Three-fold energy strategy for India

India's policy-makers have three big energy goals: providing everyone with access to energy, securing energy supply and trying to limit carbon emissions without encumbering the nation's growth. These important concerns miss the point. Energy access cannot be assured by progress towards a simple target such as supplying power 24 hours a day, 7 days a week, nationwide. India has deep divides in the quantity and quality of energy consumed across income groups and between rural and urban households.

Urban India aspires to have a reliable 24/7 electricity supply voltages currently drop at peak demand times such as during evenings. Meanwhile, more than one-third of India's households, mostly poor and rural, are not connected to the electricity grid. For those that are, blackouts last 4–16 hours a day. The poorest households are also being overcharged for substandard service1. The poorest households pay 30% more per unit of useful energy than the richest

Fuel subsidies are poorly designed and the strategies to reduce them to enhance energy security are heavy-handed. And because of limited action by the world's largest emitters, there is little left in the global carbon budget before planetary safety limits are breached. Clean energy and alternative growth is imperative. India's energy priorities should be reframed as follows: to cater to the different energy demands of citizens of various economic strata; to direct energy subsidies to benefit the poor; and to promote low-carbon industry.

Disparate demand

Urban India aspires to have a reliable 24/7 electricity supply — voltages currently drop at peak demand times such as during evenings. Meanwhile, more than one-third of India's households, mostly poor and rural, are not connected to the electricity grid. For those that are, blackouts last 4–16 hours a day. The poorest households consume one-quarter of the energy of those at the highest income levels. Urban centres are in effect subsidised by rural areas, which are being overcharged for substandard service1. The poorest households pay 30% more per unit of useful energy than the richest.

One solution to these disparate demands is to deliver more electricity through the grid while adopting cleaner energy sources. The Indian government has announced ambitious plans for renewable energy: up to 175 gigawatts (GW) of installed capacity by 2022. There are many challenges to achieving this target, from the availability of resource data on which to base decisions and managing risks to the high cost and the huge variability across the grid in terms of energy sources and infrastructure.

Meanwhile, the promise of reliable electricity through centralized infrastructure and systems remains unfulfilled. This is in part because most electricity utilities suffer financial difficulties — they lost more than $19 billion in 2012–13. One solution is to tap smaller-scale distributed renewable energy sources, primarily solar, biomass and small-scale hydropower. Off-grid power based on these technologies has advantages such as network resilience, flexibility and environmental and health benefits.

More than one million households in India rely on solar off-grid systems for lighting. A further 20 GW of energy capacity could be achieved if 15% of irrigation pumps were converted to solar energy. Renewable-energy applications can provide heating, cooling, cooking and mechanical power as well as electricity. More than 250 companies across India, with long supply chains and networks of village-level entrepreneurs, operate in the decentralised clean energy sector already.

They demonstrate that putting power in the hands of poor people can begin a transformation in how energy access is understood and delivered. At the same time, such rapid growth and geographical spread could result in variable quality of service and expensive energy for poor people. More training would help to keep up standards. The challenge is to balance two types of investment: those in the centralised grid, which are key to the aspirations of millions of higher-income households, and funds for standalone systems in isolated and underserved areas or for integrating such systems to the grid.

Another reason for pursuing renewable energy in India is to avoid the pitfalls of a growth strategy mostly based on fossil fuels. Already, imports account for more than 80% of India's crude oil and 25% of its coal and gas, raising worries about supply and price volatility. Petroleum constitutes nearly 30% of all commodity imports, leaving India little fiscal room to shrink its large current account deficit.

By Arunabha Ghosh and Karthik Ganesan