The World Bank plans to spend $1 billion on clean energy initiatives in India over the next four years.
Local generation and distribution through the distributed generation and supply model is a viable solution for providing electricity to villages that are either not electrified or do not get electricity for more than six to eight hours every day, said Mr Ashish Khanna, Senior Energy Specialist at the World Bank.
In this model, the local franchisee generates and distributes electricity and collects the revenue.
Economic gains
This model, tested at the Radhanagiri sub division of Kolhapur district in Maharashtra, showed that rural consumers could make economic gains of Rs 4,700 crore just by reducing cost of lighting for the end consumer.
The cost reduces because transmission and distribution losses are significantly brought down to 15 per cent from the existing 36.81 per cent when unexploited wind energy and biomass replaced existing fuels.
The study also found that Maharashtra had unexploited potential of 2,828 mw of wind energy and 551 mw of biomass totalling 9,400 million units.
Local franchisees are expected to bring in 30 per cent equity into these projects that costs anywhere between Rs 4.5 and Rs 6 crore per mw.
Challenges
The challenges in this model include the scale of power generation, area of distribution, apathy of financial institutions due to low ticket size of projects, lack of project evaluation skills among lenders, barrier of entrepreneurial skills in villages and the absence of an integrated approach and coordination among the renewable energy agencies of various States.