Electrification of the Poor Households - Case Study Example

School Access to electri for poor households in India: Can this be achieved by 2030? The situation in India, which is central to this study, indicates inequitable access to electricity for poor households. An estimated 89 % of rural households in India lack this basic amenity forcing them to rely on energy sources that are not environmentally friendly. Fuel poverty, in turn, translates into income poverty as the poor have difficulty in acquiring high prices of cleaner fuels. It also adversely affects the socioeconomic conditions of women. If appropriate measures are implemented in line with the Millennium Development Goals, extending accessibility to electric energy for poor households in India is feasible by 2030. There is also a need for radical transformation in the energy sector that is predominantly traditional. A shift towards safer and environmentally friendly alternative energy would ease the perpetual marginalization of the poor household in terms of electrification. Electrification of the poor households would require collaborative efforts from various sectors of the economy, government ministries and social institutions. The first step is to translate goals into action at the earliest possible time. For example, the recommendation of the IEP in the supply of fuel wood a mile of access to the houses should be acted upon immediately by the relevant government agencies. Secondly, community participation would help the realization of such an initiative. Finally yet importantly, developing a global partnership for economic development is another crucial step towards the realization of the electrification program. The research methodology is a series of surveys conducted. There is statistical analysis done with through graphical presentation. Background Inequitable access to electricity is a major impediment to economic development. This energy crisis is a major concern for developing countries all over the world. Today, nearly 800 million people in Asia and the Pacific lack access to electricity and almost 2 million depend on traditional biomass use for cooking. The lack of affordable energy services is a barrier to efficient development basics. Countries in Asia and the Pacific have implemented a wide variety of practices forefront in providing access to energy for the poor, including innovative financing mechanisms (Acharya et al 89). In addition to meeting basic needs, energy services can act as a tool to empower women and disadvantaged communities, as a starting point for mobilizing communities to take charge of their own development, and, most important, as a means of improving livelihoods and reducing poverty. However, the magnitude of the expansion project of access to energy has been far from sufficient. Energy sufficiency is a sin qua non for human development s well as economic progress Powering ‘Marginalized India’ is Feasible by 2030 India is among the electrical energy consumption and the worlds largest economies generate. The country has an estimated 4 % of annual electricity consumption as a fraction of the total global electricity consumption. Given the projected economic growth of India’s economy, the rate of annual consumption of electricity is expected to skyrocket to over 10 % of global electricity consumption given the acceleration in economic growth. In order to facilitate this projected demand and create a sustainable energy sector, successive governments have implemented a set of progressive initiatives such as the National Tariff Policy 2006, Electricity Act of 2003, Ultra Mega Power projects, the integrated energy policy, National Electricity Fund alongside other mitigation initiatives. However, the energy sector in India continues to be affected by a large number of risks and bottlenecks (Modi 98). In an a attempt to comprehend the challenges facing the energy sector in India, McKinsey & Electric Power Company and Natural Gas practice in collaboration with industry leaders and politicians conducted a six-month effort of long-term research. The objective of this effort was to assess what additional measures are needed now to ensure that the energy sector is capable of coping with the rising demands of the rapidly growing economy. This study provides a perspective on the outlook for demand in 2030, the factors limiting the development of the sector, and proposes a comprehensive work plan to unlock the potential of the sector. It is an analysis the opportunities, risks and winning approaches that will surface as the sector develops. India requires a five to ten times increase in their rate of addition of capacity if it is to meet the demand (Modi 98). The magnitude of the challenge that the country faces is the major concern of this study. According to the economic experts, the country requires a radical new approach that allows financial viability, capacity addition, improved operational efficiencies and increase in fuel supplies. The structure of the energy sector governance and monitoring mechanisms should be strengthened to ensure the successful implementation of this program. Several investment opportunities will develop through rewarding the sectors value chain in India. This analysis suggests that a U.S. investment opportunity $ 600 billion will come in the next 10 years if the bottlenecks are removed. In addition to the traditional opportunities such as large coal plants, several non-traditional opportunities arise. Such opportunities include development of peak plants and the establishment of alternative sources of renewable energy (Kapadia 78). Efforts to power the marginalized section of the Indian population require players to tailor their business models in a way that allows them to address existing bottlenecks, inefficiencies in the market and development risk. Players must develop and implement approaches that are very different from conventional models worldwide. In return, the reward to go early, when the sector is still underdeveloped, will be substantially higher than when mature. Companies in other sectors such as telecommunications and infrastructure development have demonstrated their efforts towards that. The power sector in India is at a turning point in its development and progress is essential to sustain progressive economic growth. It is crucial for all stakeholders to forge their collective efforts towards the realization of equitability in the access to electric power in the country (Kanagawa 2019) Sources of National and Household Energy in India At a disaggregated level, data from surveys of household expenditure of consumers conducted by the India National Sample Survey Organisation (NSSO) are used to determine the detailed requirements of household energy and socio- economic and demographic. For each round of the Support Structure of household consumption survey data of spending is obtained from a nationwide sample of households, involving independent and thorough coverage of urban and rural areas with the exception of certain areas in the remote and interior regions. Gallup International conducted a survey between July 1999 and June 2000 to over 120,000 households. The data retrieved from several rounds of household surveys was used to analyze changes in projected patterns of India’s energy consumption (Acharya et al 89). For this research, data on all quantities and expenditures on fuel and light sources of energy surveys, which are collected by a 30-day recall period, have been used. Since the survey is conducted during the period of one year, it is important to take into account sensational variations in consumption patterns for accuracy purposes. The number of households is converted into annual values, and divided by household size for all the analysis to be done in terms of annual values ​​per capita. While quantitative data related to different energy sources in the survey are recorded in different units of measure (kilograms of firewood, for example, kilowatt-hours of electricity, etc.), all values ​​are converted into energy units mega joules. Data on the costs of the current surveys is in Indian rupees (Modi 98). Energy Poverty: the situation in India In essence, access to clean fuels means equitability in the provision of energy sources such as kerosene, electricity and liquefies petrol gas. It is important for every household to have a reliable access to clean energy at the very least. However, in the scenario of India, the pattern of energy consumption reflects the opposite situation, as it veers towards fuels such as firewood, charcoal and dung cake whose continued usage is detrimental to the environment. In India, the National Sample Survey (NSSO) collects data on consumption expenditure of households each year. About 28 kg of firewood and wood chips are used in homes in India for the purpose of cooking per capita basis face to face consumption approximately 1.82 kg of LPG (2.01 kgoe) (Barnes 976). Access to clean energy fuels is limited to households in the urban section at the expense of rural households. For example, only a small portion of households gets to enjoy electrical services. In fact, a UN report estimates that in the urban areas, 67% of the households have electricity while less than 10% of households in rural areas rely on traditional fuels to power their homes and businesses (Acharya et al 89). The Government of India uses Poverty Line as an economic yardstick to assess the individuals and families who need government help and support. Planning Commission estimates the poverty line based on each year after adjusting for inflation. For the year 2009/10, the designated poverty line for rural and urban households was minimum revenue of Rs 368 and while 560 rupees respectively. This income is supposed to meet minimum food needs and does not offer much for other commodities such as health, education, etc. According to the criteria used by the Planning Commission of India, 27.5% of the population lived below the poverty line in 2004/05. On the other hand, according to World Bank estimates for 2005, 42% of India were living below poverty level that is to say that they earned less than $ 1.25 per day, which marked the international poverty line then (World Bank 2008). This shows the great extent of income poverty in the country. Energy poverty is considered one of the characteristics of income poverty. Provision of domestic energy such as electric power facilitates agricultural growth and industrial progress. Such growth and progress, in turn, provides opportunities for livelihood improvement in terms of increased employment and business opportunities. This also denotes higher household income and the subsequent reduction in poverty levels. In view of economic development, it is important for households to have equitable and regular access to clean energy fuels. Nevertheless, it appears that the problem of energy poverty is marked in poor households, as people with lower incomes have limited access to clean fuels. For example, among rural areas, households below the poverty line consumes only 0.59 liters of kerosene per capita, compared with consumption of 1 liter of kerosene among rural households above the poverty line (Barnes 976). A similar situation prevails in urban areas where the urban poor on average consume 0.3 kg of LPG, compared with average consumption of 2.15 kg of LPG per capita for the urban population above the poverty line. One likely reason for the pattern of consumption as the high market value associated with cleaner fuels such as LPG, which make these fuels out of the reach of the poor. As a result, the poor tend to stay with the consumption of traditional fuels such as biomass, which is usually freely available or has a low price. It is also surprising to find that poor households, both urban and rural areas, despite having limited access to cleaner fuels, spend a higher percent of their total expenditure on the purchase of energy fuels compared to households above the poverty line. NSSO terms of monthly per capita consumer expenditure (MPCE) as the main indicator of living standards. As shown in Figure 5, rural households in the lowest MPCE class of Rs 0 to 225 (USD 0 to 4.79) allocate about 11.5% of its total expenditure for the purchase of energy fuels for cooking and lighting vis-à-vis the 7.2% allocated for rural households in high MPCE class of Rs 950 (USD 20.21) and more. A similar trend is witnessed urban households (Barnett 234). The Need for a Radical Approach Rapid economic growth has increased the burden on infrastructure in India, one of the weaknesses of the country. An infrastructure deficit is widely regarded as one of the factors that could seriously hamper economic growth in India. In view of this concern, policymakers are making concerted efforts aimed at speeding up infrastructural development in recent years. Major sectors such as telecommunications, roads, airports and ports have registered remarkable progress towards infrastructural development in India. However, the energy sector continues to lag behind despite the introduction of progressive measures. Tariffs, shortages and perpetual dependence on imported fuels are the major causes of concern in India today that continue to inhibit the flow of investments. If this does not change, economic growth in India is at risk (Heierli & Polack 67). Energy demand in India is likely to cross 300 GW over the next 10 years earlier than most estimates. To meet this demand will require five times to ten times increase in the rate of incorporation of capacity. The profile of the planned capabilities will also have to be suitably modified to meet peak demand, keep emissions under control, and reduce dependence on imported fuels and affordable supplies. This is, however, not likely to materialize under the traditional approach, which is why a radical new approach is needed. During the last decade, the government has initiated a series of strategic measures such as the National Tariff Policy 2006, Ultra Mega Power projects and Electricity Act of 2003 with the aim of mitigating the energy crisis. Other parallel measures including a series of administrative measures such as the tripartite agreements between the central government, generators and the Midwest and the recapitalization of State Boards of Electricity (SEBS) have been taken to release the potential of the energy sector. Although progressive and necessary, these measures have been insufficient. In 2030, demand will be substantially higher than expected. Economists suggest that the demand for power in India is likely to go from about 120 GW today to 315 to 335 GW in 2017, 100 GW higher than most recent estimates (Pachauri et al 2098). Four key factors will drive this demand. First, the manufacturing sector in India is growing faster than in the past. Similarly, residential consumption is projected to grow to an estimated 14 percent in the next 10 years. Third, the connection of 125,000 villages to the network through various programs that aim to provide energy for all in 2012 and finally the realization of demand suppressed due to load shedding. Indias pace of adding capacity must increase by five to ten times. To fulfill its power requirement from 315 to 335 GW in 2017, India is required generation capacity from 415 to 440 GW. This implies that installed capacity currently averaging at about 140 GW will triple, which, in turn, translates into an annual increase of 20 to 40 GW. This is five times higher than ten times the GW 4 per year that was achieved in the last 10 years. Moreover, an assessment of the projected profile of India by the addition of capacity suggests that much remains to be done to alter the mix. In particular, India needs to change its dominant approach to the construction of base load plant to a more balanced mix of baseload and peaking plants (Acharya et al 89). This is crucial to ensure that the country can meet peak demand. In addition, current plans significantly increase emissions, imports from India of dual-energy, high and volatile cost of inputs. The magnitude of the task at hand indicates the need for a radical transformation; piecemeal measures would definitely not be sufficient. To achieve this amount of increase in the rate of addition of capacity, and to modify the profile of the new capabilities, India needs to adopt a radically new approach. The 10-point program presented in this report is our point of view of a broad set of measures needed to transform the sector (Modi 98). Toward realizing the dream of Energy The government, through its various ministries and in liaison with its development partners, is making sincere efforts to resolve the problem of energy poverty. Measures adopted to address the energy crisis must consider the linkage of energy poverty, income poverty and gender disparity. It is important to note that rural households in particular, are facing serious energy concerns of poverty as many families still dependent on traditional energy sources that pervasively cause mass environmental pollution. As such, there is an urgent need to ensure all households, especially the poor ones, have access to electric power or other environmentally friendly alternative energy sources (Modi 98). Rural Electrification Initiative Since electricity is considered a clean energy, the government places special emphasis on installing electric power cables for poor households and other marginalized sections of the community. The National Electricity Policy is geared towards facilitating full access to electricity by poor households by solving this problem in its entirety by 2030. It also aims to provide a lifeline minimum consumption of 1 unit / household / day by 2030 a good merit. To achieve this goal, the distribution of rural and village electrification infrastructure is being developed through a program called Rajiv Gandhi Grameen Vidyutikaran Yojana launched in April 2005. Although overall, the program looks impressive, it suffers from several drawbacks such as lack of coordination between the center and states in the projects conducted under this program. Likewise, there is an uncertainty of the commercial viability of such projects as well as supervision of the franchise (Bhattacharyya 2005).  In addition, the Rural Electrification Policy 2006 and the remote village electrification program aims to provide electricity to rural and remote areas, respectively, through off-grid systems or independent, where network connectivity is not feasible. In addition, efforts are being made by the Ministry of New and Renewable Energy (former Ministry of unconventional energy sources) to provide alternative sources of energy to households. Using solar energy as alternative energy source, the ministry endorses solar lanterns and solar cookers, providing financial support in the form of subsidies to manufacturers and users of these products. In addition, MNRE supports these products through various promotional activities such as cooking demonstrations, training, workshops, and so on. Because of these efforts, a total of 6.57 lakhs (0.65 million) and 41,000 solar cookers solar lanterns had been sold to the end of 2008/09 (Ravindranath 9). MNRE promotes other sources of alternative and renewable energy and biogas. MNRE launched the National Project on Biogas Development (NPBD) during the 1981/82 to promote family-type biogas plants to produce clean and convenient fuel to facilitate lighting and cooking in remote areas, along with enriched organic fertilizer for use in combination with chemical fertilizers in agricultural fields. By 2008/09, more than 4,120,000 biogas plants were receiving support from the NPBD, realizing 34% of the total potential of 12 million. A series of discussions with stakeholders - from private sector players and public to government officials around the center and the states, regulators, fuel suppliers, financial and other infrastructure providers - suggests that the four themes developments affecting the energy sector: the feasibility and market risks, a slow pace of capacity addition, inadequate fuel supplies, and operational inefficiencies (Ravindranath 9). The position of India as an emerging economic superpower has earned the country a place in the agenda of most countries and companies in the developing and developed nations alike. India’s rapid transition from an agrarian to a service economy has led translated into increased revenues and a significant increase in consumption. This has increased the burden of one of the weaknesses of India-its infrastructure. Currently, the country is struggling hard to meet its infrastructure deficit, indisputably one of the biggest impediments to growth. In recent years, policymakers have recognized that the stakes and increased efforts on many fronts. Although much remains unachieved, India has made considerable progress in areas such as roads and road development, airport infrastructure, telecommunications and ports (Barnes 987). In the area of ​​energy, a series of progressive measures have been implemented, such as the Electricity Act 2003. In spite of this, India is facing a significant energy deficit. In 2030, demand will skyrocket to around 415 GW, which is significantly higher than anticipated. In order to facilitate such a demand, the country will have to accelerate the pace of capacity addition, and suitably modifying the profile of new capabilities. This will require five times to ten times increase in the rate of addition of capacity, which will result in more U.S. investment $ 600 billion (Rs 24 million Rs lakh) over the next 10 years. To achieve this, India will have to adopt a radically different approach to the current. In the last 5 years, the government has introduced a series of strategic measures to harness the energy sector. A number of policies have been enacted, including the Electricity Act (EA) 2003, the National Electricity Policy, the Ultra Mega Power Projects (UMPPs), the development of energy and accelerated reform program (APDRP), the Integrated Energy Policy and National Tariff Policy 2006. In addition, the country has undertaken a series of administrative measures through tripartite agreements between power generators, the central government, and the states. There has been a significant progress as evidenced in the recapitalization of the State Electricity Boards (SEBS), a thrust in the captive coal mining, the establishment of regulatory power and a selective separation of SEBS (Wallace 09). Overcoming the Challenges It is now clear that energy poverty is closely linked to income poverty. Reliance on traditional fuels and pollutants added to the cost burden of households and adversely affects the health of people especially women and children. This highlights the links between different sectors such as energy, health sector and the financial sector, which deals with grants. To accelerate positive change towards the establishment of cleaner energy fuels, institutions from different sectors of the economy need to join in and offer services such as bundled packages to alleviate energy poverty. For example, the ministries involved in the renewable energy sector and the health sector can work together to raise awareness about the negative impact on health caused by the use of traditional fuels and the need to switch to fuels cleaner. This will help develop a robust set institutional mechanism, working together to develop solutions to alleviate energy poverty. It is also important for institutions in different sectors to be proactive, by planning and implementing innovative measures at regular intervals to address this issue (Ravindranath 9). Households that use traditional sources of energy are willfully reluctant to switch to cleaner fuels such as LPG, which have high market value attached to them. Therefore, in order to persuade them to switch to clean fuels, it would be advisable subsidize the prices. This highlights the importance of grants to improve access to energy. However, the granting of subsidies led to huge financial burden for the government (Ravindranath 9). Therefore, it is necessary that the subsidies should be provided to the selected households only, as mistargeted subsidies cause waste. The integrated energy policy suggests using debit cards or smart cards with varying levels of direct cash support to the selected households to purchase commodities. However, these smart cards have not been implemented yet, because there issues of clarity. Similarly, this requires various stakeholders such as financial institution for the maintenance of accounts of the card, card makers, non-governmental organizations to promote and raise awareness about the use of smart cards, and so on, to work together proactively (Wallace 09). In an attempt to overcome the challenges, it is important to translate the goals into action. It is important, as well, for policy measures proposed to alleviate energy poverty to be translated into action at the earliest possible time. For example, the recommendation of the IEP in the supply of fuel wood a mile of access to the houses should be acted upon immediately by the relevant government agencies. Moreover, little by little these objectives can be extended to cover other fuels like kerosene and LPG in due time. There is a need to establish a sound oversight mechanism to monitor implementation of policies in true spirit (Heltberg 76). There is also a growing need for innovative financing mechanism. Limited access to cleaner energy is also attributable to high initial cost of solar cookers and other appliances. Therefore, the introduction of innovative financial schemes in which the initial cost is reduced; it assumes special significance in households. For example, schemes where the initial cost of LPG connection does not apply outside the government for the poorest families will be beneficial. Similarly, the schemes can provide a choice of a home to make payment in parts act as an incentive to purchase cleaner fuel, and prevent the disruption of the monthly cost greatly. Schemes promoting improved stove and solar cooking, where the payment of these devices is made in installments, acts as a feel good factor of risk for households, since the additional payment made to these devices on a monthly basis is more or less funded , although the savings achieved by the use of such apparatus (Ravindranath 9). Finally yet importantly, community involvement would help overcome the challenge of energy in India. It is noted that the success of government programs for the introduction of new products or technologies, such as improved stoves and biogas plants based on the participation of the target population. It is important to develop a community-based planning and management in which people of different homes voluntarily, sees benefits in the adoption of product / technology. The participatory approach is often successful in achieving the required changes. Citing an example of an NGO called Vikas Samiti Sarvangeen, which launched a project entitled "Promotion of sustainable agricultural practices through demonstration of biogas and Other Related Activities" in 2002. This NGO uses participatory rural appraisal (PRA) exercises, which helped convince many potential beneficiaries regarding the functionality of biogas plants. Trained a group of women are sure to acquire the local knowledge and expertise and persuaded them to adopt the biogas technology. This group of women is a good example of the benefits achieved with the use of biogas (Reddy 567). Millennium Development Goals and the Need for Global Partnership on Development The Millennium Development Goals (MDGs) are the international communitys commitment to have poverty in the poorest countries in the world by 2015. Developing a global partnership for development is a crucial step to mitigate the energy problem. The World Summit on Sustainable Development (WSSD) held in Johannesburg in 2002 recognized access to energy services as a prerequisite for achieving the MDGs. Energy carriers such as electricity and other fuels facilitates job creation, industrial, agricultural and micro-enterprises and thus help alleviate poverty and hunger. Access to modern fuels facilitates the domestic burden of women and thus promotes better education and empowerment of women through their participation in economic activities. Provision of energy also improves the health centers and delivery. Cleaner energy systems such as electricity foster environmental sustainability and economic growth. The Summit called for partnership between development agencies, public entities, private sector and the civil society in order to enhance equitability in the delivery of reliable and affordable energy services that are environmentally sustainable (UN-Energy 2005). That notwithstanding, there are still millions of "energy poor" households in the world who lack access to clean energy sources and modern for basic activities of life. Everyone around 2.4 billion people still lack access to safe and reliable energy, and about 1.6 million people lack access to electricity. The problem of fuel poverty is found to be severe in developing countries like India, where about 89% of the rural population and 28% of urban households depend on clean energy sources like firewood, chips and dung cake to meet your cooking needs. Similarly, access to electricity is limited to about 56% of all households (Wallace 09). Conclusion India is among the electrical energy consumption and the worlds largest economies generate. The country has an estimated 4 % of annual electricity consumption as a fraction of the total global electricity consumption. Given the projected economic growth of India’s economy, the rate of annual consumption of electricity is expected to skyrocket to over 10 % of global electricity consumption given the acceleration in economic growth. The situation in India, which is central to this study, indicates inequitable access to electricity for poor households. An estimated 89 % of rural households in India lack this basic amenity forcing them to rely on energy sources that are not environmentally friendly. Fuel poverty, in turn, translates into income poverty as the poor have difficulty in acquiring high prices of cleaner fuels. If appropriate measures are implemented in line with the Millennium Development Goals, extending accessibility to electric energy for poor households in India is feasible by 2030. There is also a need for radical transformation in the energy sector that is predominantly traditional. A shift towards safer and environmentally friendly alternative energy would ease the perpetual marginalization of the poor household in terms of electrification. Electrification of the poor households would require collaborative efforts from various sectors of the economy, community participation as well as global partnership. Works Cited Acharya, J.; Bajgain, M. S.; Subedi, P. S. ‘Scaling up biogas in Nepal: What else is needed?’ Boiling Point, 2005. Print Barnes, D., Krutilla, K., and W. F. Hyde. The urban household energy transition social and environmental impacts in the developing world Washington, DC: RFF Press, Resources for the Future, 2005. Print Barnett, A. Energy and the fight against poverty, Livelihood sector report UK: Department for International Development, 2000. Print Farsi, M., Filippini, M., and S. Pachauri. “Fuel choices in urban Indian households” Environment and Development Economics 12(6): 757-774, 2007. 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