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Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066
Contents lists available at ScienceDirect
Renewable and Sustainable Energy Reviews
journal homepage: www.elsevier.com/locate/rser
Energy poverty: A special focus on energy poverty in India and renewable
energy technologies
Anjali Bhide, Carlos Rodríguez Monroy ∗
Department of Business Administration, School of Industrial Engineering, Technical University of Madrid, José Gutierrez Abascal, 2, 28006 Madrid, Spain
article info
Article history:
Received 8 September 2010
Accepted 16 November 2010
Keywords:
India
Energy poverty
Renewable energies
Government subsidies
Energy policy
abstract
As a large percentage of the world’s poor come from India, development in India is a key issue. After
the establishment of how access to energy enhances development and the achievement of the millen-
nium development goals, energy poverty has become a major issue. In India there is a great interest in
addressing the subject of energy poverty, in order to reach development goals set by the Government. This
will imply an increase in India’s energy needs. In a climate of change and environmental consciousness,
sustainable alternatives must be considered to address these issues.
Renewable energy technologies could provide a solution to this problem. The Government of India has
been focussing in implementing electricity policies as well as on promoting renewable energy technolo-
gies. The focus of this article is to bring to light the problems faced in India in terms of energy consumption
as well as the hindrances faced by renewable-based electrification networks. Government policies aimed
at addressing these issues, as well as the current state of renewable energy technologies in India are
discussed, so as to analyse the possibility of a solution to the problems of finding a sustainable method to
eradicate energy poverty in India. The research reveals that the Government of India has been unable to
meet some of its unrealistic development goals, and in order to achieve the remaining goals it will have
to take drastic steps. The Government will have to be more aggressive in the promotion of renewable
energy technologies in order to achieve sustainable development in India.
© 2010 Elsevier Ltd. All rights reserved.
Contents
1. Introduction ........................................................................................................................................ 1058
1.1. Energy and poverty......................................................................................................................... 1058
1.2. India and energy poverty................................................................................................................... 1058
2. Household energy consumption in India .......................................................................................................... 1059
3. Current energy scenario in India .................................................................................................................. 1060
4. Renewable energy technologies in India .......................................................................................................... 1061
5. Issues related to renewable based rural electrification systems in developing countries ........................................................ 1061
6. Policies related to electricity in India .............................................................................................................. 1061
6.1. National Electricity Policy 2005 ............................................................................................................ 1061
6.2. The Electricity Act 2003 .................................................................................................................... 1062
6.3. Solar energy ................................................................................................................................ 1062
6.4. Wind power ................................................................................................................................ 1062
6.5. Hydro power ............................................................................................................................... 1063
6.6. Biogas ....................................................................................................................................... 1063
7. Results.............................................................................................................................................. 1064
8. Conclusions ........................................................................................................................................ 1065
References ......................................................................................................................................... 1065
∗Corresponding author. Tel.: +34 91 336 4265; fax: +34 91 336 3005.
E-mail address: crmonroy@etsii.upm.es (C.R. Monroy).
1364-0321/$ – see front matter © 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.rser.2010.11.044
1058 A. Bhide, C.R. Monroy / Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066
1. Introduction
1.1. Energy and poverty
As per the Human Development Report (1997) [1], the definition
of human poverty is seen more as the denial of choices and opportu-
nities for living a tolerable life, than just the traditional definition
of income poverty. Even though energy is not sufficient to bring
about the required economic and social development to provide
these choices and opportunities, it is essential.
The link between energy and poverty has become apparent over
the past few decades. According to the IEA analysis [2], around
1.5 billion people, i.e. a quarter of the world population, have no
access to electricity. It predicts that in the absence of vigorous new
policies, 1.3 billion people will still lack access to electricity in 2030.
The Millennium Development goals set by the UN [3] provide
concrete, time-bound objectives for dramatically reducing poverty
in its many dimensions by 2015—income poverty, hunger, disease,
exclusion, and lack of infrastructure and shelter—while promoting
gender equality, education, health, and environmental sustainabil-
ity. Some of these goals include:
1. Eradication of extreme poverty and hunger.
2. Achievement of universal primary education.
3. Promotion of gender equality and empowerment of women.
4. Reduction of child mortality.
5. Improvement of maternal health.
6. Combating HIV/AIDS, malaria and other major diseases.
7. Ensuring environmental sustainability.
Access to energy enables the achievement of the Millennium
Development Goals [3]. Electricity provides lighting and permits
usage of household appliances. This extends the number of working
hours beyond daylight and enables studying and learning beyond
daylight. Modern fuels or electricity can reduce the exposure to
indoor pollution, and the time spent in cooking inefficiently and
in the collection of firewood. With refrigeration, food can be stored
for longer periods of time. Opportunities for self-employment from
home grow with access to machinery such as sewing machines.
Electricity aids in drawing of water through pumps as well as its
purification. With access to electricity, schools can have better
hygiene and facilities to attract students. With electricity, clinics
can be equipped with modern equipment, carry out proper ster-
ilization of instruments and store various medicines and syringes,
thereby improving health services to the people.
It is said [2] that 2.4 billion people rely on traditional biomass,
such as wood, agricultural residues and dung, for cooking and heat-
ing. This number is estimated to increase to 2.6 billion in 2030.
Biomass exposes women and children to indoor pollution everyday.
The World Health Organization estimates that 2.5 million women
and young children in developing countries die prematurely each
year from breathing in the fumes of biomass stoves.
Electricity does not directly replace biomass. The transition from
traditional fuels to modern fuels is not straight. The three main
determinants in the transition are availability, affordability and
cultural preferences. Even if modern fuels can be afforded, people
continue to use biomass if the modern fuels are much more expen-
sive than the biomass which is readily available and perceived as
“free” (Fig. 1).
Lower income households prefer to use biomass for cooking and
heating. As income increases it is seen that electricity and modern
fuels are used for lighting, modern appliances, pumps and commu-
nication, but they do not substitute cooking and heating. Only in
higher income groups is biomass completely substituted in house-
hold consumption.
Fig. 1. Household fuel transition.
Source: IEA Analysis World Energy Outlook [2].
1.2. India and energy poverty
India has a population of 1.1 billion, and about 22% [4] of this
population lives in poverty. Around 70% of the poor live in rural
areas. It has a fast growing population at an annual growth rate of
1.38%. The target set for poverty reduction in India is 19% population
below the poverty line by 2015 [5]. The India Planning commission
is expecting to meet this poverty target by 2015. The Indian Gov-
ernment has announced plans to provide electricity to the entire
population by 2012 to achieve social development [6–8].
According to the World Coal Institute [9], India is the sixth
largest electricity generating country as well as the sixth largest
electricity consumer. Despite this, the electrification rate is only
44%. The population estimated to have no access to electricity is
582.6 million. Some 140,000 Indian villages out of 586,000 remain
to be electrified and in many of the officially electrified ones, qual-
ity of service is such that they do not resemble true electrification.
About 625 million people do not have access to modern cooking
fuels and traditional fuels still provide 80–90% of the rural energy
needs.
Detailed statistical research [2] has revealed that in developing
countries around 2.4 billion people rely on biomass for cooking
and heating, and 1.6 billion people use no electricity at all. Most
of these people are from South Asia and sub-Saharan Africa. The
health burden as a result of the heavy dependence on biomass and
the related indoor pollution is a loss of 1.6–2.0 billion days of work
lost annually. The average time spent per month per household
in collection of fuel wood is 40.8 h. These factors severely affect
women and children who are the ones who bear this burden the
most.
India’s human development targets were outlined by the Tenth
Five Year Plan [5]. The goals have been stated as follows:
1. Reduce poverty by 15 percentage points by 2012.
2. Provide gainful and high-quality employment to the labour
force.
3. Provide education to all children by 2003 and have all children
complete 5 years of schooling by 2007.
4. Reduce gender gaps in literacy and wage rates by 50% by 2007.
5. Raise the literacy rate to 75% within the 10th Plan.
6. Reduce the decadal rate of population growth between
2001–2011 to 16.2%.
7. Reduce infant mortality rate (IMR) to 45 per 1000 live births by
2007.
A. Bhide, C.R. Monroy / Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066 1059
8. Reduce the Maternal Mortality Ratio (MMR) to 2 per 1000 live
births by 2007 and to 1 by 2012.
9. Increase the forest and tree cover to 25% by 2007 and 33% by
2007.
10. Provide sustained access to potable drinking water by 2007 to
all villages.
11. Provide electricity for all by 2012.
12. Clean all major polluted rivers by 2007 and other notified
stretches by 2012.
Other than the goals to reduce poverty ratio, reduce gender gaps,
increase forest and tree cover, provide electricity to all and to clean
all of the major polluted rivers, the other goals set have been more
ambitious than those of the millennium development goals. Each
of these goals have an energy cost associated with them.
In the course of this article we aim to look at the current energy
poverty scenario in India and how the issues can be addressed by
renewable energy technologies. We will then look at studies per-
formed on the household consumption patterns in India in order
to identify the consumption trends and establish how rural areas
need more attention. As energy poverty is more of a problem in
rural areas, this article will focus on rural energy poverty. We first
look at the current energy scenario in India to get an idea of how
electricity is currently being produced and then at renewable tech-
nologies in India and their current status. This will give us an idea as
to how energy production is taking place and what role renewable
energy technologies currently play. We will then consider issues
with renewable based rural electrification systems in order to see
what hindrances exist and then we will focus on policies estab-
lished by the government in order to understand how they plan
to approach these problems. Existing facts on the current energy
scenario in India and on the available renewable technologies in
India will also be presented so as to get a picture of how renewable
technologies can play a role in eradicating energy poverty in rural
areas. By observing all these we aim to establish how development
in India can be enhanced by the use of clean energy technologies.
2. Household energy consumption in India
India is a country in energy transition. Through the study of
the consumption patterns, a shift from inefficient solid fuels to
more efficient liquid and gaseous fuels and electric power has been
observed [10]. According to the studies, currently in India, only
approximately 8% of residential energy needs are met by the grid,
while around 80% of the residential energy is met by the use of solid
fuels, such as biomass and coal. The remaining fraction represents
the use of liquid fuels in the residential energy mix.
Data collected by the National Sample Survey Office (NSSO)
[10] shows that, despite the decline in biomass consumption over
the past few decades, even today biomass comprises about 32%
of India’s primary energy consumption. From 1980–1981 to the
period of 2000–2001, the share of biomass consumed by house-
holds has decreased from over 90% to a little over 80%. However,
looking at the overall biomass consumption, it is observed that this
has increased continuously.
In Fig. 2 which compares rural and urban energy consumption,
one can see how the rural consumption patterns have not under-
gone any significant transition, whereas, the urban consumption
has been marked by rapid substitution of traditional fuels. It can
be seen that rural residential energy consumption still depends
on biomass to a large extent. The urban household energy mix on
the other hand, is increasingly dominated by commercial fossil-
based energy sources and consumption of electricity. Even with
this change however, the presence of biomass still continues even
in urban households.
Fig. 2. Per capita energy consumption patterns in urban and rural households.
Source: Household consumer expenditure surveys [10].
The overall energy trend is characterised by an increase in per
capita electricity usage, but this is attributed mainly to the con-
sumption in urban households, as the proportions of commercial
energy used in rural households is still low. Also, even though the
gas, oil and electricity consumption has risen in rural areas, it is
still much lower in aggregate and per capita terms, as compared to
urban households.
It is observed that the total residential energy consumption in
rural households always exceeds that of the urban households. The
cause of this is attributed to the increasing dependence on ineffi-
cient solid fuels in the rural areas, while the urban areas switch to
more efficient fuel sources.
The study of the use of different sources of household energy,
in terms of percentage of population using them in rural and urban
households, also gives insight as to what the trends are and how
they differ between the two cases. From the table on percentage
of population using different sources of household energy, it can
be observed that the consumption of various fuel sources in rural
or urban households do not add up to a 100%. This reflects how
in each household a mix of different energy sources is consumed
(Tables 1 and 2).
In rural consumption, the most dominant fuel sources are
kerosene, fuel wood and dung. The dependence on coal/coke,
kerosene, fuel wood and dung does not seem to vary significantly
in the rural areas, while we see the use of sources such as LPG and
electricity rise. In the case of urban households however, a signifi-
cant halving of dependence on biomass sources is observed. Urban
households have also shown a shift in transition towards greater
dependence on LPG and electricity and lesser on biomass, coal/coke
and kerosene.
It is observed [10] that as rural expenditure rises, the consump-
tion of all types of energy sources also rises, without any bias. Only
consumers in the top decile in rural areas, show a preference for
substitution of solid fuels by non-solid energy forms. In modern
households though, the transition to cleaner modern commercial
fuels is more apparent with increase in household expenditure. The
share of biomass used decreases from 65% amongst the poorest
decile to 5% for the richest decile. The top decile exhibits a clear shift
away from biomass towards more electricity and LPG use. Kerosene
and coal are observed to be transition fuels as in the lower urban
deciles the dependence on them increases, whereas in the upper
urban decile the dependence decreases. In urban households the
energy consumption in the urban middle income decile has a mix
of energy types, including more efficient modern fuel is established
to produce useful energy.
For the same levels of expenditure in rural and urban areas, the
household energy consumption mix differs, with the urban house-
hold mix containing more modern fuels and services. As urban areas
have higher population density and due to the restrictions in space
for fuel storage and collection, a need for delivery of higher den-
1060 A. Bhide, C.R. Monroy / Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066
Table 1
Percentage of population using different sources of household energy.
1983 I987–88 1993–94 I999–00 2004–05
Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban
LPG 0 9 1 20 2 33 6 47 12 61
Coal/coke 3 21 3 14 2 8 2 5 2 5
Electricity 15 58 24 67 36 77 47 84 54 91
Kerosene 95 92 96 88 95 83 96 75 91 55
Fuelwood 86 61 89 50 88 42 88 35 88 35
Dung 53 27 56 24 53 18 52 12 46 10
Source: Household consumer expenditure surveys, [10].
Table 2
Renewable energy sources with their estimated potential and the present number
of installations or total capacities.
Source/system Estimated potential Cumulative installed
capacity/number*
Wind power 45,000 MW 3595 MW
Biomass power 16,000 MW 302.53 MW
Bagasse cogeneration 3500 MW 447.00 MW
Small hydro (up to 25 MW) 15,000 MW 1705.63 MW
Waste to energy
Municipal solid waste 1700 MW 17 MW
Industrial waste 1000 MW 29.50 MW
Family-size blogas plants 12 million 3.71 million
Improved chulhas 120 million 35.20 million
Solar stieet lighting systems – 54,795
Home lighting systems – 342,607
Solar lanterns – 560,295
Solar photovoltaic power plants – 1566 kWp
Solar water heating systems 140 million m2of
collector area
1 million m2of
collector area
Box-type solar cookers – 575,000
Solar photovoltaic pumps – 6818
Wind pumps – 1087
Biomass gasifiers – 66.35 MW
Source: Government of India. Ministry of Non-Conventional Energy Sources, [6].
*Number of devices shown which applies when capacity is not expressed in MW
or kWp.
sity fuel and electricity exists. Also, it is easier to provide services
such as electricity and fuel supply in urban areas at a lower cost, as
compared to rural areas which are remote and have a population
of lower density and lower purchasing power. In fact, the quality
of energy services, such as electricity, is poorer in rural areas, as
compared to urban areas. All these factors hamper the availability
of different modern fuels in rural areas and decrease the possibility
of enhancing rural access to modern energy services.
The fuel choices due to affordability and availability are also
reflected in India on a state level. States in India such as Maharash-
tra, Delhi and Gujarat, where urbanization and income levels are
higher, use a larger portion of commercial fuels and electricity as
compared to less developed and poorer states in India. Geography
and resource endowments in a state determine the fuel choices in
that state to a large extent as well. Availability of coal due to min-
ing activities in a state, such as Bihar and West Bengal, leads to a
greater dependence on coal as a fuel source as does the availabil-
ity of hydro based electricity in the states with rivers and suitable
terrain, such as the north-eastern states of India.
As fuel choices are also determined by personal choices, demo-
graphic factors such as sex and education of the head of the
household or decision maker, determine the fuel mix used in
households. As women and children are usually the most exposed
to indoor pollution, women tend to support the substitution of
biomass fuel sources. However, the head of the family and deci-
sion maker is usually male in India, and hence this consideration
of exposure to indoor pollution is usually overlooked in the pur-
chase of fuel. A lack of education and knowledge of the benefits
and adverse effects of different fuels also leads to an uninformed
selection of fuel. It is observed [10] that as the educational level
of households improves a shift to the use of more efficient fuels is
observed.
3. Current energy scenario in India
According to the World Coal Institute [9], India is currently
the world’s eleventh largest energy producer and accounts for
approximately 2.4% of the world’s total annual energy production.
It accounts for around 3.7% of the world’s total annual energy con-
sumption which places it as the 6th largest energy consumer. India
is also the 6th largest electricity generator, accounting for almost
4% of the global annual generation, as well as the 6th in terms of
electricity consumption.
India’s electricity production relies heavily on coal energy
sources. A strong second, as can be seen from Fig. 3, is hydro power
and the third is natural gas.
Including large scale hydro projects, about one third of the total
energy consumed is contributed by renewable energy technologies.
Coal currently provides 69% of the electricity demand in India and
will continue to be a major source in the future. India has around
10% of the world’s coal reserves but this coal is of low quality. This
poor quality coal is an inefficient source and highly polluting. Grow-
ing concerns for the environment have also driven the need to find
substitutes for this energy source.
To meet the growing demand, energy imports such as oil and
natural gas have been increasing and energy security and less
dependence on imports has become a critical factor to consider. As
energy is crucial in terms of development, the Ministry of Power has
targeted rural electrification of 100,000 villages by 2012. The Indian
Government has announced plans to provide power to the entire
population by 2012—this would require an additional 68,500 MW
of base capacity.
Fig. 3. Energy consumption in Indian power sector in 2005.
Source: GENI (Global Energy Network Institute).
A. Bhide, C.R. Monroy / Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066 1061
It is observed [10] that the effective price per unit of useful
energy being paid by the rural population is significantly higher
than that paid by urban residents, as rural households use a higher
share of inefficient traditional fuels. By accounting for all fuels and
electricity used, they discover that rural households in 1999–2000
spent a higher portion of their total household budget on energy,
as compared to urban households.
India has highly subsidised energy for the household sector. It
has undergone attempts at liberalisation and price reforms in the
past, but a large part of the supply still remains state controlled.
The subsidies delivered in India do not vary across rural and urban
households, despite the fact that on an average, rural incomes and
expenditures are significantly lower than that of urban households.
4. Renewable energy technologies in India
India is rich in renewable energy resources whose potential has
not been properly tapped. It has one of the largest programs in the
world for deploying renewable energy products and systems. The
Government of India has in fact, set up an exclusive ministry for
renewable energy development, the Ministry of New and Renew-
able Energy, the first and only such ministry in the world.
The main sources of renewable energy in India are biomass, bio-
gas, solar, wind and hydro power. Renewable sources contribute
about 5% of the total power production in India. India is also the
world’s highest biogas user and is fifth in the world in terms of both
wind power as well as photovoltaic production. From the table on
estimated potentials and cumulative installed capacity, it can be
seen that none of the potentials of the various renewable sources
has been reached.
Renewable based rural electrification systems are being con-
sidered as cleaner and environment friendly alternatives to the
traditional fuel based systems. In developing countries, these sys-
tems are looking at electrifying non-electrified regions, in order to
enhance development. These systems are suitable for remote areas
and help in providing access to electricity while keeping emissions
in check. There are several issues related to these systems.
5. Issues related to renewable based rural electrification
systems in developing countries
Studies have been conducted on the issues related to rural elec-
trification using renewable energy in developing countries [11,12].
Here, only those issues which pertain to India will be discussed. The
issues related to renewable based rural electrification are mainly
categorized as economic, legal and regulatory, and financial and
institutional.
The lack of subsidies, high initial capital costs and high transac-
tion costs for small decentralized system are some of the identified
economic barriers. Rural electrification programmes involving
renewable energy technologies usually involve consumers who
have low-incomes, who cannot afford to pay for technologies with
high initial capital costs by themselves. A lack of subsidies, financing
and credit especially affects these users, rendering these technolo-
gies as unaffordable and infeasible to them. In rural areas, the
consumers are also scattered over large areas and therefore the
additional expense of distribution networks and the high transac-
tion costs for small decentralized systems add to the burden. The
demand and use of electricity in rural areas is also low and this
makes it less profitable for private companies to offer their ser-
vices. Failure to incorporate fuel cost risks for fossil fuels and the
lack of pricing policies that do not take into account the real eco-
nomic costs of environmental damage also do not promote a shift to
cleaner renewable energy based electrification. The gradual exten-
sion of grid networks to rural areas also hampers the development
of renewable systems in rural areas.
Identified legal and regulatory barriers to renewable based
rural electrification programmes consist of inadequate legal and
policy frameworks for renewable energy power sources, and bur-
densome requirements of the small power producer which are
set by their use. Without adequate legal frameworks in place,
private companies are normally reluctant and unable to partici-
pate in the programmes. A policy framework on the other hand
enables the encouragement of the implementation of the technol-
ogy and provides incentives for private companies, users and other
involved parties. The improper use of subsidies prevents the sub-
sidies from effectively targeting the desired results and also slows
down the progress in the programmes. Donor dependency in such
programmes hampers the development as when there are restric-
tions in the funding from the donors, the programme comes to a
standstill. Unrealistic and political commitments are also identi-
fied as barriers. Unrealistic commitments by governments do not
motivate the programme implementers in achieving the goals as
they know the set goals are too unrealistic, and in fact de-motivate
them. Governments of developing countries are known to make
commitments based on political interest and these interfere with
systematic development of such programmes as the electrification
plans can be altered by the politicians at any time according to their
interests.
The identified financial and institutional barriers involve the
lack of access to credit for both consumers and investors, and the
lack of sufficient technical, geographical, and/or commercial infor-
mation. A reliable and stable line of credit must be available to
both consumers and investors in order to promote the set up and
the use of these systems despite their high initial capital cost. A
lack of information makes the set up of these systems more oner-
ous, and it decreases the attractiveness of investment in them
as the market participants are unable to make sound calculated
economic decisions. A lack in institutional capacity and technical
knowledge prevents provision of guidance and support during the
set up and promotion of such systems. Also, the problems related to
such programmes require decentralized problem solving and such
institutional support is essential.
6. Policies related to electricity in India
In this section the policies that are being put in place in India and
how these policies are oriented towards renewable energy tech-
nologies, are mentioned. We look at the National Electricity Policy
of 2005 and the Electricity Act of 2003 [6].
6.1. National Electricity Policy 2005
Some of the relevant objectives of the National Electricity Policy
(2005) are:
•Access to electricity: availability for all the households in the next
5 years (2010).
•Availability of Power: demand to be fully met by 2012. Energy
and peaking shortages to be overcome and spinning reserve to
be available.
•Supply of reliable and quality power of specified standards in an
efficient manner at reasonable rates.
•Per capita availability of electricity to be increased to over
1000 kWh/capita by 2012.
•Minimum lifeline consumption of 1 kWh/household/day as a
merit good by 2012.
•Financial turnaround and commercial viability of electricity sec-
tor.
•Protection of consumers’ interests.
1062 A. Bhide, C.R. Monroy / Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066
6.2. The Electricity Act 2003
Some of the salient features of the Electricity Act (2003) are:
•Regular preparation and publication of the National Electricity
Policy and Tariff Policy.
•Preparation and notification of a national policy, permitting
stand-alone systems (including renewable based systems) for
rural areas.
•Terms and conditions of determination of tariff to be guided by
the promotion of co-generation and generation of electricity from
renewable sources and the National Electricity Policy and Tariff
Policy.
•State commissions will discharge the functions of:
Promotion of cogeneration and generation of electricity from
renewable sources by providing suitable measures for connec-
tivity with the grid and sale of electricity to any person.
Specification of a percentage of the total consumption of elec-
tricity in the area of a distribution license, for purchase of
electricity from such sources.
These policies address some of the issues with renewable based
rural electrification while also pointing out what the Government
is focussing upon. This will be analysed later on. Various renewable
energy sources and the technologies associated with them as well
as their roles in electrification will now be discussed. Only rural
electrification as well as household applications which are useful
for rural households and livelihoods will be discussed, as the energy
poor are mainly concentrated in the rural parts of India.
6.3. Solar energy
The current solar based installed electrical capacity is approxi-
mately 1.4% of the total [6]. Most parts of India receive 4–7 kWh of
solar radiation per square meter per day with 250–300 sunny days
in a year (Government of India n.d.) [6,13]. Solar energy intensity
varies geographically with Western Rajasthan receiving the high-
est annual radiation energy and the north-eastern regions receiving
the least.
Solar Energy can be used through the thermal route or the pho-
tovoltaic route. A few applications of the thermal route are water
heating, cooking, drying, water purification and power generation.
Through the photovoltaic route it can be used for applications such
as lighting, pumping, communications and electrification of vil-
lages.
There are several applications with respect to solar. Cooking is
one such application of solar thermal energy. Solar cookers have
no recurring fuel expense and are estimated to save three or four
LPG cylinders per year on regular use. As they do not pollute the
environment, exposure to indoor pollution by biomass is reduced
with their use [14]. Solar cookers cook slowly and hence produce
better and more nutritious food, which is a concern to households
with low income and scarce meals. Box solar cookers are usually
the most suitable for small individual households. The cost of a
box solar cooker varies from around $24 to about $51 [6]. Bigger
and more expensive community solar cookers are available, which
could be useful in schools to provide the students with healthy and
nutritious food in order to encourage attendance and prevent them
from falling ill. The Indian Ministry of Non-Conventional Energy
Sources provides financial support to larger types of solar cookers
but not to box solar cookers.
Agriculture involves various time consuming stages in process-
ing, and drying is one of them. Drying in the open sun is not only
time consuming but also unhygienic. Solar dryers can be used to dry
crops and other products. They come in a variety of types and sizes,
and therefore they can be utilized for various domestic purposes
as well as in agricultural processes. The disadvantages of these sys-
tems is that they are slower than the dryers using conventional
fuels and that they can be used for drying only at 40–50 ◦C[6].
The Ministry of Non-Conventional Energy Sources is implement-
ing a national programme on solar thermal energy, which provides
interest subsidy in the form of soft loans as these systems are quite
capital intensive. The manufacture of specific purposes and sizes as
per requirement is restricted in India and hence large systems have
to be set up on project-by-project basis.
Currently, there are 14 photovoltaic companies that manufac-
ture photovoltaic modules, and 45 companies that manufacture
solar photovoltaic systems [6]. The Bureau of Indian standards
have established photovoltaic standards and the Ministry of Non-
Conventional Energy Sources (MNES), has established facilities for
testing of solar cells, PV modules, and systems.
Solar photovoltaic lighting systems are becoming popular in
rural areas of India. They are used in the form of portable lanterns,
home-lighting systems with one or more fixed lamps, and street
lighting systems. Solar lanterns are light and portable, normally
designed to provide light for 3–4 h of light daily. This aids in provid-
ing light in huts beyond daylight hours. They normally cost around
$62–$68 depending on their capacities [6].
Solar Home Systems (SHS) provide comfortable levels of illumi-
nation in the rooms of a house. Various models of SHS feature one,
two or four compact fluorescent lamps. Small DC fans or 12-V tele-
visions can also be run by the system. These systems are designed
to work for 3–4 h daily, with an autonomy of three days, which
means that they can function for three cloudy days. Different SHS
models differ in cost depending on the number of compact fluo-
rescent lamps, fans or televisions they can run. They range from
a model which can operate one 9 W compact fluorescent lamp at
$124 to a model which can operate four 9 W compact fluorescent
lamps at. Solar lighting systems are used to illuminate a street or
open areas in villages. These are designed to operate from dusk to
dawn automatically. The cost of these systems is about $39 [6]. The
Ministry of provides financial assistance for the promotion of these,
among eligible categories of users.
Solar photovoltaic (SPV) power plants generate electricity cen-
trally and make electricity available to users through a local grid,
stand-alone mode, or connect to the conventional power grid in a
grid-interactive mode. Power plants are preferred over the individ-
ual SPV systems, when the users are in close proximity. Stand-alone
SPV power plants are usually implemented where conventional
grid supply is not available, or is erratic and irregular. They are used
mostly to electrify remote villages. Their capacity varies from 1 kWp
to 25 kWp[6], and can even be higher depending on the use. They
provide constant, stable and reliable supply to their customers.
These systems can also operate where grid supply is available, and
the power plant works as a hybrid power plant. The cost of such
a power plant depends on the capacity it is built for. The approxi-
mate cost is between $6200–$6800/kW of photovoltaic capacity.
The distribution costs are not included and would add to these
estimates.
For an agricultural based country and in a geographic region
where sufficient drinking water is unavailable to a significant
population, such as India, solar photovoltaic pumping systems
are another important application of photovoltaic energy. These
pumps can be used to draw drinking water, as well as water for
irrigation. The cost of these pumps depends on the capacity and
the type of pump as well.
6.4. Wind power
The most important application of wind energy is the genera-
tion of electricity. With 2980 MW of installed wind power capacity,
India currently ranks fifth in the world in terms of wind power
A. Bhide, C.R. Monroy / Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066 1063
capacity. India’s current technical potential is estimated at about
13,000 MW, assuming 20% grid penetration [6,13]. However, wind
power potential has been assessed at 45,000 MW. A Wind Power
Programme was initiated during the Sixth plan, in 1983–84, in order
to survey and assess wind resources, set up demonstration projects
and to provide incentives, to make wind electricity competitive [6].
As wind power density is not uniform, only certain states have
this resource while others do not have sufficient. The windiest
states are Gujarat, Andhra Pradesh, Karnataka, Madhya Pradesh and
Rajasthan. In fact, the Centre for Wind Energy Technology has set up
a Wind Resource Assessment Programme, to tap suitable resources,
and has even published wind data they have generated in order to
promote wind power. They have even set up master plans to pro-
vide information on the availability of wind, land, grid availability
and accessibility to the site for the benefit of project promoters.
Several promotional incentives have been made available for
wind power projects. The incentives available are 80% accelerated
depreciation in the first year and concessional import duty of 5% on
five specified wind turbine components, and their parts. Favourable
tariffs and policies are also available in several states. These are
aimed at promotion of wind power projects by private investors.
India also produces wind turbines, mainly through joint ventures
or under licensed production agreements.
For decentralized mode rural applications such as pumping
and power requirements, wind energy can be harnessed through
water-pumping windmills, aerogenerators and wind–solar hybrid
systems. Water pumping windmills can be used to pump drink-
ing water and water for minor irrigation, from wells, ponds and
bore wells. They do not need high wind speeds and can start lift-
ing water when the wind speed approaches 8–10 km/h, and it has
the capacity to pump around 1000–8000 l/h [6]. Windmills how-
ever can operate only in locations with medium wind regimes and
with no surrounding obstacles such as buildings or trees. The sys-
tem costs are also very high and are therefore unaffordable to many
individual users. The cost of setting up a water-pumping windmill
varies from about $1340 to about $3600 [6]. The Ministry of Non-
Conventional Energy Sources provides for the ex-works of the cost
of setting up the system, and even higher subsidies for unelectrified
islands.
Small wind electric generators (aerogenerators) can be installed
as stand-alone systems or along with solar photovoltaic systems,
to form a solar hybrid system for decentralized power generation
suitable for unelectrified areas. The optimum wind speed for aero-
generators is at about 40–45 km/h [6]. Batteries can be charged
and used during non-windy periods. The cost of these systems is
around $4000–$5000/kW and they require maintenance work of
about $40per kW per annum [6].
Wind-solar based hybrid systems produce mutually supple-
mented power, thus offering reliable and cost-effective decentral-
ized electric supply. Batteries can be charged for use as when
required. The cost of the system varies from $5000–$7200/kW
[6]. Installation costs are about $205, while maintenance and
repair costs are about $60 per kW per annum [6]. The MNES pro-
vides subsidies for community use as well as higher subsidies
for non-electrified islands. These systems are installed through
nodal agencies using central subsidy and manufacturing bases have
been developed. State nodal agencies are in charge of providing
repair/service facilities through the respective manufacturers.
6.5. Hydro power
India is endowed with hydro resources which are both viable
and economically exploitable. In fact, hydro power is the second
highest contributor of the energy consumed in the power sector.
Large hydro power projects are being utilized for power produc-
tion, and account for most of the energy consumed which comes
from renewable sources. The hydro potential has been assessed to
be about 84,000 MW, at 60% load factor [13]. In addition to this,
6780 MW of installed capacity from small, mini and micro-hydel
schemes have been assessed, and 94,000 MW of installed capacity
have been assessed for pumped storage schemes [15]. However,
only 19.9% of the potential has been harnessed so far.
As hydro power has been tapped and used for grid purposes,
small hydro power will be focussed on in this discussion, as small
hydro power has small scale applications which would benefit the
energy deprived. Small scale hydro power (SHP) projects are hydro
power projects with a station capacity of up to 25 MW each. These
can be set up on rivers, canals or at dams and are flexible in terms
of installation and operation. The technologies and manufactur-
ing base is indigenous in SHP projects. Small Hydro Power project
equipment is being manufactured in India. According to the Min-
istry of New and Renewable Energy Sources, 11 small hydro power
equipment manufacturers currently operate in India. It is also envi-
ronment friendly as it causes little or no submergence, minimal
deforestation and minimal impact on flora, fauna and bio diversity.
These projects are in fact even compatible with use of water used
for irrigation and even drinking water.
The cost of SHP projects depends on where they are set up, i.e.
the location and the site’s topography. The cost of the civil works
and the equipment usually determine the cost of the project. They
normally cost between $1 million to about $1.4 million per MW
[6]. Pay-back period of these projects is usually 5–7 years and this
depends on the capacity utilization factor.
The Ministry of Non-Conventional Energy Sources has so far
installed 523 SHP projects with an aggregate installed capacity of
1705 MW, and have 205 SHP projects with an aggregate capac-
ity of 479 MW under implementation. The SHP sector is increasing
its competitiveness with other alternatives, through increase in
capacity by an average increase of 100 MW per year, and through
reduction in the gestation period and capital cost. Databases con-
taining potential SHP sites have been created and a programme
involving subsidies is being planned for encouraging development
of SHP plans in states across India. In order to be eligible for subsi-
dies, standards for quality have been put in to place.
States in India have put policies such as low interest rate loans in
place, in order to attract private sector entrepreneurs to set up SHP
projects. Tariffs are being determined by the state electricity regula-
tory commissions keeping the interest of stakeholders, developers
and the Ministry of New and Renewable Energy Sources in mind.
Several leading financial institutions have started financing SHP
projects, thereby providing stable and secure financing options.
Water mills are an example of converting the energy of water
into useful mechanical energy. They have been used in north India
for applications such as grain grinding and oil extraction. These nor-
mally have low conversion efficiency and improved systems have
been developed for electricity generation. The Ministry of New and
Renewable Energy Sources have a scheme for water mill devel-
opment through associations, cooperative societies, NGO’s, local
bodies and state nodal agencies. The scheme subsidises up to 75% of
the actual cost if lower than the ceilings [6]. These have been effec-
tive in remote and rural areas with suitable topography in states
such as Uttaranchal in North India.
6.6. Biogas
India is currently the fifth largest consumer of biogas. The bio-
gas derived from animal waste in India is mainly from cow dung.
The estimated potential of household biogas plants derived from
animal waste in India is 12 million plants. Under the National Bio-
gas programme over 3.7 million biogas plants of 1–6 m3had been
installed till December 2004 [6]. Since then, the Ministry of New
and Renewable Energy Sources has established larger units in sev-
1064 A. Bhide, C.R. Monroy / Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066
eral villages, farms and cattle houses. An estimate of 3.5 million m3
per day of biogas production is provided by the Ministry of New
and Renewable Energy Sources. This is equivalent to a daily supply
of about 2.2 million m3of natural gas.
Biogas plants in India provide gas for cooking, lighting and
power generation. Biogas is used with specially designed burners
for cooking and plants of 2 m3capacity are sufficient for families
with four to five members. Gas lamps are fuelled by biomass and
for a 60 W lamp, 0.13 m3of biogas is required per hour. It can also
be used to generate mechanical and electrical power by replac-
ing 75% of the diesel used in dual-fuel engines with it. Efforts are
being made to generate electricity from biogas in a decentralized
mode by means of small-capacity engines. Thus, standardized mod-
els of biogas plants suitable for even households are available. For
family-type biogas plants the fixed-dome and floating-drum plants
of 1–4 m3capacity is usually used [6].
In India, not only is biogas plant related technology and infras-
tructure being developed, but training and deployment of skilled
manpower for plant construction and maintenance has also been
taking place. The plants also take care of treatment of industrial and
urban waste to a large extent, as the technology of using anaerobic
digestion to treat these wastes and produce biogas has been suc-
cessful. The biogas slurry is rich in a water-soluble form of nitrogen
and hence can be used as organic manure. It is also rich in bacte-
ria and can therefore be used for composting along with biomass.
Hence, these plants not only provide a more efficient energy source,
they also provide employment to a large number of people in the
rural areas and provide solutions to environmental problems, such
as waste and manure handling, water pollution and carbon monox-
ide emission.
The lifespan of biogas plants in India can be estimated to be
about 10 years. Based on the life-cycle analysis, the estimated cost
of generation of 1 m3of biogas is 6 cents and this is said to be more
cost-effective than the cost of diesel and kerosene when compar-
ing energy values [6]. The Ministry of New and Renewable Energy
Sources has also estimated that the construction of 1 million bio-
gas plants generates about 30 million man-days of employment
for skilled and unskilled workers and 1.2 million tonnes of organic
manure per year. It also leads to abatement of greenhouse gas
emissions through anaerobic digestion of cow dung and effective
utilization of biogas.
Financial assistance for construction and maintenance of bio-
gas plants, development of skilled manpower, training for use and
maintenance, awareness creation, and support to implementing
agencies and technical centres for implementation are provided
by the Ministry of New and Renewable Energy. The National Biogas
Programme in India provides various central subsidies for setting
up biogas plants and the amount depends on the users and the
area. Thus promoting the set-up of these plants in remote and under
developed areas and for users who do not have access to electricity,
as well as those who have greater development and energy needs.
The Government of India also provides repair and servicing facili-
ties to support the operation of these plants. The state governments
have also implemented programmes targeted at implementation
and training support. They help regularly organise training of work-
force in the construction, maintenance and use of the biogas plants.
The training centres also provide technical training and publicity
support for the National Biogas programme.
7. Results
Having looked at the household energy trends we see that
there is still a great dependence on solid fuels. The percentage of
residential energy needs met by solid fuels is only 80% and as these
fuels are highly inefficient, polluting and create health burden,
cleaner and more efficient alternatives must be provided. Also,
there has been an increase in the overall biomass consumption
even though dependence on it in households has decreased. A
drastic difference is observed in the trends between urban and
rural consumption reflects difference in preferences of fuels is
due to unequal development and differences in the availability
and affordability of fuels. This is also supported by the fact that
the population in rural areas that earns as much income as those
in the urban areas, still consume a greater percentage of solid
fuels, due to lack of accessibility to other alternatives. Differences
in consumption patterns varying geographically between states
according to availability of resources as well as differences in the
extent of development have also been observed. All these factors
imply that the Government of India must play a significant role
and putting relevant policies in place to promote the use of grid
electricity over solid fuels, as well as being more proactive by
providing more energy source alternatives along with the pace of
the growing population and its needs. Also, the policies must be
targeted towards rural areas and the main consumers of the solid
fuels. Subsidies should not only be determined by what resources
are easily available, but also keeping in mind the impacts and
indirect costs, such as cost to the environment, of the fuels in mind.
India encounters the problem of a negative balance in overall
energy consumption and production, and the growing population
adds to the problem. It can be seen that the majority of electricity
produced comes from the use of coal while only a small percent-
age from renewable energy sources which do not include large
scale hydro projects. The commitment of the Government is to pro-
vide the entire population with electricity by 2012, to increase per
capita availability of electricity from its current figure of around
380–421 kWh/capita [16] to over 1000 kWh/capita by 2012 [6],as
well as the achievement of the development goals. Each of these
goals has an associated energy cost and entails an increase in the
requirements of energy. In order to stick by the commitment made
by the Government through the ratification of the Kyoto protocol,
sustainable options must be focussed on. The Government of India
has taken steps towards this by putting much needed electricity
policies in place and by focussing on renewable energy technolo-
gies.
For remote villages which are not connected to a grid, decen-
tralized application of renewable energy sources provide a suitable
alternative. The Intergovernmental Panel on Climate Change (IPCC)
report findings which also show that it is the right time to look
at alternative energies for rural energy supply. Successful rural
electrification programmes have shown that a sustained renew-
able energy market can develop quickly and efficiently through the
right combination of institutional and financial regulations and if
adequate energy policies are adopted. The Government’s electricity
policies display their intention of overcoming hindrances to electri-
fication, especially to rural electrification, but some issues however
are still not resolved and there is scope for further improvement.
The Government’s measures such as the setting up of the Min-
istry of New and Renewable Energy Sources show their intent of
having renewable energy sources play an important role in the
further electrification of the country, and in the eradication of
energy poverty. We notice how the potential of renewable energy
sources have not been tapped in India. This shows a great scope
for improvement, provided the right encouragement is provided
by the Government.
Solar thermal energy is a cost effective and reliable form of
energy and it has several household applications relevant to rural
areas, where access to modern energy fuels and services is lim-
ited. The photovoltaic route in India has also been well established.
Even the manufacture of photovoltaic cells takes place in India. The
Government’s assistance in terms of setting standards and setting
up testing facilities for solar cells, PV modules and systems helps
A. Bhide, C.R. Monroy / Renewable and Sustainable Energy Reviews 15 (2011) 1057–1066 1065
encourage high quality in the photovoltaic manufacturing sector in
India. The targeting of categories of users for the solar home sys-
tems by the Government is useful in providing benefits for those
who need it.
For wind energy there are greater limitations as the resources
are not evenly distributed. For the small scale wind projects, there
are obstacles which cannot be helped, such as need for perfect iso-
lated locations with the current wind speeds. These limitations do
not make them a universally ideal solution to the need for rural
electrification. However, India has not tapped its full wind energy
potential and through the infrastructure and programmes set up,
wind energy sources will provide a lot more benefits in the future.
By taking care of maintenance and providing installation subsi-
dies, the Government of India is trying to make it attractive. State
involvement assists in providing the required decentralized sup-
port to systems which provide rural electrification.
Hydro projects have excellent efficiency, low maintenance costs
and low costs of generation. Small scale hydro projects have the
advantage of using indigenous technology which is manufactured
in India and they cause a minimal environmental damage. The tech-
nology for these systems is rapidly improving and becoming more
and more competitive. The Government’s support, through subsi-
dies and setting up of databases, is encouraging the development of
these systems and making them more affordable. Financial assis-
tance through loans and subsidies are also helping the setting up
of these systems. The involvement of state nodal agencies thereby
provides the decentralized support required.
The use of biogas in households also saves women and chil-
dren from exposure to indoor pollution, and the time as well as
the effort they spend in collecting firewood and cooking with
inefficient fuel sources. Thus this technology provides various
environment-related advantages and social related advantages,
while providing energy solutions to energy deprived rural areas.
Financial assistance for construction and maintenance of biogas
plants, development of skilled manpower, training for use and
maintenance, awareness creation, and support to implementing
agencies and technical centres for implementation are provided by
the Ministry of New and Renewable Energy. Therefore the Govern-
ment is not just providing financial support and technical assistance
for biogas plants, they are also enhancing development by pro-
viding job opportunities to those living in rural areas. They are
providing training as well as employment for people from the rural
areas, thereby bringing about development in more than one way.
Although renewable energy technologies might require low
cost or free fuel, they incur high upfront capital costs. The
cost of electricity produced (UNDP 2004) by solar photovoltaic
route is about 25–160 cents/kWh, by solar thermal route around
12–34 cents/kWh [16]. In India in fact, the cost of grid-interactive
power plant produced electricity is around 31 cents/kWh and from
stand alone power plants it is more expensive [6]. Cost of electricity
production for wind energy is 4–8 cents/kWh and for small hydro
energy plants is 2–12 cents/kWh (UNDP 2004) [16]. Whereas based
on life cycle analysis, the cost estimated for the generation of biogas
from a family-type plant is 6 cents. By conventional coal electricity
generation is about 4 cents/kWh [17]. We see that in terms of costs
of electricity generation, conventional coal technology is much
cheaper in comparison to renewable energy source technologies.
As the customers of electricity in rural areas are from lower income
groups and private parties will not invest unless it is commercially
viable, the burden of these costs must be borne by the Government.
8. Conclusions
As a considerable percentage of the world’s poor reside in India,
the issue of sustainable development is a key concern. It has been
established that access to clean energy enhances development by
providing several opportunities and improving the quality of life.
Most of India’s poor live in the rural area and hence a greater focus
must be placed on the access of energy sources to these regions. By
announcing their development goals and by announcing the goals
of providing electricity to the entire population by 2012, the Gov-
ernment of India is committing itself to development and reduction
of poverty.
By making electric power accessible to the whole population by
2012, the Indian Government is ensuring the eradication of energy
poverty. Increasing the reliability of quality of power and its effi-
ciency at reasonable rates helps target the needs of the people of
lower income groups. This helps ensure proper electrification for
the regions which although are declared electrified, have poor ser-
vices and cannot reap the benefits of electricity. An increase in per
capita consumption, which is stated as a policy, does not imply
equitable distribution but it does imply a greater level of devel-
opment. Making electric power commercially viable will decrease
dependence on sponsors and make it profitable for private par-
ties to invest in thereby reducing the dependence on sponsors.
The involvement of private parties in fact will reduce maintenance
costs, reduce overuse and also maximise benefits from these sys-
tems. The protection of the consumers’ interests ensures that these
keep in mind the energy deprived and prevent them from being
exploited by private investors who enter the energy market. Reg-
ular preparation and publication of policy and tariffs will help
establish fixed guidelines for the sector, to avoid ambiguity and
promote private investment. National policy for permitting stand-
alone systems including renewable system for rural areas implies
making it easier for private investment to set up these projects and
promoting such projects in general. The intended determination of
tariffs based on the generation and co-generation from renewable
sources show how there will be an added advantage for renewable
based technologies, hence promoting investment in them. Estab-
lishing the responsibilities of the state government, addresses the
decentralized problem solving which is required to deal with issues
related to rural electrification, which are decentralized in nature
themselves. The Indian Government has also established several
programmes and institutions to increase reliability in this sec-
tor and makes it purchase and payment of these systems easier.
The Government has also addressed the problems of maintenance
and monitoring by taking up this responsibility through its vari-
ous institutions. This shares the burden with the involved parties
and also builds confidence in the systems. The policies of the Gov-
ernment however do not explicitly address the current electricity
subsidies. The subsidised electricity does not target the increase in
energy access by energy deprived rural households, and in fact it
benefits richer urban households who have greater access to more
modern energy technologies.
A large number of programmes and initiatives have been carried
out by the Government of India. However, they have set unrealistic
targets in terms of their development goals and reduction in energy
poverty. To achieve these targets, the initiatives taken so far are
insufficient. For the achievement of these targets through sustain-
able means, renewable energy technologies must be encouraged
to a further extent. The Indian Government has made an ambitious
start. However, the different levels of government, local, state and
national, need to increase their efforts to a much greater extent in
order to achieve significant results.
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