy evolutionIt is important to understand the evolutionof RE policy in India before debating uponits efficacy. Though technologies such asbiogas plants and improved cook stoves havebeen available in India since the late 1940s,RE programmes only started in earnest afterthe creation of CASE (Commission onAdditional Sources of Energy) in 1980, andthe DNES (Department of Non-conven-tional Energy Sources) in September 1982.From the late 1970s to the early 1980s, thethrust of the national efforts in this field wasdirected towards capacity building andresearch and development (R&D), largely innational laboratories and educational insti-tutions. Starting in the early 1980s to theend of the decade, there was a major expan-sion with emphasis on large-scale demon-strations and subsidy-driven expansion(mainly in the areas of biogas), improvedcooking stoves and solar energy. During theearly 1990s, there was a growing realizationthat faster diffusion of RE sources requiredgreater reliance on commercializationthrough fiscal rather than financial incen-tives through the involvement of the privatesector. Partly as a result of this, the DNESwas converted into a full-fledged ministry(Ministry of Non-conventional EnergySources, or MNES) in July 1992. In the cur-rent stage, extending from the beginning of1990s, the emphasis has been more on theapplication of matured technologies ofpower generation, based on wind, smallhydro, biogas, biomass systems as well as onindustrial applications of solar and otherforms of energy.

Despite gradual policy evolution over thepast few decades, and a fully functional min-istry dedicated to RE, the impact in terms ofnumbers (installed base) has not been veryencouraging. Understandably, looking at thesize of the country, it may take years for anyappreciable change in the ground level situa-tion, but the dissemination process clearlyneeds to be catalyzed. To do this, the policy-level initiatives need to be fine-tuned, andthe policy gaps need to be addressed.

Acting local is the keySince the primary aim of RE in India is elec-trification of the remote regions, in additionto supplementing conventional energy(wherever possible), any policy initiativesmeant for RE need to have a global outlookbut a local orientation. In fact, a successfulRE strategy, will be the one, which is "by thelocals, for the locals and of the locals".Therefore, it needs to be uniquely designed

for each place, taking into account itsrenewable resource of the region, the needof the local population, its entrepreneurialtalent, as well as other socio-economic fac-tors. What works somewhere may not workelsewhere. Thus the national level policiesneed to have the flexibility and creativity toadapt to the advantage of the local situation.The policies need to be directed towards theground-level requirements. "Somebody hasto look at a bottom to top approach, asagainst our current practice of top-to-bot-tom policies," points out Harish Hande,Vice President, Selco India, which is one ofthe biggest success stories in RE dissemina-tion in India. He feels that most of the orga-nizations active in the sector work fromtheir headquarters in Delhi and are too cen-tralized (instead of being localized) in theirapproach.

Which is why, more often than not, thevital local input is usually missing. The gov-ernment needs to work closely with thelocal entrepreneurs, local banks, localequipment suppliers, local intermediariesand local beneficiaries before scripting REpolicies. "Besides putting in place a finan-cial low cost credit system through thebanking network, the ministry needs to net-work extensively with corporates and indus-tries, particularly those active in rural area",says AK Vora, Managing Director, Tata BPSolar India's biggest solar energy productmanufacturer. For creating the market, nec-essary regulatory and commercial frame-works should be in place. Private invest-ments in rural areas should be encouraged,and the tariffs from such projects should bemade more remunerative. Also, there couldbe a stipulation that a percentage of eachutility's energy generation should besourced from non-conventional sources.

RE technologies can succeed in ruralareas only if the local entrepreneurs areencouraged to take up projects. The localentrepreneurs have the local business skillsand network. They also best understandlocal culture and ethos and are moreamenable to the residents. What they usual-ly lack is working capital and access to tech-nology. Here is where support is needed.On one hand, technology linkages need tobe provided to these businessmen, and onthe other hand, innovative funding schemessuch as the EDF (entrepreneurial develop-ment fund) need to reach them. Sometimes,an extra bit of "handholding" is needed. Itmay be required to convince local financialinstitutions to fund such projects.Sometimes, the entrepreneurs may need tobe sent for a special course to educate themabout the technology.

Educate the financialsector?Local entrepreneurs often complain thatbanks do not lend money simply becausethey do not understand what the businessor the technology is and the business model.Therefore, industry experts feel that insteadof growing a crop of centralized fundingagencies, the ministry should educate thelocal bankers on the techno-economics ofRE technologies. Winrock InternationalIndia's Solar Finance Capacity BuildingInitiative (SFCBI) is a case in point. Underthis USAID sponsored project, the NGOtrained more than 1,000 bank managers inthe southern states of India. A post-trainingsurvey indicates that the funding support tosolar home-lighting systems increased by600 per cent. This success has encouragedWinrock to take a more ambitious programof training 5,000 bankers in the next phase.Looking at the volume of opportunities inrural India, many more such programs needto be implemented.

Quality and supportAnother drawback is the notion amongst therural masses that renewable products -- solarlighting systems, solar lamps, solar pumps --have low quality and support facilities. Thisopinion has gathered weight since many friv-olous players had initially entered the marketwith low quality products with complete lackof maintenance and service facilities. Whilemaking policies, the government needs to beextra careful that only serious players, whohave long-term commitments, be encour-aged to stay in the business. In this regard,SELCO-India was founded in 1995 to mar-ket, install, and service solar home lightingsystems throughout South India. To date, the company has installed over 15,000 solarhome lighting systems through its networkof about two dozen service centres in southIndia. The company has brought about a revolution of sorts in villages by helping the poor farmers get access to best-quality

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India currently has around 1900MW of wind installed

products at affordable prices, with a financ-ing facility, and regular maintenance. "Thesuccess of SELCO has been its ability to pro-vide financing at the doorstep, making thebest products available at competitive rates,and providing the best service at regularintervals" says Hande with an air of achieve-ment. There is a crying need for more of suchcorporates to enter the sector.

Growth prospectsLooking at aggregate growth over the lastfew years, the RE industry seems to begrowing at a moderate rate of about 15-20percent. However, with the entire infra-structure in place (at least at the nationallevel), there is no reason why we should notbe looking at exponential growth or a step-change approach. “MNES needs to evaluateits historical position of average or marginalgrowth each year to step-change, and workout plans by which the market level of 12-13 MW of PV reaches 100 MW/year overthe next 2-3 years. This is true for othertechnologies as well", says Vora. Such amove would require a different approach interms of vision, in terms of policies, in termsof lobbying within the government, interms of getting appropriate funding levels,and in terms of efficiency of program imple-mentation. In an era of multiple programsbeing implemented in each state, a standardgrowth rate in line with historical figures isnot enough.

There seems to be a flaw in the imple-mentation strategy as well. As things stand,MNES implements all its state level pro-grams through nodal agencies, which are

proving to be a bottleneck. While some ofthese nodal agencies are good, others aren't.It is increasingly being felt that the MNESshould open more implementation channelsto catalyze the RE dissemination process."These fronts could be local NGOs, coop-eratives, or other institutions working at thegrass roots level. The nodal agencies that arenot doing effective work need to be reacti-vated", says Vora. Coordinated efforts bymultiple agencies may be more effective inRE programs given the need for multipleprogram delivery.

Lessons andchallengesNowhere in the world have renewablesbecome popular yet only due to marketforces. Governments have to play a crucialrole in creating the right policy environ-ment or providing backup financial sup-port. At the same time, government shouldlimit its involvement. It must rememberthat it cannot develop markets; cannotrespond to consumer requirements; andindefinitely cannot keep providing subsi-dies. Also, a judicious mixture of directsubsidies, indirect subsidies, and fiscalincentives works. Each incentive attractsand encourages a different stakeholder, andthe appropriateness of their mix dependson the RE technology's level of develop-ment and financial viability. Consequently,it is important to continuously monitorand fine-tune the incentive structure so asto keep pace with market developments.The MNES's efforts in rural areas are

geared towards meeting rural energy needs;reaching electricity to all remote house-holds by 2012; and supplementing conven-tional power. The mid-term aim is toachieve a 10 percent share in additionalpower generating capacity (about 10,000MW) from renewables. It also aims to elec-trify around 20,000 remote villages, inwhich grid extension is not likely by 2012.This mammoth task would require invest-ments of about US$12 billion (about Rs600 billion), 90 per cent of which is expect-ed to come from the private sector. Lookingat the current policy framework, infrastruc-ture in place, and growth rates, these targetsseem pipe dreams.

To give a definite policy direction, theMNES has announced several times that itis preparing a national renewable policy, toaddress issues such as grid connectivity,third party sale, promote market develop-ment, encourage trade, and stipulating spe-cific percentage of power to be purchasedfrom such sources. Despite urgent need,the much-touted policy has been in themaking for over eight years, and is stillnowhere in sight. Even the much talkedabout Electricity Bill 2003 does not pushthe cause of renewables. It provides forpower to be generated and distributedregardless of type and quantity without toomuch regulation. The RE communityclearly missed an important chance to haveRE promotion directly included in the Billitself which could have helped the sector.However, despite all the shortcomings,missed opportunities, and caveats in thepolicy and program implementation,"green energy" is clearly the way to go.Whether the country meets the targets inthis regard or not, renewables will form apart of any energy plan in the years tocome. With constantly diverging demand-supply curves, increasing population, lowper-capita energy consumption, India doesnot have many options.

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Table 1: RE potential and achievements in India

Source Potential Achievements

Wind power 45,000 MW 1,870 MW

Small hydel 15,000 MW 1,509 MW

Biomass power 19,500 MW 484 MW

Biomass gassifier - 53 MW

Energy from waste 1,700 MW 26 MW

SPV power - 2.5 MW

Family-sized biogas plants 12 million 3.48 million

Improved cook stoves 120 million 35.2 million

Solar street lighting systems - 43,474 numbers

Home lighting systems - 235,162 numbers

Solar lanterns - 441,481numbers

Solar water heating(sq. m collector area) 140 million 700,000

Solar cookers - 530,000 numbers

Solar steam cooking systems - 6 numbers

SPV pumps - 5,527 numbers

Wind pumps - 888 numbers

Hybrid systems - 193.35 kW

Sunil Puri is a post-graduate in energystudies from the Indian Institute ofTechnology, Delhi, and an MBA infinance from the InternationalManagement Institute, Delhi. He alsoworks with Winrock International India,New Delhi, as Program Manager(Outreach). The views expressed in thisarticle are of the author himself, and neednot necessarily reflect the views ofWinrock International India. contact:sunil_pr@hotmail.com