June Estimate of Carbon Abatement Potential of Energy Consumption in Rural Areas of India

Size: px
Start display at page:

Download "June Estimate of Carbon Abatement Potential of Energy Consumption in Rural Areas of India"

Transcription

1 June 2013 Estimate of Carbon Abatement Potential of Energy Consumption in Rural Areas of India

2 June 2013 Acknowledgements Shakti Sustainable Energy Foundation is grateful to the team of Ernst & Young LLP, India for providing their services related to technical assistance in research, analysis and preparation of the report. Shakti also expresses its gratitude and acknowledges the effort put in by several teams, individuals and stakeholders from different organizations who provided useful suggestions and inputs during the various meetings and interactions held during the course of the study. Disclaimer This report uses publicly available information and information gathered through stakeholder consultations. The information gathered or contained in the report is not independently verified by Shakti, and accordingly, Shakti expresses no opinions or makes any representations concerning its accuracy or complete reliability or sufficiency. The recipients should carry their own due diligence in respect of information contained in the report. Shakti and Ernst & Young LLP, India disclaim any and all liability for, or based on or relating to any such information and/or contained in, or errors in or omissions from, their inputs or information in this report.

3 Contents Executive Summary Introduction Overview of Rural India Energy Scenario in Rural India Energy Demand Energy Supply Challenges for improving the energy situation in Rural India Overview of Policies and Initiatives Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY) Remote Village Electrification Programme (RVEP) Rajeev Gandhi Grameen LPG vitaran Agricultural DSM Programme - BEE National Solar Mission Village Energy Security Test Projects Objectives Approach and Methodology Objectives Approach Methodology Assessing the current rural energy mix of the country Estimating carbon footprint of the existing energy mix: Projecting the abatement potential vis-à-vis the BAU energy mix: Present Scenario: Energy consumption and emission overview Rural Households Cooking Lighting Appliances Total Energy Consumption and GHG Emissions from Rural Households Agriculture Irrigation Farming Total Energy Consumption and GHG Emissions from Agriculture... 37

4 3.3 Village Industry BAU Projections: Energy consumption and emission overview Rural Households Lighting Cooking Appliances Summary of BAU Emission Projections for Rural Households Agriculture Irrigation Farming Summary of Projected Energy Consumption and Emissions from Agriculture Abatement levers: Opportunities for low carbon growth Renewable Energy Supply Options Energy Efficiency in Rural Households Energy Efficiency in Agriculture Rural Sustainable Energy Roadmap Sustainable Energy for Rural Households Sustainable Energy for Agriculture Summary of GHG emissions and Energy Demand Prioritization of Abatement Measures Implementing the Roadmap Conclusion

5 List of Tables Table 1 Demographic figures Rural India Table 2 Rural Household Annual Energy Consumption by Source (basis: NSSO 2009) Table 3 Estimated End-Use Energy by Source Table 4 Rural Household GHG Emissions by Energy Source (Basis: NSSO 2009) Table 5 Agriculture Energy Consumption by Energy Source (Basis: CEA, PPAC, ) Table 6 Agriculture GHG Emissions by Energy Source (Basis: CEA, PPAC, ) Table 7 Fuel Consumption Data - Village Industry Sectors Table 8 Total Projected Energy Consumption and GHG Emissions for Rural Households Table 9 Total Projected Energy Consumption and GHG Emissions from Agriculture Table 10: Advantages and Barriers Mini-Grids Community Based Models Table 11: Advantages and Barriers for Mini-Grids Private Business Models Table 12: Advantages and Barriers for Mini-Grids Utility Models Table 13: Advantages and Barriers for Small Hydro Power Table 14: Advantages and Barriers for Small Wind Energy Systems Table 15: Advantages and Barriers for Biomass Gasification Table 16: Advantages and Barriers for Solar Home Lighting Systems and Pico PV Sytems Table 17: Advantages and Barriers CFLs Table 18: Advantages and Barriers LEDs Table 19: Advantages and Barriers for Star rated appliances Table 20: Specifications of cook-stoves in Indian Market Table 21: Advantages and Barriers for energy efficient cook-stoves Table 22: Advantages and Barriers for Energy Efficient Pump-Sets Table 23: Advantages and Barriers for Drip Irrigation Table 24 Prioritization of Renewable Energy Technologies for Off-grid / Decentralized Power Generation Table 25 Augmentation of existing rural Development Initiatives Table 26 Augmentation of Existing Energy / Climate Change Initiatives

6 List of Figures Figure 1 Comparison of Urban and Rural Energy Demand Figure 2 Urban and Rural Energy Supply Figure 5 Typical activities and energy sources for rural households Figure 6 Number of households (millions) in different income groups by primary energy source for cooking, NSSO Figure 7 Primary source of lighting for rural households - Census Figure 8 Typical activities and energy sources for agriculture Figure 9 Impacts of Irrigation Figure 10 Percentage share of different sources of power for farming in Indian agriculture (State of Indian Agriculture, ) Figure 11 Pace of village electrification Figure 12 Energy consumption from lighting for the year and Figure 13 Projected Energy Demand for Lighting Figure 14 Projected energy demand for cooking Figure 15 Diffusion of appliances per electrified household (as per NSS0 61st round) Figure 16 Projected Energy Demand from Appliances Figure 17 Trends in area under cultivation in India, to Figure 18 Trends in sale of Tractors (Source: IASRI) Figure 19 Classification of Abatement Levers Figure 21 Typical Components of an Aero Generator Figure 22: Applications of Producer Gas from Gasification of Biomass Figure 23 End use energy and fuel consumption for cooking Figure 24 Absolute GHG Emissions and GHG Abatement from Cooking Figure 25 Lighting Energy Consumption Figure 26 Lighting GHG Emissions and GHG Abatement Figure 27 Home Appliances Energy Consumption Figure 28 Home Appliances GHG Emissions and GHG Abatement Figure 29 Irrigation Energy Consumption Figure 30 Irrigation GHG Emissions and GHG Abatement Figure 31 GHG Emissions Summary Figure 32 Energy Demand Summary Figure 33 Total GHG Abatement by Type Figure 34 Total GHG Abatement EE and Fuel Switch

7 List of Abbreviations BAU BEE CFL CO 2 C-WET DSM EC EE ESCO GDP GHG GW ICT INR kg KVIC kw kwh LED LPG MGNREGA MJ MNRE MPCE MtCO2 MW NABARD NCEF NGO PDS PURA PV RE RESCO RGGVY R-LNG RRB RVEP Business-as-usual Bureau of Energy Efficiency Compact fluorescent lamp Carbon dioxide Centre of Wind Energy Technology Demand side management Energy Conservation Energy efficiency Energy Service Companies Gross domestic product Greenhouse gas Gigawatt Information and Communication Technology Indian rupees Kilogram Khadi and Village Industries Commission Killowatt Kilowatt hours Light emitting diodes Liquefied petroleum gas Mahatma Gandhi National Rural Employment Guarantee Act Megajoule Ministry of New and Renewable Energy Monthly Per Capita Expenditure Million tons of carbon dioxide Megawatt National Bank for Agricultural and Rural Development National Clean Energy Fund Non-governmental organization Public Distribution System Provision of Urban amenities to Rural Areas Photovoltaic Renewable energy Renewable energy supply Rajiv Gandhi Grameen Vidhyutikaran Yojana Re-gassified liquid natural gas Regional Rural Bank Remote Village Electrification Programme

8 S&L TAIPA TJ TRAI UN USD Standard and Labeling Tower and Infrastructure Providers Association Terrajoule Telecom Regulatory Authority of India United Nations US Dollars

9 Executive Summary Increasing the quantity and quality of energy supply to rural areas is vital for socio-economic development of the rural population, which in turn is vital for overall growth of India. Therefore, the issue of access to energy is recognized by the Government of India as critical to inclusive growth. The Government of India, through different policies and initiatives, has promoted development of rural India by increasing supply of affordable sources of energy, promoting infrastructure development, promoting electrification of villages and households, introducing efficient pump sets for irrigation, increasing LPG connections, etc. These initiatives have certainly contributed to development in rural areas of the country. However, the country is still coping with the issues of access to energy as well as unsustainable energy usage practices. The gap between the demand of customers connected to the grid and the available electricity supply in India was reported as almost 92 TWh (a deficit of 9.3%) by the Central Electricity Authority for the year Further, around 25% of the population does not have access to electricity 1, so there is a large suppressed demand, and if it is considered, the actual deficit is much larger. Access to modern energy for cooking is another concern, as 75% of the population depends primarily on firewood burned in traditional cook-stoves 2, contributing to indoor pollution, health hazards, and black carbon emissions. Energy demand suppressed due to inadequate resources is likely to surface with better access to electricity supply and energy resources. Most of this demand is likely to be met by conventional carbon-intensive sources in the future if the existing path to development continues. However, this may not be the most sustainable and cost-effective approach in the long run to improve the energy situation of the rural areas in the country. Rural energy demand is distributed across India covering approximately 640 thousand villages. 3 Energy consumption in rural areas may be sub-divided under three sectors rural households, agriculture and village industry. Whenever energy is supplied, it is often used in-efficiently, as it is supplied at highly subsidized rates or free of cost. For instance, overutilization of groundwater resulting from excessive pumping (a fallout of low or free cost of power for irrigation), has led to depletion of water table in many parts of India. This in turn is increasing the energy requirements for pumping of water from lower water tables. This report aims to quantify and chart out a sustainable low-carbon growth path to improve the energy situation in rural India. The report describes the results of analysis carried out to assess the current rural energy mix of India, estimate carbon footprint of the current energy mix, and project the GHG emissions abatement potential vis-à-vis the BAU energy mix. Some of the key findings, from the study are that the overall difference between the BAU demand scenario and the aggressive low-carbon scenarios in 2032 amounts to: 1 World Energy Outlook 2011, Energy for All: Financing access for the poor 2 Source: Census Source: Census 2011

10 GHG emissions abatement of 169 million tons of CO 2 (refer Figure 28), approximately 42% of BAU emissions in 2032 Electrical energy demand reduction of 709 PJ Avoidance of approximately 22 GW of additional power capacity addition by 2032 due to optimized electrical demand Thermal energy demand reduction of 202 PJ (including 180 PJ of kerosene and 22 PJ of diesel) Subsidies and under-recoveries resulting from supply of PDS kerosene in 2032 would be reduced by approximately INR 15 thousand crores (2.7 billion USD) based on present rates The study concludes that low carbon development of rural India can improve socio-economic development of rural India, and achieve universal access to energy for farmers, rural households and rural businesses through sustainable and inclusive growth.

11 1.0 Introduction 1.1 Overview of Rural India India, with a population of 1.2 billion, is the second most populous country in the world. According to the 2011 Census, 68.84% of Indian population lives in rural areas. Rural areas are defined as areas with more than 75% of the male working population engaged in agricultural, a population density less than 400 per sq. km., and the absence of a municipal corporation or board 4. Key demographic figures relevant to rural India are tabulated below: Table 1 Demographic figures Rural India Population, total (2011) 1,210,193,422 Decadal Population growth ( ) % Population density (people per sq. km) (2008) Rural population (2011) 833,087,662 Rural population (% of total population) (2011) Increase in number of villages ( ) 2279 As more than two thirds of the country s population resides in rural India, its development is of foremost importance for the overall economic growth of the country. India is one of the fastest developing economies in the world, and to ensure integrated and inclusive growth of the country, reliable and safe energy has to be supplied to rural areas. 1.2 Energy Scenario in Rural India Energy is an important input for providing basic public services such as education and health as well as for commercial / industrial activities. Therefore, increasing the quantity and quality of energy supply to 4 National Sample Survey Organization

12 rural areas is vital for socio-economic development of the rural population, which in turn is vital for overall growth of the country. The energy demand and supply scenario in rural India gives insights into the challenges faced by the government in ensuring sustainable energy supply for rural areas in confluence with socio-economic development Energy Demand The existing energy scenario in rural areas is starkly different from that of urban areas. Figure 1 Comparison of Urban and Rural Energy Demand Industrial Energy Consum mption Thermal applications (boiler rs, furnaces, kilns, etc.) Power driven equipment (motors, pumps, etc.) Urban Energy Rural Energy Commerci ial Energy Consum mption Househol ld Energy Consum mption Househol ld Energy Consum mption Agricultura ral Energy Consum mption Village Industry Energy Consum mption Lightin ng HVAC Applianc ces Lightin ng Cookin ng Applianc ces Lightin ng Cookin ng Applianc ces Irrigatio on Farmin ng Thermal applications (drying, heating, etc.) Power-driven equipment (hulle ers grinders, motors, etc.) Rural energy demand is distributed across India covering approximately 640 thousand villages 5, whereas in urban areas energy demand is much more concentrated around urban agglomerations and industrial centers. Urban energy demand consists primarily of industrial and commercial energy consumption, whereas household energy consumption is a relatively smaller component. In contrast, rural energy demand is dominated by consumption in rural households, which require energy for cooking, lighting, and use of electrical appliances. Energy for agriculture is also an important component of rural energy demand. Farmers require energy for pumping water for irrigation of crops, as well as for use of farm 5 Source: Census 2011

13 machinery such as tractors and tillers. Village industry is a relatively smaller component, and consists primarily of small cottage industries for processing of agricultural products as well as activities of artisans / craftsmen Energy Supply Urban energy systems and rural energy systems are also markedly different as most of the infrastructure in the energy sector has been developed for meeting urban energy requirements (urban household, commercial and industrial energy demand). Infrastructure Infrastructure for generation, transmission and distribution of grid power ensures relatively high availability and quality of electricity to urban areas. Primary fuels (eg: coal, diesel, LPG, furnace oil, etc.) are accessible through commercial markets and distribution distributi networks. Figure 2 Urban and Rural Energy Supply In contrast, rural energy systems are characterized by dispersed energy sources. Biomass is the main source of energy, used extensively for cooking in households, and is usually collected directly by the end endusers. Family members of rural households (primarily (primarily women and children) may walk for several hours for collecting and bringing biomass back to their homes. A combination of different types of biomass may be used including dried wood lying on the ground, tree branches / twigs, reeds, agriculture residues, residue and dung cake. Fossil fuels are used on a limited basis, with LPG and kerosene supplied through public distribution systems at subsidized rates. Electricity is limited and although the central and state governments are

14 making progress in village electrification, the electrification of villages does not always lead to electrification of households (as per the current RGGY definition a village is electrified if a minimum of 10% of the households are electrified). Electricity is utilized to a greater extent for agriculture, primarily for irrigation. However, to address shortages of electricity, farmers also rely on diesel based pump-sets for irrigation. Increased farm mechanization in agriculture has gradually resulted in a shift from human or animal driven activities to use of tractors and tillers for ploughing of fields. Farm mechanization has allowed for increase in productivity to some extent. However the productivity increase is constrained by limited access to energy and in-efficient use of available energy Challenges for improving the energy situation in Rural India There is a significant scope for increasing energy access and quality of energy supplied to rural areas, considering the contrast between urban and rural energy scenarios. The current rural energy scenario is characterized by dispersed energy demand and energy sources, as well as inefficient utilization of energy. The current scenario constrains social and economic development owing to limited access to energy as well as the drudgery typically associated with collection of biomass fuel. Challenges associated with sustainable energy for rural areas are tabulated below. Rural Energy Objectives To increase the access to affordable, reliable, safe and high quality energy for the rural population To advance economic growth in rural areas in a sustainable manner To increase productivity, and reduce time spent for collection of traditional fuels (such as fuel wood), water, etc. To improve living conditions and reduce health hazards associated with indoor combustion of fuels such as kerosene and biomass To utilize available renewable resources efficiently, using environmentally safe technology To promote utilization of energy-efficient products and appliances Rural Energy - Challenges Access to electricity is limited, and consequently availability of public services such as education, health, etc. are constrained by limited access to electricity Limited energy supply constrains productivity of village industries and limits rural jobs Family energy needs met largely by women and girls collection of fuel and water takes up time and limits time spent for education, employment, economic activities, etc. Rural households are dependent on traditional biomass which is often burned in an inefficient manner, producing harmful indoor air pollution Where electricity is available, the use of energy efficient products (including pumps for irrigation, and appliances in households) is not prevalent as electricity is supplied at subsidized rates or free of cost

15 The Government of India has carried out various initiatives for addressing challenges associated with access to energy and sustainable energy supply for rural India. Some of these initiatives focus on increasing access to grid electricity and traditional fossil fuels, whereas others are focused on effective utilization of renewable sources and/or energy-efficient usage of available energy. 1.3 Overview of Policies and Initiatives Improving the socio-economic conditions of rural areas and promoting integrated development of rural India is a priority for the Government of India. The Government of India, through different policies and initiatives, has promoted development of rural India by increasing supply of affordable sources of energy, promoting infrastructure development, promoting electrification of villages and households, introducing efficient pump sets for irrigation, increasing LPG connections, etc. Some of key policies and initiatives are described below: Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY) Electrification of villages and households is being carried out under Government s flagship programme, RGGVY through the Rural Electrification Corporation (REC). RGGVY was launched in 2005 and is one of the major national efforts to universalize access to electricity. It aims to provide free of cost connection to all the people living below poverty line in rural India. The program addresses the need for sustainable supply to rural area through collection of the cost of electricity supplied from the beneficiaries. The program, targets to electrify 1,25,000 un-electrified villages and 78 million rural households in unelectrified and electrified villages 6. By February 2011, cumulatively 90.6% of inhabited villages had been electrified ( out of ). 7 The RGGVY also consists of a Decentralized Distributed Generation (DDG) scheme, which aims to electrify villages through distributed conventional or renewable energy sources, where it is not feasible to deliver grid connectivity. REC is the nodal agency for the scheme, and would issue the capital subsidy for eligible projects under the scheme. DDG projects may be implemented by State Renewable Energy Development Agencies (SREDAs), other departments promoting RE, or state utilities Remote Village Electrification Programme (RVEP) The Village Electrification Programme was initiated in under the Ministry of New and Renewable Energy (MNRE). It was renamed as the Remote Village Electrification Programme in in The programme aims at providing basic lighting and/or electricity facilities through renewable energy systems to un-electrified remote villages and hamlets which would not be connected to the grid in the near future under the Rajiv Gandhi Grammeen Vidyutikaran Yojana. The programme considers various RE options include small hydro power, biomass gasification, non-edible vegetable oil based engines, biogas engines, solar photovoltaic (SPV) power plants, and SPV home-lighting systems. Of these technologies, the programme has focused predominantly on SPV home-lighting systems CEA Annual Report

16 1.3.3 Rajeev Gandhi Grameen LPG vitaran In October 2009, the Minister of Petroleum and Natural Gas launched a new scheme with an aim to set up small size LPG distribution agencies in order provide LPG to the remote places in India. With the implementation of the scheme the Ministry wants to increase the LPG penetration in the rural areas and to cover remote as well as low potential areas for all the locations having potential of 600 LPG refill sales per month. The scheme was initially launched in 8 states namely, Madhya Pradesh, Uttar Pradesh, Rajasthan, West Bengal, Bihar, Jharkhand, Chhattisgarh and Orissa covering over 1200 locations where the penetration of LPG is very low Agricultural DSM Programme - BEE Bureau of Energy Efficiency (BEE) started an agriculture demand supply management (Ag DSM) management programme in order to promote and accelerate adoption of energy efficient technologies and measures in the agriculture sector. As part of the Agricultural DSM Programme, the efficiency of the agricultural pump sets are upgraded through Public Private Partnership mode. Energy saving potential in the agricultural sector is identified for various states, and energy efficient pump-sets are introduced. The programme aims to create appropriate framework for market based interventions in agricultural pumping sector by providing a policy environment to promote Public Private Partnership to implement the project National Solar Mission Solar energy can potentially play a vital role in distributed power generation and supply of power to remote and rural areas. To promote the use of solar energy the Jawahar Lal Nehru National Solar Mission was launched by Government of India and State Government on 11 th January The mission aims to promote sustainable growth while addressing the energy demand and security challenges for India. The mission seeks to address reduction in consumption of kerosene and diesel, electricity access to rural households for lighting, efficient transmission and meeting the energy demand through solar thermal systems by harnessing solar energy. The main objectives of the Mission are following 8 : To develop a policy framework for the deployment of 20,000 MW of solar power by To ensure large-scale deployment of solar generated power for grid connected as well as distributed and decentralized off-grid provision of commercial energy services. To promote programmes for off grid applications, reaching 1000 MW by 2017 and 2000 MW by To create favorable conditions for indigenous solar manufacturing capability and market leadership. To increase the capacity of grid-connected solar power generation to 1000 MW within three years by 2013; an additional 3000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tariff Village Energy Security Test Projects The Village Energy Security Test Projects have been started by Government of India with an aim to meet the total village energy requirements, such as cooking, lighting, street-lighting and commercial facilities. Ministry of New and Renewable Energy provided 90% of the funds required to meet the total energy demand, whereas the remaining 10% was mobilized by the community. As the community contributes financially, there was a significant involvement and participation of the community. The project also has 8

17 a considerable potential for local employment generation. A Village Energy Committee, which comprises half women members, was formed to manage the project and aid us in carrying out project activities. Labour for installation and commissioning of systems, and electrification was given by the communities. The project plan was to meet the village energy demand through biomass based conversion and other renewable technologies like, biomass gasifiers, dung based biogas plants, improved stoves / chullas, and oil bearing plants. Various other policies and programs have been initiated by the Central and the State governments to meet promoted development in Rural India. Although, there are various initiatives by government and nongovernment organizations for introducing clean technologies to rural India, currently the penetration of these technologies are limited. Renewable energy in the form of biomass is widely available in rural India, and is the main source of energy in rural households. However, there is limited usage of technologies for efficient and environmentally sound utilization of biomass energy and for harnessing other types of renewable energy sources. Similarly energy efficient products are not widely used. The barriers and challenges for adoption of clean technologies in rural India are discussed in Chapter 5 of this report, and the potential roadmap for low-carbon growth of the rural sector is discussed in Chapter 6. The objectives, approach and methodology for carrying out this assessment in presented in the next chapter.

18 2.0 Objectives Approach and Methodology 2.1 Objectives Although the current supply of energy in rural India is limited due to inadequate infrastructure and other supply constraints, the suppressed demand for energy is likely to increase rapidly with better access to electricity and other energy resources. Most of this demand is likely to be met by conventional carbonintensive sources in the case of business-as-usual development of Rural India (eg: coal based power plants connected to the grid, DG sets, etc.). However, this may not be the most sustainable and costeffective approach in the long run to improve the energy situation of the rural areas in the country. Numerous studies have been executed to identify low-carbon development paths for developing and developed countries around the world. Most of the analysis on carbon abatement potential and carbon mitigation policies has been focused on energy consumption in urban areas and involves solutions relevant to urban energy systems. Limited information is available on the quantum of carbon emission from energy use in rural areas and the possible mitigation potential of the same. This study aims to bridge this gap, and to identify a sustainable low-carbon growth path to improve the energy situation in rural India. The objectives of this study are to assess the current rural energy mix of India, estimate carbon footprint of the current energy mix, and project the abatement potential vis-à-vis the BAU energy mix. 2.2 Approach The approach applied for meeting the objectives described above involved three components: desk research, one-to-one interactions with stakeholders, and validation. This approach was adopted to collect, analyze and validate information relevant for steps of the study. Desk Research: Various government departments such as the National Sample Survey Organisation (Ministry of Statistics and Program Implementation), Census of India (Ministry of Home Affairs), Petroleum Planning and Analysis Cell (PPAC), etc. have published a wealth of information and primary data on rural areas, households, agriculture and associated energy consumption. Similarly, various studies

19 related to rural India and energy poverty have been commissioned by the World Bank, United Nations Development Program and other non-governmental organizations. Desk research was carried out to compile the relevant information available in the public domain for further analysis in the context of the study. One to-one interactions: With one-to-one interactions with identified stakeholders were carried out to collect information and assess stakeholder perspectives related to the objectives of low-carbon growth of rural India. Government agencies were consulted with respect to the energy mix in rural India, the various government initiatives currently being carried out with respect to energy efficiency / off-grid power / renewable energy / access to power, and the barriers and potential solutions for implementation of clean energy technologies. Academic institutions were consulted to discuss data sources related to energy in rural India as well methods applied for projection of energy consumption / GHG emissions. Nongovernment institutions and technology suppliers were consulted to assess barriers / potential solutions for implementation of clean energy options, as well as to collect data for quantification of potential contribution of various clean technology options. Validation: The information shared by various stakeholders, was reconfirmed / validated by conducting secondary research, using publicly available sources. Similarly data collected from publicly available databases was discussed and validated with identified stakeholders. 2.3 Methodology The following methodological steps have been applied to achieve the end objectives of the study Assessing the current rural energy mix of the country This step involved calculation of the total energy consumption or energy mix for the rural India. This was further divided into three components: Component A: Assessing the energy mix for rural households Component B: Assessing the energy mix for agricultural sector, and Component C: Assessing the energy mix for village industries. The following is a summary of activities which were carried out under this step:

20 Assessing the current rural energy mix of the country Sub-steps Context Setting The purpose of the context setting was to obtain secondary information on rural India and thus to set the context for the evaluation of the current rural energy mix. Activities carried out are as following: Analysis of key trends, technology status, policy and regulatory perspective related to energy consumption in rural areas Analysis of how existing/ upcoming national level climate change policies and regulations are shaping the energy consumption in rural area Identification of the energy usage areas and data collection Sources of electrical and thermal energy demand, end use activities, and types of equipment/ devices were identified for each of the sectors. Calculation of energy consumption including grid, off-grid, non electricity usage Electricity consumption and direct fuel consumption in rural India, for each of the identified sectors was calculated. The calculated values were cross-referenced with various sources and were also discussed with external experts for verification. Component A: Methodology for estimation of the energy consumption for rural households: Energy consumption for rural households was determined on the basis of data pertaining to per capita energy consumption in rural households and the total rural household population. Data on per capita fuel /electricity consumption in rural households has been sourced from NSSO Household Consumer Expenditure Survey and population data has been sourced from Census of India.

21 Per capita electricity consumption in rural households Electrical energy consumption Rural household population Rural Households Per capita fuel consumption (LPG, kerosene, biomass, etc.) Thermal energy consumption Rural household population

22 Component B: Methodology for estimation of the energy consumption in Agriculture Energy consumption in agriculture, mainly comprising of diesel and electricity consumption for irrigation and farming activities, was evaluated. National data on total fuel and electricity consumption in the agriculture sector is used directly for the assessment. Data on electricity consumption in agriculture sector is published by the Central Electricity Authority. Data on fuel consumption in agriculture was sourced from PPAC statistics. Electrical energy consumption Total quantity of electricity consumed for agricultural purposes Agriculture Thermal energy consumption Total quantity of fuels consumed for diesel pumpsets, farm machinery, etc.

23 Component C: Methodology for estimation of the energy consumption in village industries Component C: Methodology for estimation of the energy consumption in village industries A qualitative assessment was carried out to assess the energy consumption patterns and to identify whether energy consumption in village industries can be separately accounted. To assess the energy consumption in village industries, the type of industries to be considered for the analysis was determined based on KVIC definitions, and through stakeholder consultation with government and non-government agencies. Data on selected village industries was collated to evaluate specific energy consumption and total energy consumption Estimating carbon footprint of the existing energy mix: This step involved calculation of the carbon footprint for the existing energy mix for the rural India. This involved categorization of GHG emissions sources for each of the three sectors, establishing emission factors, and calculation of the GHG emissions. Estimating carbon footprint of the existing energy mix Sub-steps Categorization of GHG emission Sources GHG emission sources were categorized as direct (fuel consumption) / indirect (purchased electricity) emissions, as well as on the basis of categorization of energy sources (sector, end use, etc.). Establishing emission factors Emission factors have been selected from national/ international databases like IPCC, GHG protocol, CEA CO2 baseline database, etc. Carbon footprint calculation Carbon footprint calculated is in accordance with internationally accepted GHG accounting protocols based on the activity data and corresponding emission factors.

24 The GHG inventory for rural India was developed for the base year (most recent year for which energy consumption data is available for the relevant sector), quantifying the GHG emissions from thermal and electrical energy consumption in each of the identified sectors Projecting the abatement potential vis-à-vis the BAU energy mix: The approach for projection of the abatement potential was sector-specific and dependent on the end-use activities, drivers for growth of the particular sector, and available data / forecasts. This step involved projecting the business as usual (BAU) energy consumption / GHG emissions till 2032, identification of abatement levers, and assessment of low-carbon scenario, as summarized below: Projecting the abatement potential vis-à-vis the BAU energy mix Substeps Energy/GHG Projections till BAU BAU energy consumption projections of the rural energy mix of India till 2032 starting from the base year were developed. The detailed forecasting approach is described in chapter 4 of this report. Identification of Abatement levers Abatement levers (low-carbon technologies / measures) were identified for end-use activities as well as for energy supply in Rural India. Abatement levers were evaluated based on multiple parameters such as GHG abatement potential, level of technology maturity, penetration rate, ease of implementation, govt. support / fiscal incentives, etc. Assessment of low-carbon scenario The low-carbon scenario for Rural India was assessed by carrying out the following: Analysis of energy / GHG abatement from levers, and estimatation of the penetration rate of low-carbon technologies / measures from secondary research, technology supplier s document, expert sources Estimation of overall energy-saving and GHG abatement potential Modelling two different scenarios for low-carbon growth: o Ambitious low-carbon scenario (high investment / promotion of low carbon technologies), o Conservative low-carbon scenario (relatively less investment / promotion of low carbon technologies)

25 3.0 Present Scenario: Energy consumption and emission overview Energy consumption and GHG emissions in rural areas may be sub-divided under three sectors rural households, agriculture and village industry. In this chapter we review the major energy consuming activities, energy sources, current energy consumption, and GHG emissions for each of the three sectors. 3.1 Rural Households India is home to around 1.2 billion people and hosts around 330 million households 9. Around 221 million (67%) of these households are in rural India. Rural households typically require energy for basic amenities such as cooking / heating of water, lighting, and use of various electrical appliances. As India s climate is mostly tropical and sub-tropical, space heating and cooling is not a major component of energy use in rural India, particularly because of limited access to electricity. Figure 3 Typical activities and energy sources for rural households 9 Source: Census 2011

26 3.1.1 Cooking The majority of the energy demand for rural households is attributed to cooking. The vast majority of rural households depend on biomass collected locally, including dried wood lying on the ground, firewood (tree branches / twigs), agriculture residues, and dung cake. When firewood is procured from trees, generally tree branches are removed and the tree trunks are left uncut, allowing them to grow back over a period of time (approximately a year). 10 If biomass is collected this way, the CO 2 emissions from combustion of biomass are offset by the sequestration of CO 2 resulting from growth of biomass. In this case, the collection of biomass does not involve depletion of carbon stocks and combustion of this biomass does not contribute significantly to net GHG emissions. However, commonly used cook-stoves often result in inefficient combustion of biomass, leading to generation of black carbon emissions. Black carbon, with a short atmospheric life of 3 8 days, acts as a short-lived climate forcer, contributing to warming of the atmosphere and disrupting regional climatic patterns. 11 Further, black carbon and in general fine particulate matter produced from inefficient combustion of biomass, exposes rural household members to respiratory health risks. As per the World Health Organization, 35 percent of chronic obstructive pulmonary deaths and 21 percent of lower respiratory infection deaths around the world are attributable to indoor air pollution from solid fuels. This is particularly true for households without either a proper stove to help control the generation of smoke or a chimney to draw the smoke outside. There is a scope for use of efficient cook-stoves for controlled combustion of biomass to reduce health impacts, reduce black carbon emissions, and decrease the amount of time spent in collection of fuel for cooking. The challenges and benefits associated with adoption of efficient cook-stoves are discussed in detail in Chapter 5 of this report. Apart from biomass, a variety of other fuels such as liquefied petroleum gas, kerosene, etc are available (to a limited extent) as sources of energy. 10 Putting the cook before the Stove: A user-centered approach to Understand Household Energy Decision-Making, Stockhom Environment Institute 11 Source:

27 Figure 4 Number of households (millions) in different income groups by primary energy source for cooking, NSSO Low Income Middle Income High income The number of households which depend primarily on LPG for cooking is comparatively higher for the high income group of rural households (7.5 million households in the high income group, as of 2007, compared to 5.2 and 0.4 million in middle and low income groups). However across all income groups, biomass remains the primary energy source for the vast majority of households. Cumulatively, as per Census 2011, around 75% of households in rural India use firewood and crop residues as a primary source of cooking, 11% use cow dung, 11% use LPG or CNG, and only 0.7% use kerosene as a primary energy source. In coming years with improved access to LPG / CNG distribution networks, and rising purchasing power of rural households, the use of gas for cooking is expected to increase in the BAU scenario as explained in section 4 of the report Lighting Apart from cooking, lighting is an important energy service as it directly affects the quality of life, education and productivity of people. Lighting is required to extend the hours available for studying / working, and to allow for household activities and social gatherings at night. Improving the quality and quantity of light available to rural households is therefore imperative for rural development. Around 43% of rural households primarily use kerosene for lighting, and 55% depend primarily on electricity. 12 This is in stark contrast with urban areas where 93% of households depend primarily on electricity for lighting purposes. Traditional lighting devices such as kerosene based wick lanterns and hurricane lamps are commonly used in rural areas Source: Census Energy Poverty in Rural and Urban India, The World Bank, November 2010

28 Figure 5 Primary source of lighting for rural households - Census 2011 Solar, 0.5% Other oil, 0.2% Kerosene, 43% Electricity, 55% The limited access and non-affordability of grid electricity are the main factors driving the use of traditional fuel-based lighting in rural areas. The dependence on kerosene has several adverse impacts including health and safety hazards; combustion of kerosene emits hazardous fumes and poses fire hazards. Further kerosene lamps deliver lower brightness in comparison to electric light, and also do not comply with the minimum standard of brightness (300 lumens) recommended by Total Energy Access (TEA) for households. 14 Solar lanterns and solar home lighting systems currently are used to a minimal extent in rural India (0.5% of households use solar as a primary source for lighting). In chapter 5 of this report, we review the associated challenges and benefits for use of solar powered lighting as a substitute for lighting powered by grid electricity or kerosene. As electricity is primarily used by 55% of rural households for lighting requirements, it is imperative that efficient lighting devices are utilized. However, the penetration of CFLs and LEDs in rural areas has been constrained, and incandescent lights are predominantly used. Issues related to the high cost and inability to operate under low voltage or fluctuating voltage conditions, pose as challenges for use of efficient lighting devices Appliances Appliances are typically required for indoor space cooling, food preservation, and for relaying electronic information. As per the Indian Human Development Survey 2005 (sample survey covering 22,538 rural households throughout India), 44.3% of rural households have fans, 11.6% have color televisions, 7.5% have telephones, 5.3% have refrigerators, and 0.2% have computers. More recent data from Census 2011 reveals that ownership of televisions, computers and telephones has substantially increased, with televisions in more than one third of rural households, telephones (either landlines, mobiles, or both) in more than half of rural households, and computers in around 5% of rural households. 14 Poor People s Energy Outlook, 2012

29 Currently, electricity only accounts for around 7% of the share or total energy consumption (electrical and thermal) of rural households. Out of this 7%, the major share is attributed to lighting loads 15, and therefore the current share of appliances in overall energy consumption is minimal. However, considering the trend in increasing number of appliances, the increasing purchasing power or rural households, and efforts towards household electrification, it is evident that the role of appliances in the overall rural energy consumption will be higher in years to come Total Energy Consumption and GHG Emissions from Rural Households Absolute quantities and percentage of energy consumption from various energy sources, based on data from NSSO Household Consumer Expenditure Survey 2009, are tabulated below. Table 2 Rural Household Annual Energy Consumption by Source (basis: NSSO 2009) Energy Source Energy (PJ) Share (%) Electricity % Coke % Firewood & chips % Kerosene (PDS) % Kerosene (other sources) % Coal % LPG % Charcoal % Petrol % Diesel % Total Thermal Energy % Total Thermal and Electrical Energy % 15 Source: Energy Poverty in Rural and Urban India, The World Bank, November 2010

30 It is important to note that the end-use efficiency in the case of solid fuels as well as for kerosene is particularly low (around 15% of the total energy content of the fuel). Therefore actual thermal energy available for end-use is only around 628 PJ.

31 Table 3 Estimated End-Use Energy by Source Energy Source Estimated End- Use Energy (PJ) Share (%) Electricity % Coke % Firewood & chips % Kerosene (PDS) % Kerosene (other sources) % Coal % LPG % Charcoal % Petrol % Diesel % Total Thermal Energy % Total Thermal and Electrical Energy %

32 In the assessment of GHG Emissions, it has been assumed that use of biomass does not contribute to depletion of carbon stocks, and is therefore considered a renewable fuel. However, it may be reiterated that the combustion of biomass (particularly inefficient / uncontrolled combustion) contributes to black carbon emissions, which have a short term impact on warming of the climate as well as regional climatic patterns. At an estimated emission factor of 0.85 g / kg (Lesley Sloss, Black carbon emission in India ), biomass consumption is estimated to contribute to 178,125 tons of black carbon emissions per year. The GHG emissions due to combustion of fossil fuels and usage of electricity are summarized in the table below. Table 4 Rural Household GHG Emissions by Energy Source (Basis: NSSO 2009) Energy Source Electricity Coke Firewood & chips Kerosene (PDS) Kerosene (other sources) Coal LPG Charcoal Petrol Diesel Total emissions from combustion of fuels Emission GHG Emissions (MtCO2) Share (%) Factor tco2/ MWh % 97.5 tco 2 /TJ % % 71.9 tco 2 /TJ % 71.9 tco 2 /TJ % 96.1 tco 2 /TJ % 63.1 tco 2 /TJ % 112 tco 2 /TJ % 69.3 tco 2 /TJ % 74.1 tco 2 /TJ % % Total emissions from purchased electricity and combustion of fuels % 16 Electricity emission factor is sourced from CEA C02 Baseline Database Version 7.0 (combined margin emission factor) and fuel emission factors are based on default IPCC values.

33 It is evident that even though electricity contributes to only 7% of energy requirements, it accounts for 70% of the GHG emissions. This is due to the fact that 83% of the energy consumption (attributed to biomass) is considered renewable. The contribution of grid electricity to household energy consumption is likely to increase with progress towards household electrification, and rising income levels in rural India. Therefore to enable low-carbon growth for development of rural India it would be vital to balance grid electricity with other off-grid renewable energy sources and also to increase the role of renewable energy in the grid mix. Further grid electricity alone cannot ensure universal access to electricity, and therefore has to be supplemented with distributed energy generation. In chapter 5 of this report, the pros and cons of various off-grid renewable energy sources and technologies are discussed in detail.

34 3.2 Agriculture The majority of the rural population is dependent on agriculture for sustenance. Agriculture constitutes the single largest sector of the total employed population in India. 17 Increasing agricultural productivity is a key goal for the Government of India, as it is vital for overall rural development, food security, income generation and quality of life for the rural population. Apart from producing food, the agriculture sector also produces a number of non-food products including fibers used for making clothing, biomass residues for fuel, oilseeds for extraction of oil, etc. Agriculture requires energy as an important input for production and access to energy is important for ensuring agricultural productivity. Energy is required for irrigation of agricultural land as well as for operation of various types of farm machinery. Figure 6 Typical activities and energy sources for agriculture Irrigation Access to water is vital for increasing the productivity of agricultural land, and therefore energy for irrigation is an important input for the agriculture sector. Increased productivity from irrigation leads to improved quality of life of farmers, and also helps farmers to adapt to climatic variations which can impact agricultural output. 17 Key indicators of Employment and Unemployment in India , NSSO 66 th Round

35 Figure 7 Impacts of Irrigation Both the availability of water and access to energy are essential requirements for irrigation. India has an overall irrigation potential of 140 million hectares, out of which 109 million hectares has been developed and 80 million hectares are currently being utilized. 18 Most of the irrigation in India involves drawing groundwater to the surface. However, overutilization of groundwater resulting from excessive pumping of water (a fallout of low or free cost of power for irrigation), has led to depletion of water table in many parts of India, particularly the north-west. Depletion of water table leads to increased energy requirements for pumping of water. Development of infrastructure for increasing the accessibility of surface water for irrigation is one possible approach to curtailing both groundwater depletion and excessive utilization of energy for irrigation. When it comes to irrigation, water management practices go hand in hand with energy management. Unsustainable utilization of energy of irrigation ultimately leads to reduced water availability and reduced agricultural productivity Farming Another important factor for agricultural productivity is farm mechanization. The use of farm machinery in place of human labor or draught animal power has been steadily increasing in India. 18 State of Indian Agriculture,

36 Figure 8 Percentage share of different sources of power for farming in Indian agriculture (State of Indian Agriculture, ) Agricultural workers 60% 50% 40% Electric motors 30% 20% 10% 0% Draught animals Diesel engines Tractors Power tillers As illustrated in Figure 8, in the period from to , the share of agriculture workers and draught animals as a source of power in farming has decreased from 11% to 5% and from 53% to 9% respectively. On the other hand, the percentage share of tractors as a source of power in farming, has increased from 8% to 42%. The percentage share of electric motors and diesel engines has also increased. Power tillers (two wheel tractor with a rotary tiller) are versatile equipment which have only recently started becoming popularized in lowland flooded rice fields and hilly terrians. Tractors, power tillers, electric motors, and diesel engines are all sources of power which may be used in conjunction with various other types of farm machinery (powered machinery) for carrying our activities including soil working / seed bed preparation, seeding, planting, harvesting, threshing, etc. Tractors, power tillers and diesel engines generate mechanical power using diesel as the main source of fuel, whereas electric motors convert electrical power to mechanical power. The various types of machinery used for carrying out agricultural activities are listed below:

37 Farm mechanization (the adoption of agricultural machinery), apart from increasing agricultural productivity, also plays a role in resource conservation. The introduction of technology in agriculture allows for adoption of techniques such as zero-tillage (planting of seeds using seed drills - avoiding ploughing of land), raised-bed planting, precision farming (use of ICT to facilitate decision making and improved farm management), etc. Farm mechanization is also important as a means for adaptation to climate change. For instance, it gives farmers flexibility to readjust crop sowing schedules and reduce the time taken for harvesting of crops. The importance of farm mechanization, particularly in the context of the agriculture sector in India cannot be understated. Energy is an important input for operating farm machinery and diesel is the primary fuel used. However, farm machinery can be used to conserve energy as well, through implementation of techniques for increasing agricultural productivity and saving resources such as water and fertilizer. Farm mechanization in India faces many challenges associated with high capital cost, financing, and lack of economies of scale (non-contiguous farmlands and small farm sizes). The usage of farm machinery plays an important role in both agricultural productivity and energy consumption in the agricultural sector Total Energy Consumptionn and GHG Emissions from Agriculture Electricity consumption data for the agriculture sector is sourced from the Central Electricity Authority. Fuel consumption for agriculture is sourced from the Ministry of Petroleum and Natural Gas. As of , around 59% of the energy consumed in the agriculture sector is electrical, and 41% is thermal (petroleum products), out of which the majority (99%) is due to diesel consumption. Electricity consumption is attributed to electric pump sets and other farm machinery with electric motors. Diesel and other petroleum products are used in diesel pump-sets, tractors, and other farm machinery with diesel engines. The contribution of electricity as a source of energy is expected to increase over time as the reach of the electric grid is extended and as irrigation potential is further realized.

38 Table 5 Agriculture Energy Consumption by Energy Source (Basis: CEA, PPAC, ) Energy Source Energy (PJ) Percentage 59.0% Electricity Diesel % Light Diesel Oil % Furnace Oil % Total Thermal Energy % Total Electrical and Thermal Energy % GHG emissions based on the identified energy mix for agriculture are tabulated below. Table 6 Agriculture GHG Emissions by Energy Source (Basis: CEA, PPAC, ) Emission Factor GHG Emissions Percentage (MtCO2) Energy Source Electricity 0.85 tco 2 / MWh % Diesel 74.1 tco 2 /TJ % Light Diesel Oil 74.1 tco 2 /TJ % Furnace Oil 77.4 tco 2 /TJ % Total Thermal Energy % Total Electrical and Thermal Energy % Import of power from the grid accounts for 82.3% of the GHG emissions, whereas consumption of fuels accounts for only 17.9% of the total GHG emissions. This is due to the high emissions intensity of the Indian grid, which is dominated by coal fired power plants. 19 This value corresponds to total electricity consumption for agricultural purposes in India.

39 3.3 Village Industry Village industries are defined by Khadi and Village Industries Commission (KVIC) as any industry located in a rural area which produces goods or provides any service with or without the use of power and in which the fixed capital investment per head of worker does not exceed one hundred thousand (lakh) rupees. According to KVIC, Village Industries fall into the following categories: Mineral based industry Agro based & food processing industry Polymer & chemical based industry Forest based industry Handmade paper & fibre industry Rural engineering & bio technology industry Service industry Separate accounting of energy consumption for village industries is challenging for several reasons. Village industries are mostly operated out of the rural households and do not have separate electricity connections. Further, the majority of the village industries utilize labor driven equipments as opposed to machines which consume fuel and electricity. Finally, most of the categories identified by KVIC are not exclusive to village industries. For instance, large industrial setups (which are clearly not village industries) would also fall into categorizations such as mineral based industry, food processing, polymer & chemical based industry, service industry, etc. Therefore, data on energy consumption attributed to village industries in each of the categories defined by KVIC is not readily available. Owing to their small size, the contribution of village industries to overall energy consumption in rural areas is limited. Since access to power is limited in rural areas, industries dependent on power are primarily located around cities or towns instead of in villages. Village industries with thermal energy requirements rely primarily on biomass residues like firewood and chips. Energy consumption data from an FAO survey is available for various types of industries which are predominantly dependent on biomass residues. It is assumed that industries associated with processing of agriculture products, are primarily located in villages. Data on selected industry sectors is tabulated below:

40 Table 7 Fuel Consumption Data - Village Industry Sectors Industry Specific biomass consumption Total biomass consumption (TPA) Tobacco leaf curing 4-10 kg / kg cured tobacco Tea drying 1 kg / kg dry tea Puffed rice making 0.75 k g / kg of paddy processed Cotton dyeing 1 kg / kg of material processed - Coconut oil production kg / kg oil - Rice par boiling 0.1 kg / kg raw paddy - It is important to note that the biomass consumption in the above industries is likely to consist primarily of locally collected biomass, which is considered a renewable source of energy. Even when firewood is procured from trees, generally tree branches are removed and the tree trunks are left uncut, allowing them to grow back over a period of time (approximately a year). 20 Therefore, collection of biomass does not involve depletion of carbon stocks and combustion of this biomass does not contribute significantly to net GHG emissions. Based on this assumption, there would be no net GHG emissions from the consumption of biomass. Other fuels such as coal, charcoal, diesel, etc. may are utilized to some extent, and power may be required for running of motors, grinders, crushers and other equipment. However, as explained above, the quantities of fuel and electricity consumption are not likely significant and are not separately accounted. Village industries are mostly operated out of the rural households and it is assumed that the energy consumed by these units forms part of household energy consumption. In the next chapter, we discuss the sector-wise projections of energy demand and GHG emissions from different sectors of Rural India. 20 Putting the cook before the Stove: A user-centered approach to Understand Household Energy Decision-Making, Stockhom Environment Institute

41 4.0 BAU Projections: Energy consumption and emission overview In this section, energy consumption and GHG emissions in Rural India resulting from agricultural and residential sectors are discussed. Various methods for estimating energy demand of different sectors as described in literature. In this study, end-use 21 models have been used to estimate and project the energy consumption for rural India. Due to data constraints, econometric 22 analysis is used only where possible. The major drivers of growth in rural India are population, urbanization and GDP which have been applied as exogenously given. Projections with respect to various end-activities in rural household and agriculture sectors are discussed below. 4.1 Rural Households Energy demand from the household sector in rural India is mainly from three sources: lighting, cooking and appliances. Patterns in village and household electrification were key inputs for the forecasting of rural household energy consumption. While 90.6% of inhabited villages in the country were electrified 23 as of 2011, only 55% of rural households depend primarily on electricity for lighting and 43.2% depend mainly on kerosene. 24 A typical rural household receives six hours of electricity from the grid during offthe villages across India peak hours, usually during the afternoon and night. The pace of electrification of has tremendously increased since various governmental policies and initiatives have been put into practice. Figure 9 Pace of village electrification This methodology is commonly used in estimation of future level of energy demand. Stephane de la Rue du Can et al. used this methodology to calculate the energy demand for agriculture, residential and transport sectors of India. Moreover, World Bank in its draft report Residential Consumption of Electricity in India, India: Strategies for Low Carbon Growth uses end use methods to calculate the energy demand for residential sector in India. 22 Robustness checks were not possible due to data constraints. However, the models which are already proven to be robust in the literature are used here. 23 Reference: CEA Annual Report Source: Census 2011, Source of Lighting: Central Electricity Authority, Ministry of Power

42 Apart from electrification rates, other key parameters for the analysis include number of households, household expenditure, and growth of end-use activities (cooking, lighting, appliances). The following key steps are applied in forecasting the household sector energy consumption. Projecting number of households and their expenditures in rural areas 26. Projecting the number of households that are electrified 27. Forecasting the total energy demand (electricity and kerosene) from cooking Forecasting the total energy demand (electricity and kerosene) from lighting Forecasting electricity consumption in appliances among electrified households 28. Projections with respect to various end-activities (lighting, cooking, appliances) in rural households are discussed below Lighting Electricity and kerosene are the primary fuels used for lighting. The energy demand for lighting has been estimated for households that have electrified source of lighting and for those that depend on kerosene for lighting. The figure below shows the historical consumption of electricity and kerosene across different Monthly Per Capita Expendituree (MPCE) classes for years and Figure 10 Energy consumption from lighting for the year and Source: NSSO reports 26 Indian Census reports and World Bank reports give projections of number of households till Depending on the trend the data has been extrapolated till Rural Electrification rate (electrification of villages) is assumed to be 100% by It is assumed that 91.5% of households would be electrified by Rate of appliance diffusion is assumed to follow Gompertz function

43 Historically, there has clearly been a shift from usage of kerosene to usage of electricity for lighting among households with higher income (higher MPCE). This is an important trend for the projection of energy consumption for lighting. As the use of electricity for lighting is increased, kerosene consumption is projected to decrease. However, kerosene would continue to be used both as back-up source of lighting for higher income households (during power outages), and as a primary source of lighting for lower income households. The energy consumption and GHG emissions have been projected as follows: Figure 11 Projected Energy Demand for Lighting Energy Demand from Lighting (PJ) Energy from electricity Energy from kerosene Energy Source Projected GHG Emissions from Lighting (MtCO2) Electricity Kerosene 14.4

44 4.1.2 Cooking For projecting energy consumption from cooking, we have estimated cooking energy demand, applying a linear regression model 29 with population growth rate and per capita energy consumption as key inputs. The energy consumption and GHG emissions have been projected as follows: Figure 12 Projected energy demand for cooking Energy demand from cooking (PJ) Energy Mix Projected GHG Emissions from Cooking (MtCO2) % of cooking energy demand met from LPG usage, and remaining 70% met from usage of 30 renewable biomass 23.2 For cooking purposes, traditional fuels like firewood chips dung cake are presently the main sources of energy. However, LPG penetration is likely to increase with government initiatives for introducing LPG connections to rural areas. Therefore, the GHG emissions from cooking would depend on the share of LPG in the cooking energy consumption in Here we assume that current pattern of LPG usage for cooking in urban households, is comparable with the scenario likely to exist for the rural population in Based on this, 29 Methodology applied in National Energy Map of India, Technology Vision 2030 TERI. 30 An end use efficiency of 64.40% is applied to estimate LPG usage. The default IPCC emission factor of 63.1 tco2/tj is applied to estimated GHG emissions from LPG consumption.

45 we assume that around 30% of the energy consumption would be attributed to LPG. 31 The remaining 70% of the energy requirement would continue to come predominantly from biomass. However, it is uncertain whether usage of biomass would be considered renewable (would not lead to depletion of carbon stocks) in For simplification purposes, while aggregating total emissions for rural households, we assume that biomass will continue to be renewable ewable (in line with assumptions for the current energy mix). However, the impacts of unsustainable usage of biomass including adverse impacts of black carbon emissions, environmental and health hazards may warrant consideration of technologies for using biomass energy more efficiently and cleanly Appliances The projection of energy consumption of household appliances depends on the income level, the rate of appliance penetration and rate of rural electrification. In this study, MPCE is used as a proxy for the income per capita in the rural sector. 32 Figure 13 Diffusion of appliances per electrified household (as per NSS0 61st round) The figure above shows the rate of diffusion of various appliances across the different MPCE classes. As income class increases, diffusion of fans and television increases at a much higher rate than other appliances. In fact, it is assumed that by 2032, in case of television and fans, the rate of diffusion would 31 As per Census 2011, 28.5% of urban household primarily depend on LPG or CNG for cooking. This figure is rounded up to 30%. 32 This assumption is based on the similar assumptions taken in the literature. In the paper The Status of Rural Energy Access in India: A Synthesis by Balachandra Patil (2010), a similar assumption is taken to calculate rural energy consumption in household sector.

46 be similar to the urban penetration rate. 33 The combination of growing income levels, rising standards of living and increased access to electricity will lead to increased penetration of appliances in rural areas, as latent energy demand would then surface. The energy consumption due to usage of appliances and corresponding GHG emissions have been projected as follows: Figure 14 Projected Energy Demand from Appliances Final Energy Demand from Appliances (PJ) Appliances currently do not have a major share in rural household energy consumption (lighting and cooking are the main sources of energy demand). However as purchasing power and electrification increases, the projected share of energy demand from appliances in 2032 is significantly higher. Accordingly, the GHG emissions in 2032 from usage of appliances is projected to be million tons of CO Summary of BAU Emission Projections for Rural Households The total projected energy consumption and GHG emissions from the rural household sector is tabulated below: 33 Stakeholder consultation

47 Table 8 Total Projected Energy Consumption and GHG Emissions for Rural Households 2032 Parameter Unit Value Total Electrical Energy PJ 1064 Total Thermal Energy PJ 989 Total Energy PJ 2053 Total GHG Emissions for Rural MtCO Households 34 This represents an increase in GHG emissions from 2009 by more than 161 million tons of CO 2. This increase in GHG emissions is attributed only to rising electricity and fossil fuel consumption in rural areas. Even though it is assumed that biomass is a renewable fuel in our analysis, continued dependence on biomass as a source of energy and continued utilization of in-efficient cook-stoves may lead to depletion of carbon stocks in the long run. In chapter 5 of this report, we discuss the available alternatives for reducing GHG emissions growth in the rural household sector, through optimal utilization of energy sources (including biomass). 4.2 Agriculture Energy demand from agriculture is primarily due to irrigation and operation of farm machinery. The growth rate of the agriculture sector is a vital parameter for forecasting of energy demand from these sources. Historical data on the agriculture sector size / output is readily available for the past few decades 35. The net sown area (or net cropped area) in agriculture has remained constant during the last 20 years 36. The cropping intensity, i.e. the ratio of gross cropped area to net sown area, has however, gone up from 130 per cent in to 138 % in , which indicates an increase in agricultural productivity. 34 This value corresponds to the scenario where biomass continues to be renewable. If biomass is considered nonrenewable this value is increased to 90 million and total emissions from thermal and electrical energy are increased to 390 million. 35 Details of the data sources and general assumptions are given in Annex State of Indian Agriculture, 2011

48 Figure 15 Trends in area under cultivation in India, to Source: Directorate of Economics & Statistics, Ministry of Agriculture & CSO The availability of land for irrigation is an important factor for forecasting of energy consumption. India currently has an overall irrigation potential of 140 million hectares, out of whichh only about 109 million hectares has been realized Irrigation In our analysis, energy consumption from irrigation has been considered separately for the following components 38 : i. Electricity requirement for pumping water per hectare of cultivated irrigated land with electric pumps ii. Diesel requirement for pumping water per hectare of cultivated irrigated land with diesel pumps In , electricity consumption of the agricultural sector accounted for 19.6% of the total electricity consumption in the country. 39 In fact in the last few decades, electricity consumption in agricultural sector has increased at a much faster pace compared to other sectors (compound growth rate of 8.61% between and ). For our analysis, we have assumed that the share of electric pumps will increase corresponding to progress in rural electrification. However, the required number of pumps used per hectare will reach a saturation level based on the limitations on area under irrigation. The maximum potential of electric 37 Agriculture 2011, Planning Commission 38 Stephane et al, (2009) 39 Energy Statistics , MOSPI

49 pumps till 2032 is taken to be approximately 20 million as per CEA reports. It has been assumed that diesel pumps will continue to be used, but only as a backup during power cuts. Hence, diesel pumps are projected to decline from 7 million in 2003 to 2 million in 2032 and diesel consumption for agriculture. However, overall diesel consumption for agricultural activities will continue to rise due to energy demand from farm machinery Farming For simplification purposes, energy demand from farm machinery has been attributed completely to usage of tractors, which are the primary source of power for farming. Projections of energy demand are made on the basis of projected diffusion of tractors, which is in turn estimated based on trends in gross irrigated area, agricultural GDP, and historical sales of tractors. Figure 16 Trends in sale of Tractors (Source: IASRI) Production in numbers hp hp hp hp > 50 hp We have projected that annual sales of tractors continue to grow and reach 7 million tractors by 2032, which represents a diffusion of approximately 55 tractors per thousand hectares of arable land Summary of Projected Energy Consumption and Emissions from Agriculture The business as usual projections till 2032 with respect to electricity consumption (due to electric pumpsets for irrigation) and diesel consumption (due to diesel pump-sets for irrigation and farm machinery) are tabulated below:

50 Table 9 Total Projected Energy Consumption and GHG Emissions from Agriculture Parameter Unit Value Electrical Energy from Irrigation PJ 479 Thermal Energy from Irrigation PJ 52 Thermal Energy from Farming PJ 559 Total Thermal Energy PJ 611 Total Energy Demand from Agirculture PJ 1090 Total Emissions from Agriculture MtCO This represents an increase in GHG emissions by more than 28 million tco 2 as compared to Increase in electricity consumption, and diesel consumption in tractors is partially offset by decrease in diesel consumption for irrigation (due to increase electrification) as well as increased penetration of renewable energy. The growth of the agriculture sector is vital for the overall growth of the country. Therefore, it is imperative to explore sustainable low-carbon growth path for the sector. In the next chapter, we discuss the alternative technology options / measures for curtailing energy consumption and GHG emissions in Rural India.

51 5.0 Abatement levers: Opportunities for low carbon growth Abatement levers or low-carbon technology options / measures, have been classified into three categories as illustrated in Figure 17. Options available under each of the categories, and their respective advantages and barriers are described in this chapter. Figure 17 Classification of Abatement Levers Categories Renewable Energy Supply Abatement Levers Mini Grids Small Hydro Small Wind Energy Systems Biomass Gasification Biogas PV Standalone systems New SHP installations Upgrading existing traditional water mills Solar home systems Pico PV Systems Solar PV Pumps Energy Efficiency / Clean Fuels for households EE Lighting Devices and switch from kerosene to electrical lighting EE Cook-stoves and increased supply of LPG EE Appliances CFLs LEDs Star rated refrigerators Star rated ACs Star rated fans Energy Efficiency in agriculture Agriculture pump sets Water management Drip Irrigation Surface water infrastructure Rain water harvesting Legend Electricity Savings Fuel Savings / Fuel Switch Both electricity and fuel savings

52 5.1 Renewable Energy Supply Options Mini Grids A mini-grid distributes electricity using local distribution networks which are not connected to the main electricity grid. To ensure a continuous supply of power, mini-grids can be coupled with renewable energy systems or hybrid systems consisting of renewable energy as the primary source of power generation, with diesel generators as a secondary source. A mini-grid can potentially supply continuous power more reliably than the national grid. These systems can generate enough power to meet both domestic (lighting, appliances) and non-domestic (schools, clinics, irrigation systems, rural businesses, telecom towers, etc.) electricity requirements for a village or group of villages. A combination of different renewable energy technologies (eg: hydro, solar, wind, biomass, etc.) can be applied to balance out the shortcomings of a single type of renewable energy. The choice of technology may be based on what resources are locally available, and what is economically viable considering the local conditions. Small/ mini / micro hydro can be applied in rural areas close to water resources, to generate a continuous supply of power cost-effectively (over the lifetime of the plant). However, hydropower is subject to seasonal variations in output, is site-specific (limited to locations close to water resources), and involves significant time and investment during the installation phase (including feasibility assessment, site preparation, and construction). Solar PV is not site-specific as solar radiation is abundant in most places in India; however, power can only be generated during daylight hours, and energy storage becomes a key requirement for hybrid systems with solar PV cells. Small wind energy systems are also intermittent (both on with respect to seasonal variation and day-to-day generation) and further can only be applied in sites with high wind speeds. In coastal areas, small wind energy systems can potentially deliver high plant load factors and generate power cost-effectively. In areas with abundant availability of agro-residues, biomass gasifiers can be a promising alternative, providing a continuous stream of power subject to continuous supply of feedstock. Feedstock supply depends on the type of biomass utilized, and may be disrupted due to seasonal variations in weather (including extreme weather such as floods or droughts). A combination of the above renewable energy options, along with diesel generators as a backup, can provide an effective solutions to power households / villages which are unlikely to be connected to the national electricity grid in the near future. These systems have multiple advantages over the conventional route of supplying electricity by connecting villages to the national grid, including: Consumers in villages do not have to wait for the national grid to reach them, and can generate electricity with locally available resources. When the grid does reach villages already electrified through hybrid min-grids, there is a possibility of selling surplus electricity back to the grid.

53 Transmission losses can be minimized, by generating power adjacent to the distributed energy consumption areas When considering the full cost of supplying power through grid to rural areas, off-grid electricity generation through renewable energy works out to be more economical. State utilities typically supply electricity to rural areas at highly subsidized rates in the range of 3 to 5 INR/kWh. However the actual cost of supplying electricity to rural or remote areas is in the range of 9 to 15 INR /kwh. Off-grid renewable energy systems can be easily scaled up as demand grows, as they generally consist of modular components (eg: solar PV cells, small wind energy systems, bio gas plants, etc.). A key factor for implementation of mini-grids is developing successful business models around them. A mini-grid may be implemented through a community based model, a private business model, utility model, or a combination of these. The advantages and barriers associated with each type of model are described below.

54 Table 10: Advantages and Barriers Mini-Grids Community Based Models Community Based Models Community based models: The mini-grid system is owned and operated by a cooperative society. The system may be setup under a subsidy scheme by the government. Advantages Barriers The local community gets involved in the decision-making process related to energy supply, leading to improved self governance structures. If the energy source for the system is agroresidues or cow dung, then both the owners of the energy source and the end users of the energy can form part of the cooperative. The local community has a long term interest in maintaining the system s operation to ensure steady supply of power. Lack of skilled manpower can increase the risk of technical breakdown / reduced efficiency Additional time and resources may be required to develop the cooperative and impart capacity building for taking ownership and operating the system Subsidies from government and /or capacity of the cooperative to invest in the system may be limited. Social conflicts may arise if the system is not well planned.

55 Table 11: Advantages and Barriers for Mini-Grids Private Business Models Private Business Models Private Business Models: The mini-grid system is installed and operated by a private company, which invests in the system, operates the system and supplies power to end-users for a tariff over a long term period. Advantages Barriers Private businesses would have a higher capacity to invest in hybrid mini-grid systems, and can replicate the model across locations with relative ease, once it is successfully implemented. Private businesses would have the technical expertise and incentives to ensure that the system operates at high efficiency. The local community could benefit from both steady supply of power, and potential Private parties may only invest in projects which have been proved to be financially viable. Either the owner of the mini-grid system, or an intermediary party would have to absorb the risk of recovering tariff from multiple end-users. Access to finance (credit or equity) is necessary for businesses implementing this model. employment opportunities.

56 Table 12: Advantages and Barriers for Mini-Grids Utility Models Utility Models Utility Models: The mini-grid system is installed and operated by the state electricity distribution companies (DISCOMs). Tariff is directly state utilities / DISCOMs from the end-users. Advantages Barriers State utilities are experienced players in the business of supplying power. State utilities can potentially replicate the system across locations and lower costs through economies of scale. Most state utilities are already suffering financial losses due to supply of subsidized power to end users, and inefficient power plant operations. There may not be any incentive for state utilities to implement such projects on a large scale particularly as the government is already working on electrification of rural areas by building grid infrastructure (RGGVY program of Ministry of Power) State utilities may not have the capacity to manage and supply manpower for operation of units dispersed across the state. Of the above three models, the private business model seems to be a workable solution based on successful case studies in India. However, the involvement of local community or local entrepreneurs is also critical to the functioning of private business model solutions. Successful case studies of mini grid systems coupled with renewable energy in India include project implemented by private players such as Husk Power Systems, DESI Power, OMC, and others. However, as of now these systems have been limited primarily to northern states such as Bihar and Uttar Pradesh. Most of the existing systems utilize rice husk, which is abundantly available as a waste product of rice mills, as a feed stock for biomass gasifiers. There is a potential for scaling up the deployment of these systems in all parts of India where grid access is limited. Rice husk or other agricultural by-products of consistent quality may not be available everywhere as a feedstock. However, a combination of various renewable energy options (depending on

57 what is feasible in a particular geography), along with diesel generators as a backup, can be deployed in almost all parts of India. Combinations of the business models described above may be required, where it is not profitable for private businesses to make the entire investment and operate the entire system. For instance state utilities can pay a role by sharing the investment and revenues for setting up the off-grid solutions with the private businesses. Two of the successful case studies implemented by private businesses are described below Husk Power Systems and OMC Power. Case Study 1 Husk Power Systems Husk Power Systems is a rural development enterprise, which installs and operates biomass-based power plants in India s rice belts, primarily in Bihar and Uttar Pradesh. The company has installed close to 90 rice husk based power plants as of December 2011, has been supplying electricity generated from these power plants to rural households not connected to the electricity grid. Husk Power develops biomass gasifiers that operate on rice husk, a common agricultural waste product in rice producing areas. The gasifiers are manufactured locally, have a capacity of 35 kw to 100 kw, and consume rice husk at a rate of 25 kg and 50 kg per hour. Prior to installing a gasifier at a village, the company carries out a basic energy audit to determine electrical load and energy demand for a cluster of houses. Husk Power typically deploys a local distribution network consisting of overhead power lines for distribution of power, and LED circuit breakers for monitoring of the power consumption in individual households. Households are charged for electricity at rates which are aligned with local conditions, typically at a level comparable with the household s monthly expenditure on kerosene prior to project implementation. Pricing models are adapted based on local conditions for a given setting. The typical costs for Husk Power Systems are as follows: Typical installation cost: USD 1,300 per kw (including local distribution network) Typical operating cost: < USD 0.15 / kwh References: HPS Plants Google Maps Husk Power Systems

58 Case Study 2 OMC Power and Off-grid renewable energy solutions for Telecom Industry Background- Telecom Industry India has around 350,000 telecom towers across the country, out of which around one fifth (70,000) are in off-grid locations and many more are in locations with poor grid availability. When it comes to supplying power to telecom towers, the business as usual approach has been to depend on diesel generators which are capable of generating power around the clock, even in the most remote of locations. However, this is set to change with innovations in hybrid renewable energy systems for catering to the energy demand of telecom towers. The Telecom Regulatory Authority of India (TRAI) has issued directives to the telecom service providers to reduce dependence on diesel and cut carbon emissions by running at least 50% of all rural towers and 20% of urban towers on hybrid power by However, running individual renewable energy systems for geographically dispersed towers is a challenging task from an operational point of view, and may not be the most economical approach. The Tower and Infrastructure Providers Association (TAIPA) is a representative industry body for telecom infrastructure providers. Considering the directives of TRAI and the challenges associated with operation of renewable energy systems for individual towers, TAIPA has issued a request for proposal (RFP) for renewable energy service providers (RESCOs) to work with the tower companies for supplying power to telecom towers as well as surrounding villages. TAIPA has proposed that tower companies can act as anchor clients for a RESCO facility or off-grid power plant supplying power to both the neighboring area and towers. A certain amount of revenue assurance can be provided by the telecom companies for supply of renewable power, addressing concerns related to high the costs of off-grid power generation. OMC Power - Profile Recently, Bharti Infratel has signed up an agreement with OMC, a RESCO offering off-grid power solutions to telecom companies. Bharti Infratel is one of the leading passive telecom infrastructure providers in India with more than 33,000 telecom towers, and a 42% stake in Indus Towers - which has a portfolio of more than 112,000 towers across India. OMC is a RESCO that finances, builds, operates and maintains Micropower Plants or off-grid hybrid renewable energy plants. OMC s Micropower Plants generate electricity from solar energy, wind energy, or biogas (depending on what is economical in the respective geography), and also utilize battery banks and diesel generators as backup. Power is supplied to tower companies which can purchase electricity directly from OMC rather than operating their own diesel generators or renewable energy systems. OMC also handles the operation and maintenance of the telecom tower sites themselves. Additionally, the Micropower Plants also provide electricity to residents and businesses in nearby villages, ultimately providing off-grid solutions for empowering rural India. References: Telecom industry aims to reduce diesel consumption Bharti Infratel and OMC Announce Partnership OMC Power Solutions for Telecom

59 Small Hydro Power (SHP) Background In areas with access to water bodies, small, mini or micro hydropower can provide electricity requirements for a number of applications, covering rural household, agriculture, and rural businesses. As per definitions of MNRE, a hydro power plant is classified as small if it has a capacity between 2001 to kw, mini if it has a capacity between 101 to 2000 kw, and micro if it has a capacity up to 100 kw. 40 The technology for hydro power is well developed and commercially available. Hydro turbines cover a huge range of capacity from 0.2kW up to 800kW and therefore can provide an adequate solution to every local situation, provided that a suitable water flow is available. Current Scenario and Growth Potential MNRE has created a database of potential sites for SHP. An aggregate potential capacity of 15,384 MW has been identified by the ministry from 5,718 potential sites. About 50 percent of the total potential lies in the states of Arunachal Pradesh, Himachal Pradesh, Jammu & Kashmir, Uttarakhand and Chattisgarh. The government targets at least 5,000 MW of capacity addition from SHP in the next 10 years. In addition to providing electrical energy, small hydro has been used traditionally in the form of water wheels or water mills in the Himalayan regions as a source of mechanical energy for rice hulling, milling of grain and other applications. Traditional water mills operate at low efficiencies, and improved designs have been developed for generation of mechanical and electrical power in the capacity range of 3-5 kw. As per MNRE, it is estimated that there are more than 150,000 potential water mill sites in the Himalayan regions of India. A number of NGOs, cooperatives and other organizations are now upgrading water mills or installing new efficient water mills to meet the electrical energy demand in rural areas. These initiatives have been particularly successful in the state of Uttaranchal which has over 500 efficient watermills installed in remote and isolated areas. As on 30 th June 2012, the total installed capacity of grid-connected small hydro power plants in India is 3411 MW, and a total 2068 off-grid systems (micro hydel / water mills) have been installed. The following are the main advantages and barriers of hydro power systems: Table 13: Advantages and Barriers for Small Hydro Power 40 Reference:

60 Small Hydro Power Advantages Barriers Due to their small size, hydro power plants involve the local population from the implementation to operation, maintenance and management. This can lead to capacity building and employment generation for the local population. SHP is one of the most economically feasible ways to produce power, has low distribution and manpower costs and has a long operational life (> 25 years). The technology is readily available. There are presently about twenty manufacturers in India which fabricate almost the entire range and type of SHP equipment, and around five manufacturers which produce micro-hydel and watermill equipment. Implementation of small hydropower requires expertise and knowledge of geomorphology and hydrology. It is essential to have reliable predictions of the availability, time distribution and seasonal variations of the flow rates, to avoid incorrect sizing and low PLFs. SHP involves significant time and investment during the installation phase (including feasibility assessment, site preparation, and construction). SHP is subject to seasonal variations in output, and output can also be impacted by climatic changes (eg: monsoon) SHP is site-specific and is limited to locations close to water resources.

61 Small Wind Energy Systems Background Wind is by far the largest renewable energy segment in India, contributing to approximately 70 percent to the total renewable energy power capacity in India. 41 Typically, wind power installations in India are part of large wind farms developed by wind turbine suppliers, who develop and maintain the sites on behalf of the investors. Electricity generated by the wind turbines is evacuated to the national grid and sold to the state utility, or in some cases wheeled for captive consumption or sold to third parties. Therefore, although wind power has been successful in India to a large extent, the focus has been on grid-connected systems, and the technology has not contributed directly to meeting electricity demand in rural India. In the past few years, wind turbine manufacturers have focused on developing larger and more efficient turbines to increase energy output and drive down the cost per kwh. The main advantage of larger turbines is that wind speeds increase at higher altitudes and there is also less turbulence higher up. In addition, the amount of power a rotor can produce is proportional to the square of the blade length. 42 Therefore, power generation is drastically increased with larger turbines. However, on the other end of the spectrum are small wind energy systems, which have the potential to directly contribute to electrification of rural areas. Small wind energy systems consist of aero-generators and water pumping mills. An aero generator is a small wind electric generator having a capacity of up to 30 kw. Aero generators are installed either in stand-alone mode or along with solar photovoltaic (SPV) systems to form wind-solar hybrid systems. The hybrid wind-solar systems have been implemented at a cost of 3 to 3.25 lakhs per kw. These systems can generate 2.5 to 3.0 kwh per day, depending on wind speed and solar radiation at the particular site. 41 Reference: MNRE, 2011 As per MNRE classifications renewable energy consists of wind, small hydro, biomass, 42 Clean Technology Primer Jeffries Research

62 Figure 18 Typical Components of an Aero Generator Water pumping windmills are devices which convert kinetic energy of the wind into mechanical energy for pumping of water from bore wells or open wells. Typically, in areas with good wind availability, water can be pumped from the depth of 10 to 50 meters, which is equivalent to a 0.75 hp of electrical water pump. 43 Current Scenario and Growth Potential As per the Centre of Wind Technology (C-WET), there is a potential for generation of 45 GW of wind power in India at a 50 meter height, which is a conservative estimate considering 2% land availability in most states (for Himalayan states / North Eastern states and Andoman & Nicobar, land availability at 0.5% has been considered). At an 80 meter mast height, the estimated potential is increased to approximately 103 GW. 44 As on 31 st March 2012, the total capacity of grid-connected wind power installations in India amounted to GW, with the majority in Tamil Nadu, Gujarat, Maharashtra and Rajasthan. 45 Small wind energy systems are viable in regions with an average wind speed of at least 5 m/s. 46 The existing potential for aero-generator systems has not been quantified by MNRE. However, data on mean annual wind speed at wind masts in various states is published by MNRE / C-WET. In general states which have been determined to have a high wind potential (eg: Gujarat, Karnataka, Maharashtra, Andhra 43 Reference: Maharashtra Energy Development Agency, < accessed August Reference: Center of Wind Energy Technology, < accessed August Reference: State-wise and Year-wise Wind Power Installed Capacity, MNRE, < accessed August Reference: The Potential of Small and Medium Wind Energy in Developing Countries, Alliance for Rural Electrification

63 Pradesh, Tamil Nadu) have recorded mean annual wind speeds of around 5 m/s or greater in various locations even at low mast heights of 20 or 25 meters. Therefore, it may be presumed that aero-generators can be successful in these states. Most of the aero-generator installations in India consist of wind-solar hybrid systems ranging from a capacity of 0.4 kw to 10 kw per installation. A cumulative capacity of 1.74 MW of aero-generators (mostly wind-solar hybrid systems) has been installed in India as on 30 th June Maharashtra itself accounted for around 1.35 MW of installed capacity in aero-generators at the end of FY Other states with high wind potential have so far have not capitalized on the opportunity to the extent that Maharashtra has. As in the case of aero-generators, wind pumping mills also can be deployed in states with good wind potential. A cumulative of 1352 wind pumping mills were installed in India as on 31 st March 2011, with the majority in Gujarat (879) and Rajasthan (222). Table 14: Advantages and Barriers for Small Wind Energy Systems 47 Reference: Cumulative Deployment of Various Renewable Energy Systems / Devices in the country as on 30/06/2012, MNRE, < accessed August Reference: Yearwise List of Installation of Wind Solar Hybrid System in Maharashtra and List of registered Manufacturer /Dealers MEDA, < accessed August 2012

64 Small Wind Energy Systems Advantages Barriers Due to their small size, aero-generators or wind pumping mills can be installed adjacent to the source of energy demand (near a group of village households / agricultural fields) Small wind energy systems are generally viable only in areas with mean average wind speeds of 5 m / s or higher. Therefore these systems can operate only in selected sites in states with high wind potential. In hybrid wind-solar systems, the intermittent nature of wind is complemented by sunlight which is available more consistently during daylight hours. Also, as small wind turbines require less area than solar PV cells, the hybrid system makes efficient use of space and resource availability. As wind is an intermittent source of energy, it has to be complemented by other systems such as solar and /or diesel to provide a continuous supply of power. Batteries are also an essential component of small wind energy systems. These additional components add to the total cost of the system. The amount of power a rotor can produce is proportional to the square of the blade length. Therefore small wind energy systems generate less power and cost more per kwh compared to conventional (large scale) wind turbines. For long term operation of small wind energy turbines, regular maintenance is necessary (greasing, visual inspection, refurbishment of electrical workings / blades, etc.). The limited availability of trained personnel as well as spare components for repairs can be a hurdle for maintenance of these systems.

65 Bio-energy Systems Biomass can be harnessed as a source of renewable energy using various technology options including biomass gasifiers, biogas digestors, liquid bio-fuels and direct combustion of soild biomass for power generation (steam rankine cycle). Of these technologies, it is feasible to implement small scale units for decentralized power generation or thermal energy use using biomass gasifiers and biogas digestors. These two technologies are discussed in detail below. Background Biomass Gasifiers Gasification is a process that converts organic or fossil based carbonaceous materials into carbon monoxide, hydrogen and carbon dioxide (also called syngas or producer gas). Gasification is achieved under high temperatures (>700 C) with a controlled amount of oxygen and/or steam, but without combustion of the carbonaceous material. Gasification of biomass and the combustion of the resulting producer gas in gas engines can generate power in an efficient manner for off-grid applications. Fuels which can be used as feedstock for gasifiers include wood chips or agricultural waste such as rice husk, wheat husk, coconut husk, coconut shells, corn cobs, wheat straw pellets, etc. One kilogram of biomass produces around 2.5 cubic meters of producer gas at standard temperature and pressure. The calorific value of the produce gas depends on the type of fuel. Some of the types of biomass which produce relatively higher calorific value producer gas (> 5 MJ /m3) include coconut shells, corn cobs, pressed sugarcane, and wood (depending on moisture content and type of gasification). Apart from calorific value, other important criteria for fuel selection include bulk density, moisture content, dust content, tar content, ash and slagging characteristics. These fuel properties can influence both the design of the gasification system as well as the desired operational characteristics of the gasifier. Apart from power generation, there are many other potential uses for gasification systems. Producer gas can be directly used as a fuel in internal combustion engines as a substitute for diesel. 49 These engines may be used for running irrigation pumps or other agricultural machinery. Producer gas may also be used directly for heating applications for crop drying or for combustion in boilers / furnaces in small industries. 49 ICEs are normally designed to run on diesel or gasoline, and may not be able to run on 100% producer gas. However, it may be possible to develop designs for ICEs adapted to producer gas characteristics.

66 Figure 19: Applications of Producer Gas from Gasification of Biomass Output options Feed options Agricult ural residues Woody biomass Kitchen wast es Charcoal / coal Gasification process Gasification technology Clean low cost synthesis gas Power for Irrigat ion Power for households Fuel for internal combustion engines Cooling for cold storage Improved agricultural yield and increased availability of agricultural residues for gasification Steam / heat for agroprocessing indust ries Biogas Digesters Biogas is a product of anaerobic digestion of organic material (decomposition of organic matter by bacteria in the absence of oxygen) in biogas digesters. Biogas consists of around 65% methane 34% carbon dioxide and trace amounts of other gases, and can be produced from a variety of organic material including animal waste, crop residues, as well as domestic and industrial waste. The rate of biogas production depends on the type of feedstock, and various factors such as the carbon: nitrogen ratio, retention time, solid concentration, and temperature. Manure works well as a feedstock for biogas digestors, and is often accessible to farmers in rural areas, who use cattle as a source of dairy products or labor, or breed other types of livestock for food products. Domestic wastes from septic tanks may also be used, but the quantities are often insufficient, and cleaning agents may kill the bacteria required for the digestion process. Plant material can also produce biogas, but takes longer to digest and may lead to difficulties in the operation of the digesters if used as the only feedstock. As in the case of producer gas, biogas can be uses for various purposes, including direct combustion for cooking /heating purposes, as fuel for gas lamps for lighting, as a source of energy for refrigeration / cold storage, and as fuel for internal combustion engines for production of mechanical work or electricity. The slurry produced from biogas digesters can also be used directly as a valuable fertilizer. Small scale biogas digesters can be of fixed dome type or floating dome type and may be constructed from various materials including bricks, ferro-cement, and fiber glass reinforced plastic. Power or mechanical energy can be generated by supplying the biogas generated in the digester to an internal combustion engine.

67 Current Scenario and Growth Potential This Biomass Gasifier Programme of MNRE aims to promote biomass gasifiers for utilization of surplus biomass resources to meet rural energy demands in areas with limited or no access to power, for distributed applications such as lighting, water pumping, telecom towers etc. The program provides Central Financial Assistance for biomass gasifiers coupled with producer gas engines for supplying offgrid electricity to rural areas (apart from other applications such as industrial captive energy and gridconnected power). 50 As on 31 st August 2012, a cumulative capacity of MW of biomass gasifier based power has been installed under the program. As explained in the section on mini-grids, successful business models applying gasification technology are operating in rural India. However, these are mostly limited to Northern states with abundance of rice husk as feedstock. Proliferation of the technology requires further R&D to develop improved gasifier designs for different types of fuel, improved ICE designs adapted for use of producer gas, and operational improvements such as sizing and drying of fuel, as well as handling of ash, slag and tar. Table 15: Advantages and Barriers for Biomass Gasification 50

68 Biomass Gasifiers Advantages Barriers Biomass gasification systems are versatile as the producer gas as can be used for a variety of applications including power generation in gas turbines, direct fuel input to engines for generating mechanical power, fuel input to boilers / furnace for thermal energy requirements, etc. Biomass gasification systems can be implemented at small scales of kw, which makes them more suitable for distributed power generation compared with direct combustion of biomass. Almost all types of biomass as well as other carbonaceous fuels (eg: coal / charcoal) can be gasified. This is a significant advantage over types of bio-energy such as biogas and bio-fuels, which are much more limited in the type of biomass which can be used as feedstock. Biomass gasification is particularly suited for agricultural systems, where biomass Certain types of biomass are non-uniform and/or have high moisture content (eg: pressed sugarcane, coconut shells, wheat straw, etc.) Biomass feedstock needs to be uniformly sized and dried for efficient gasification. However, techniques for efficient sizing and drying of biomass are not well established. Cooling and cleaning of producer gas to remove tar, moisture and other impurities is critical, particularly if the producer gas has to be used for electrical / mechanical power generation. The equipment for cooling and cleaning of gas increase the investment cost as well as the operational and maintenance cost for the system. Ensuring uniform power output can be challenging with variations in quality of biomass (energy content, density, ash content, etc.) residues are readily available. Biomass gasification can provide sufficient energy for irrigation, which can lead to improved yields and a sustainable supply of agricultural residues as feedstock. MNRE has also been promoting family biogas plants to provide clean fuel for households and communities. As on 31/08/2012, around 4.5 million biogas plants were installed in India as per MNRE.

69 The Ministry plans to install 150,000 to 200,000 additional family biogas plants every year in the 12 th five year plan. 51 MNRE has also launched a program to promote Biogas based Distributed/Grid Power Generation in January The program aims to set up power generating units of 3 KW to 250KW capacity in rural areas of the country. A Central Financial Assistance (CFA) is offered by MNRE for the installation of biogas plants for power generation, for various capacity ranges as follows: INR 40,000 /kw for capacity range of 3 KW - 20 KW INR 35,000 /kw for capacity range of >20 KW to 100 KW INR 30,000 /kw for capacity range of >100 to 250 KW The subsidy would be the lesser of 40% of the project cost and the per kw subsidy mentioned above. The program is implemented through state nodal departments or agencies, KVIC, and other institutions of MNRE. There is a total estimated potential for installation of around 12 million biogas plants in India as per MNRE. However, this potential may increase overtime with growth in livestock population resulting from demand for milk and other livestock products in rural India. It has been estimated by the National Centre for Agricultural Economics and Policy Research that dairy producing livestock population would grow from 319 million in 2010 to 400 million in The increase in livestock population would lead to an increase availability of manure, which can be used as feedstock for biogas plants. Biogas Digestors Advantages Barriers Biogas digesters can be implemented at small scales (3 KW to 250 KW), which makes them more suitable for distributed power generation compared with direct combustion of biomass. Biogas can be used for a variety of applications including cooking, heating, cooling, and power generation. When used for cooking, biogas is a much cleaner fuel compared with firewood. Indoor Not all types of biomass can be used in biogas digesters. For instance, plant material often has a longer retention time. The rate of biogas production is dependent on the biological decomposition process, which is sensitive to changes in temperature, acidity, and composition of feedstock. Therefore the operation and maintenance of biogas plants requires skilled manpower and technical know-how. 51 MNRE s Strategic Plan for New and Renewable Energy Sector for the Period M. B. Dastagiri, Demand and Supply Projections for Livestock Product in India,

70 pollution as well as black carbon emissions can be reduced with displacement of firewood with biogas for cooking. Biogas digesters can produce digested slurry as a by-product, which is useful as a All type of biomass cannot be used as feedstock. Manure and domestic wastes are the most commonly used types. It is not feasible to operate digesters on mainly agriculture residues. fertilizer. Digesters can be connected to toilets, and their installation can lead to improved sanitation in rural areas.

71 Photovoltaic stand-alone systems Background Standalone photovoltaic systems consist of Solar home systems (SHS), Pico PV Systems (PPS) as well as photovoltaic pumps. Solar Home Systems Solar home systems are solar-based electricity-generating technologies designed to meet the power needs of individual households. Although they are used principally to supply power for lighting, SHS can also provide power for other household appliances such as televisions, radios, computers, mobile phones, etc. Solar home energy systems consist of several components including the photovoltaic (PV) module, charge controller, battery and the electrical load. The PV module is usually mounted on the roof of the house so that it is exposed to direct solar radiation throughout the day. The module converts incident radiation into electricity which in turn charges the battery which is placed inside the house. The battery provides power to the lights and other appliances as required. A charge controller prevents overcharging or deep discharging of the battery, and also acts as an energy management device, providing information on the system s performance. The charge controller is critical for maintaining the longevity of the battery life. Pico PV Systems Pico PV systems are smaller versions of SHS, generally providing power in the range of 1 to 10 W, and consist of a small solar panel accompanied by a battery. PPS can be used for lighting loads as well as telecommunication devices such as cell phones or radios. In some cases the PPS is fixed to a particular device as in the case of solar lanterns, whereas in other cases, the system can be unplugged and connected to different devices at different times. Solar Photovoltaic Pumps A solar PV pumps consists of an electric motor, a control panel / controller, a battery, an inverter 53, and the pump itself. Solar PV pumps are typically used for irrigation as well as for pumping of drinking water. Solar pumps are not different from normal pumps apart from the fact that they consist of control systems for using solar power as an energy source, and batteries for storage of the power. Typically, these pumps can continue to take power from conventional sources such as diesel / grid electricity. However, for efficient pump-sets up to a 4 HP size, it is possible to operate the irrigation pump without relying on diesel and electricity as back-up, as these pumps are only required to be used for a few hours a day. 54 Current Scenario and Growth Potential 53 D.C electricity is generated using solar PV. Operation of an A.C. motor requires an inverter. Otherwise, for D.C. motors, the power generated can be used directly. 54 Reference: Discussion with equipment suppliers

72 The National Solar Mission is a major initiative of the Government of India for promoting solar power to address India s energy security challenge. One of the objectives of the Mission is to promote off-grid systems to serve populations without access to commercial energy. Specifically the mission aims to promote off-grid solar applications cumulating to 1000 MW by 2017 and 2000 MW by Further the mission has set a target to deploy 20 million solar lighting systems in rural areas by As of 31 st March 2011, a total of 748,676 solar home lighting systems had been installed in India. Further a total of 731,202 solar lanterns and 7,323 solar PV pumps had been installed. Table 16: Advantages and Barriers for Solar Home Lighting Systems and Pico PV Sytems

73 Solar Home Lighting Systems and Pico PV Sytems Advantages Barriers Solar power based lighting is safer, cleaner and generates better quality lighting compared with kerosene lamps. These systems eliminate the health and safety hazards associated with kerosene lamps. Solar PV is an expensive technology. Even though the cost has been reduced drastically over the last few years, it remains prohibitively expensive, when not supported by subsidy. Solar based lighting leads to avoidance of kerosene usage, which reduces the subsidy burden on the government. Lack of skill and awareness about the functioning of the solar systems and solar lanterns components lead to mismanagement of the battery. Battery life also gets greatly Better quality lighting enhances the studying environment for children and boost social life in the communities. It also accounts for additional monetary benefits from extended shop hours, mobile phone charging and craftwork in the evening. reduced because of inappropriate usage and un-prescribed mode of charging. Solar lanterns are expensive lighting solution unaffordable by poor households. Subsidies for kerosene and charitable distribution de-incentivizes the usage of solar home systems / solar lanterns. Solar systems require comparatively less operation and maintenance compared with other systems such as biomass gasification, and small hydro. Solar lanterns sometimes are associated with a short warranty period that does not cover the payback period of the product. Solar PV systems are modular and can easily be scaled up.

74 5.2 Energy Efficiency in Rural Households Energy efficient lighting devices Background Lighting is one of the basic needs of households and important for the quality of life of residents as well as for ensuring productivity during after daylight hours (education, public services, shops, market places, etc.). The majority of rural households depend predominantly on kerosene for meeting their lighting requirements. However as households are electrified, whether through grid or off-grid renewable energy sources, the use of efficient lighting devices is essential both from the point of view of reducing grid electricity consumption, and reducing the sizing / investment of renewable energy systems required to meet rural lighting demands. The most inexpensive types of electric lighting devices available to rural households are incandescent bulbs. Since an incandescent bulb converts about 95 per cent of electricity into heat and five percent to light, incandescent bulbs producer lower output for a given wattage compared to more efficient alternatives. CFLs A Compact fluorescent lamp (CFL) is an energy efficient alternative to an incandescent bulb. CFLs work according to the same principle as standard fluorescent lamps (tubelights), but have the same compactness as that of incandescent lamps. CFLs consist of two main components including a gas-filled tube and amagnetic or electronic ballast. The gas in the tube glows with ultraviolet light when electricity from the ballast flows through it. A CFL consumes around 80% less electricity compared to an incandescent lamp to provide the same level of illumination. A 15 W CFL can replace a 60 W incandescent bulb. A CFL costs around seven to eight times more than an incandescent bulb, but considering the savings in electricity bills, CFLs can pay back for themselves within a year. 55 LEDs Light emitting diodes (LEDs) are lighting devices that become illuminated by the movement of electrons through a semiconductor material (diodes). LEDs waste less energy as electricity is directly converted into light. LEDs can be integrated into various types of products such as flashlights, light bulbs, and 55 Reference: Centre for Science and Environment, < accessed August 2012

75 integrated light fixtures. A 5 Watt LED provides equivalent output to a 15 Watt CFL or a 60 Watt incandescent bulb. 56 LEDs also have a longer life span in comparison to incandescent lamps and CFLs. Current Scenario and Growth Potential The acceptance of CFLs and LEDs is increasing in urban areas. However, these efficient lighting devices have not made any significant foray into rural India, partly because of limited access to electricity and party because of high costs / limited awareness. However, with increasing electrification of households and rising purchasing power of rural households, there would be a good potential to reduce energy demand and energy bills through utilization of efficient lighting devices instead of inexpensive incandescent bulbs. Table 17: Advantages and Barriers CFLs CFLs Advantages As a substitute for kerosene based lamps, CFLs avoid the health and safety hazards associated with the combustion of kerosene, particularly for indoor lighting. CFLs produce higher quality light, more suitable for reading / education or other indoor activities in after daylight hours compared to kerosene based lighting or incandescent bulbs CFLs have a longer life time compared with for incandescent bulbs. Barriers CFLs are more expensive than incandescent bulbs. In the context of rural households, particularly those with low purchasing power, higher costs are a prohibitive barrier even with savings in operational costs. Incandescent bulb can provide a reduced level of output under low voltage conditions. However, CFLs tend to fail under low voltage or fluctuating voltage conditions. Awareness of the benefits of investing in CFLs in now widespread 56 Reference: Centre for Science and Environment, < accessed August 2012

76 Table 18: Advantages and Barriers LEDs LEDs Advantages Barriers LEDs have a longer operational lifetime compared to CFLs and incandescent bulbs. Currently, white LED lamps have an average life of 100,000 hours in contrast to 5,000 hours average life of an incandescent bulb. LEDs therefore require less frequent replacement compared to CFLs and incandescent. LEDs do not contain mercury as in the case of CFLs, and are therefore safer. The cost of an LED light is 80 times more than that of an incandescent bulb and 10 times that of a CFL. LED lights have a long pay-back period of 5 to 10 years. The efficiency of LED lights tends to reduce over a period of time. If provisions are not made to allow for dissipation of the heat generated by an LED light, the lifetime and efficiency of the light may be reduced. LEDs are compact and can be used in a variety of different products. For instance LED lights can be hung from a wall /ceiling, used in flashlights, used in head-mounted devices, connected to solar charging devices, etc. As a substitute for kerosene based lighting, LED lights can offer an emissions-free solution, and produce higher quality light, more suitable for reading / education or other indoor activities in after daylight hours.

77 Energy efficient appliances Background For promoting energy efficient appliances, India s Standards and Labelling program was launched on 18 th May 2006 by the Ministry of Power, and presently applies to 14 equipment/ appliances of which four (Air Conditioners, Tubular Fluorescent Lights, Frost Free Refrigerators, Distribution Transformers) have been notified under mandatory labelling effective 7 th January, The other ten types of appliances are presently under voluntary labelling phase (including color televisions, electric-water heaters, ceiling fans, domestic LPG stoves, washing machines, etc.). The S&L program of the Bureau of Energy Efficiency under the Ministry of Power, has been designed to bring about market transformation and to stimulate the development of energy efficient technologies. The program intends to reduce the energy consumption of appliances without compromising on quality and services provided to consumers. The comparative labelling of appliances gives consumers information on the amount of energy savings possible, and allows them to compare different products in the market with respect to their energy efficiency performance. The star rating for a product is calculated from the Star Rating Band which is the range of energy efficiency for the type of product. The following information is displayed on the product labels: Stars (1-5) which indicate the relative efficiency of the product Daily / annual power consumption under standard test conditions Important product specifications such as energy efficiency rating, brand, model, capacity, etc. The role of the S&L program in promoting energy efficiency in some of the appliances commonly used in households is explained below. Refrigerators: Refrigerators typically have a life time of around 15 to 20 years, and the energy costs for operating refrigerators over this period is usually several times the purchasing price. The program currently covers frost free refrigerators under mandatory labeling. According to the star rating bands for refrigerators, the most efficient refrigerators get a 5 star energy label whereas the ones in the lowest end of the range get a 2 star label. It is estimated that a consumer investing in a 5 star refrigerator, would accrue energy cost savings to an extent that the incremental investment (compared to a 2 star refrigerator) would pay back within a period of 4 years. Air-conditioners: Air-conditioners (ACs) are the most energy intensive of household appliances. Air conditioners are covered under mandatory labeling under India s S&L program. Commonly used ACs are either of the window type, or the split type. The energy consumption of ACs is dependent on both the sizing / capacity of an AC and the energy efficiency rating. The capacity of an A/C (typically ranging from 0.75 to 2 tons

78 refrigerant) needs to be selected as per the size of the particular room or space which would be cooled by the AC. It is estimated that for an efficient air conditioner of 1.5 tons capacity, the incremental cost of the rated AC (compared to a non-rated less efficient air conditioner) would be recovered in under six months due to savings in energy costs. Ceiling fans Ceiling fans are widespread in India and it is estimated that cumulatively the energy consumption from usage of ceiling fans in India is higher than that of any other household appliance. Ceiling fans are currently under the voluntary labeling scheme (it is not mandatory of ceiling fans to be labeled with information on energy efficiency but the provision for labeling is there). Current Scenario and Growth Potential As explained in Chapter 4, appliances currently do not have a major share in rural household energy consumption (lighting and cooking and the main sources of energy demand). However as purchasing power and electrification increases, the projected share of energy demand from appliances in 2032 is significantly higher.

79 Table 19: Advantages and Barriers for Star rated appliances Star rated appliances Advantages Barriers Energy efficient appliances use less energy for the same output as conventional device, thereby reducing energy bills for households. Investments in rated appliances usually pay back for themselves within a few years. Energy efficient appliances result in reduced capital investment for energy supply infrastructure. When households are powered by renewable energy, the reduced energy demand can considerably reduce the sizing and investment costs for the renewable energy systems. When households are powered by the grid, reduced capacity addition of coal based power plants resulted in both avoided costs, and avoided GHG emissions. The higher cost of energy efficient appliances compared to conventional products can be a prohibitive barrier for rural households. Consumers are often not aware of the potential reduction in energy bills and pay back periods for investment in star rated appliances compared with non-rated appliances Retailers do not have any incentives for promoting or keeping stock of energy efficient appliances. Retailers may also not be aware of the S&L program and its benefits to consumers. The S&L program may not have the resources to launch awareness campaigns extensively in rural areas, where household electricity consumption at the moment is not significant.

80 Energy efficient Cook-stoves Background In rural households, the majority of energy requirements are attributed to cooking and heating of water. LPG penetration in Rural India is low, and therefore biomass (eg: fuel wood, dung cakes, etc.) is used as the primary source of energy for cooking. Commonly used cook-stoves often result in inefficient combustion of biomass, leading to generation of black carbon emissions. Black carbon and in general fine particulate matter produced from inefficient combustion of biomass, exposes rural household members to respiratory health risks. Efficient cooks-stoves offer viable solutions for reducing the adverse impacts of indoor pollution caused by combustion of biomass for cooking. Energy efficient cook stoves are fixed or portable cook-stoves that combust solid biomass fuels 20 to 65 percent more efficiently compared with traditional cook-stoves. 57 There are multiple variations in the design specifications of energy-efficient cook-stoves, ranging from basic single-burner stoves constructed from mud and brick to advanced portable forced draft cook-stove models with metal and ceramic construction and electric fan assisted air flow. Cook-stoves can also vary with the type of fuel used, with some cook-stoves designed for usage of traditional biomass fuels, and others designed for usage of biomass pellets. Technical and financial specifications of three different types of energy efficient cook-stoves in the Indian market are tabulated below. 58 Table 20: Specifications of cook-stoves in Indian Market Features First Energy / BP Oorja (for-profit) Envirofit (for-profit) TIDE (non-profit) Design and Construction Outer layer of cast iron and inner ceramic chamber for insulation Regulated fan which continuously blows draft of air for more efficient combustion Rechargeable batteries used for the fan Tray at the bottom collects unburned pellets and ash Cylindrical structure with two layers of fire kiln brick material, which increases heat retention Inlets allow better air circulation Mud-and-brick construction resembling traditional cook-stoves Has an insulation, a cast iron grate, a chimney Installed at user s home 57 Reference: Power to the people: Investing in clean energy for the base of the pyramid in India, Centre for Development Finance, IFMR 58 Reference: Power to the people: Investing in clean energy for the base of the pyramid in India, Centre for Development Finance, IFMR

81 Features First Energy / BP Oorja (for-profit) Envirofit (for-profit) TIDE (non-profit) Fuel Pellets made from agricultural waste and small amount of kerosene (30 ml to 40 ml) required to light the pellets Fuel wood, chopped into small pieces because of small size of inlet Fuel wood Dung Advertised Emission Reductions and Benefits 34% reduction in suspended particulate matter 98% reduction in CO emissions Combustion efficiency of 40 to 80% Fuel consumption reduced by 50% Cooking time reduced by 40% Toxic emissions reduced by 80% Fuel consumption reduced by 30 percent for household models and by 40 to 50 percent for larger stoves. Chimney removes smoke from the kitchen and increases fuel efficiency Typical Cost INR 1,050 INR 750 to 1,150 INR 150 to 300 Current Scenario and Growth Potential Energy-efficient cook-stoves are being promoted by non-governmental organizations and entrepreneurs. These stoves may be sold through rural retailers / distributors who supply other cooking appliances / fuels such as LPG stoves. Alternatively, some organizations choose to market and sell their products through their own local network. The most economical efficient cook-stoves, natural draft mud and brick stoves promoted by the non-profit TIDE, have been fairly successful with an adoption rate of 75 to 80 percent in areas where they have been made available. For the more expensive / advanced efficient cook-stoves, the adoption rate has been around 10 to 15%, in areas where they are available. 59 In the future, efficient cook-stoves can potentially play a vital role in reducing the adverse impacts of burning biomass fuel indoors. Further the efficient usage of biomass is imperative to ensure that biomass is procured sustainably. Efficient cook-stoves can reduce the usage of biomass for cooking, reducing cooking times / time required for procurement of fuel, and free up time for other productive activities. Table 21: Advantages and Barriers for energy efficient cook-stoves 59 Reference: Power to the people: Investing in clean energy for the base of the pyramid in India, Centre for Development Finance, IFMR

82 Energy Efficient Cook-Stoves Advantages Barriers Efficient cook-stoves contribute to improved quality of life of the women and children in the villages who spend about 20 hrs per week for collection of fuel. 60 With reduced fuel requirements, less time can be spent for fuel collection. Energy efficient cook-stoves reduce indoor air pollution and associated respiratory illness. Some users spend money to purchase biomass fuel for cooking. Consumers who purchase fuel wood from the market can reduce fuel costs by purchasing a basic Higher upfront costs of efficient cook-stoves in comparison to traditional cook-stoves (which are often home-made) make efficient cook-stoves an unattractive option. The cost savings from lesser usage of biomass are not realized by all users, as many rural households collect fuel wood from their surroundings for free. Some designs of efficient cook-stoves have a small inlet, which require wood to be chopped into smaller sizes. These designs can lead to additional time spent for fuel processing, and can deter users. efficient cook-stove, recovering the cost of the stove in as little as two months. 5.3 Energy Efficiency in Agriculture Sustainable growth of the agriculture sector is critical for the socio-economic growth of rural India. In particular, access to energy for irrigation and farm mechanization is essential for increasing agricultural productivity. Agricultural productivity is important for socio-economic amelioration of farmers, and increasing resource efficiency of the sector. Further increasing agricultural productivity leads to increased sequestration of CO 2 emissions. 60 Access to Energy for the poor: The Clean Energy Option, Oil Change International and Action Aid

83 However, there is significant potential for reducing energy consumption in agriculture, without compromising on agricultural productivity. Irrigation is the main energy consuming activity in the sector, and increasing the efficiency of irrigation pump-sets is one of the main levers for increasing energy efficiency. Additionally, water management techniques can also lead to reduced energy consumption, due to reduced load on irrigation pumps.

84 Demand Side Management - Agricultural Pump Sets Background Demand side management in agriculture offers substantial opportunities for reducing overall energy consumption and reducing the subsidy burden on governments without compensating on the output or productivity of the agricultural sector. Three types of measures may be carried out for increasing pump-set efficiency: Purchasing new efficient star rated pump sets instead of substandard new pump sets Retrofitting of the existing pump sets by replacing pipes and the foot valve Replacement of the existing less efficient pump sets with star rated energy efficient pump sets Many dealers sell inexpensive and sub-standard quality pumps to farmers. As the electricity tariff is highly subsidized, efficiency is generally not considered by farmers as a key criterion for selection of pumps. Dealers also have an incentive to sell oversized pumps with maximum head and as a result, often an inappropriate size and type of pump gets selected. Therefore, influencing the pump selection behavior of farmers, and promoting sale of efficient and correctly sized pump sets, is a key strategy for reducing electricity consumption. Further, in most cases there are high frictional losses in pumping systems due to undersized pipes and high friction foot valves. Therefore, efficiency improvements of 10 15% are possible through replacing the existing undersized pipes with appropriately sized new low-friction pipes, and replacing existing high friction foot valves with low-friction and low head foot valves. Finally, in some cases, replacement of the existing pump sets with star rated efficient pumps is advisable. This low efficiency could be the result of a various factors like a substandard quality pump, inappropriate/over size, multiple motor rewinding, age of the pump, etc. Efficiency improvements as high as 40 to 50% are possible, particularly in cases with over-sizing of pumps. On average, it is estimated that 1176 kwh / year can be the electrical energy savings per pump per year. 61 Current Scenario and Growth Potential In order to accelerate DSM measures in agriculture sector, BEE initiated the Agricultural DSM program, which aims to achieve energy efficiency improvements in electric pump-sets though through Public Private Partnership mode. Under the program, energy efficiency measures are implemented in agricultural pump sets by Energy Service Companies (ESCOs), which result in lower subsidy to be paid by the State Government. The stage government would then share a part of the subsidy savings to the ESCO on an annual basis to compensate for their investment in pump set up gradation. The overall nation-wide saving potential is the agriculture sector from demand side management is estimated to be 30%. 62 In the 12 th five year plan, BEE has targeted to replace 2.5 lakh pump-sets through the Agricultural DSM program Reference: Energy Conservation and Commercialization in Gujarat, USAID India 62 Reference: State-wise Electricity Consumption & Conservation Potential in India, National Productivity Council 63 Reference: Discussion with BEE Officials

85 Table 22: Advantages and Barriers for Energy Efficient Pump-Sets Energy Efficient Pump-Sets Advantages Barriers Energy efficient pump-sets result in reducing overall energy consumption and savings in subsidies for the state government. The technology is readily available in the market. There is a nation-wide initiative already under implementation by the Bureau of Energy Efficiency, Government of India promoting DSM in the agricultural sector. There are market barriers to uptake of DSM in agriculture. The farmers themselves have little incentive to invest or participate in these measures, as electricity is supplied at highly subsidized rates in the agriculture sector. Dealers have a tendency to sell oversized sub-standard pump sets to farmers. Limited ESCOs are available for participation in the BEE Agricultural DSM program. State utilities may lack the financing for taking up DSM activities, and may also have limited expertise / infrastructure to deliver the DSM program. There is a lack of awareness of the benefits of the energy saving measures among farmers and other stakeholders. Further there is sometime resistance from farmers with respect to reducing the rating of pumpsets. The BEE program currently does not cover diesel based pump-sets.

86 Water Management Initiatives Background The agricultural sector provides a means of livelihood for millions in India, who depend on the availability of water to ensure agricultural productivity. However, India has started facing severe water scarcity in different regions. Demand for water for agricultural, domestic, and industrial needs has been continuously increasing in India, but the potential water available for future use has been declining. Around 80% of the water consumed in India is attributed to the agricultural sector. The energy requirements for pumping continuously depleting ground water for irrigation can be curbed through water management techniques. Apart from reducing energy requirements for pumping of ground water, water management initiatives also contribute to ensuring sustainable supply of water in the long run. Drip irrigation is an alternative to conventional surface irrigation or sprinkler irrigation. The technology involves constant application of a specific quantity of water to soil crops using a system of pipes, valves and small drippers for transporting water from its source (eg: wells, tanks and / or reservoirs) under particular quantity and pressure specifications. Drip irrigation systems significantly reduce water consumption by managing moisture requirement as per requirements of each plant. Drip irrigation supplies water directly to the root zone of the crop, which reduces water losses occurring through evaporation and distribution. Drip irrigation can provide up to 90 per cent water-use efficiency, compared to surface irrigation, which delivers 60 per cent water-use efficiency and sprinklers systems which deliver 75 per cent efficiency. Apart from water savings, the technology also leads to increased yield of crops, ranging from 20 to 90 per cent for different types of crops. 64 A drip irrigation system typically consists of: Pumps or pressurised water system Filtration systems Nutrients application system Backwash Controller Pressure Control Valve (Pressure Regulator) Pipes (including main pipe line and tubes) Control Valves and Safety Valves Poly fittings and Accessories (to make connections) Emitters. 64 Reference: Potential For Drip And Sprinkler Irrigation In India, A. Narayanamoorthy, < accessed August 2012

87 Apart from drip irrigation, energy consumption for irrigation can also be reduced by increasing the usage of surface water, and reducing dependence on ground water. Rain water harvesting and development of surface canal infrastructure are some of the strategies that can be adopted for increasing the utilization of surface water. Current Scenario and Growth Potential Since drip irrigation is a capital-intensive technology, the Central and State governments support the technology by providing subsidies for drip irrigation. The schemes and the technology itself has been around for decades. However, the penetration of drip irrigation systems in India is very low. As of , 0.21% of the net irrigated area in India was under drip irrigation technology. The highest percentage of net irrigated area under drip irrigation was in Tamil Nadu (0.69%), followed by Maharashtra (0.64%) and Karanataka (0.24%). 65 Table 23: Advantages and Barriers for Drip Irrigation 65 Reference: Agricultural Engineering Data Book, Jan. 2008, Central Institute of Agricultural Engineering, < accessed August 2012

88 Drip Irrigation Advantages Barriers The technology results in reduction of water usage as well as energy usage. Crop yields are improved from application of the technology, at a rate between 20 90% depending on the type of crop. Drip irrigation is adaptable to terrains where other systems are difficult to operate due to the topography, climate or soil conditions. For instance, drip irrigation has been successfully implemented in sandy areas, as well as in areas with salty soils. Drip irrigation systems can be automated, significantly reducing labor requirements. Agricultural chemicals / nutrients can be The initial cost of drip irrigation systems is higher than other types of irrigation systems. Unexpected rainfall can adversely affect drip irrigation systems, resulting in flooding of emitters, shifting of pipes, dilution of nutrients, etc. Operation of farm machinery such as tractors may be difficult as it may lead to damage to pipes in the drip irrigation system. There is a lack of awareness of the benefits of the drip irrigation systems, and also a lack of incentive in areas where water scarcity is no yet an issue. applied more efficiently using drip irrigation. Fertilizer costs can be reduced through application of drip irrigation, which results in comparatively reduced leaching of nitrates already present in soil. As explained in the examples above, there are multiple opportunities to reduce energy demand from rural households and agriculture through promotion of energy-efficient equipment / measures. Further the energy demand can be met through various types of renewable energy technologies. The combination of distributed or off-grid renewable electricity generation, increased mix of RE in the grid, and energyefficient equipment/measures can lead to sustainable development of the rural sector, and also improve access to energy in areas more efficiently than by only relying on development of grid infrastructure and fossil fuels. The development of grid infrastructure is vital for rural development and for increasing

89 access to the poor but for the development to be sustainable, grid infrastructure has to be supplemented with the measures described above. The next chapter details the potential strategies for promoting the measures / technologies for sustainable low-carbon growth for rural India.

90 6.0 Rural Sustainable Energy Roadmap Sustaining overall economic growth in India is dependent on socio-economic development of rural populace. The goal of enabling universal access to energy in a sustainable manner is congruent with socio-economic development goals (eg: the UN Millennium Development Goals), as energy is required for providing basic services such as public health, education, access to water, sanitation, etc. The rural sustainable energy roadmap encompasses implementation of low-carbon growth technologies/ measures for meeting rural energy requirements and increasing access to energy for the rural population. The roadmap entails more efficient utilization of energy resources, and increased supply of energy through harnessing locally available renewable sources. Two low-carbon scenarios have been developed to represent the potential outcomes of the sustainable energy roadmap for rural India: Moderate low-carbon scenario Aggressive low-carbon scenario These scenarios are compared with the business-as-usual (BAU) demand scenario, discussed in the previous chapter. Key differences between the scenarios are highlighted below. 66 BAU Demand Scenario Moderate - Low Carbon Scenario Aggressive - Low Carbon Scenario Energy efficiency Involves business-as-usual equipment / appliances Involves partial / moderate deployment of energy - efficient equipment / appliances Involves maximum / high deployment of energy - efficient equipment / appliances Percentage contribution of renewable energy generation to grid electricity 9% 9% 12% 67 Percentage contribution of off-grid renewable energy to total electrical demand in rural areas 11.5% 21% 30% 66 Values for emissions and energy are also presented for 2011 for comparison in different figures presented in this chapter. These are also projected figures based on end-use models and do not exactly match with figures presented for present energy consumption in Chapter The aggressive low crbon scenario is aligned with Scenario 3 of the CEA National Electricity Plan for the 12 th and 13 th five year plans (high renewable, high gas scenario). The contribution of RE in terms of capacity is as high as 28% with an extrapolation of the capacity addition plans till However, due to the low PLF of RE, the contribution to electricity generation is much lower at 12%.

91 The BAU demand scenario in rural India is driven by use of less efficient equipment / appliances, and energy supplied from carbon-intensive sources. It is assumed that by 2032, all rural households and agricultural energy (electrical and thermal) requirements are met in the BAU demand scenario. However, the socio-economic costs of meeting these requirements can be optimized by adopting a sustainable energy roadmap. Apart from increased access to energy, the roadmap also entails co- benefits such as reduced emissions of black carbon / hazardous fumes, less time spent collecting fuel-wood, increased agricultural productivity, potential for employment / revenue generation through export of surplus electricity, and others. Key components of the sustainable energy roadmap are detailed in the following sections. 6.1 Sustainable Energy for Rural Households Sustainable Energy for Cooking Key features of a sustainable energy scenario for cooking include: Shift from traditional cook-stoves with low end-use efficiency to advanced cook-stoves with improved end-use efficiency Increased penetration of LPG, reducing dependency on biomass Reduced black carbon emissions and indoor pollution resulting from combustion of biomass Reduced time spent by members of rural households for collection of fuel-wood The end-use efficiency of biomass in traditional cook-stoves is around 15%, whereas the end-use efficiency of LPG is around 64%. Therefore, biomass savings are proportionately much higher than the reduction in end-use energy (refer Figure 20) from biomass in the low-carbon scenarios. In the aggressive low-carbon scenario a combination of switch to LPG and application of advanced (biomass-based) cookstoves, results in reduction in biomass consumption by close to 80%, whereas energy derived from biomass is reduced by 43%. Key assumptions for the scenarios considered are tabulated below: BAU Demand Scenario Moderate - Low Carbon Scenario Aggressive - Low Carbon Scenario Type of Cook-stoves (for cooking with biomass) Traditional cook-stoves (~ 15% end use efficiency) Advance cook-stoves (~ 22% end use efficiency) Advance cook-stoves (~ 30% end use efficiency) Fuels 30% of end-use energy for cooking derived from LPG, balance from biomass 50% of end-use energy for cooking derived from LPG, balance from biomass 70% of end-use energy for cooking derived from LPG, balance from biomass

92 Figure 20 End use energy and fuel consumption for cooking Cooking - End Use Energy Cooking - Fuel Consumption End Use Energy (PJ) BAU Demand Enegy From Biomass (PJ) Moderate Low-Carbon Scenario Energy From LPG (PJ) Aggressive Low- Carbon Scenario Fuel (Thousand tons) BAU Demand Biomass Qty (Gg) (thousand tons) Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario LPG Qty (Gg) (thousand tons) Absolute GHG emissions from cooking would increase with a shift from biomass to LPG (assuming biomass is renewable). However, in the sustainable energy/ low-carbon scenarios, the biomass saved from use efficient cook-stoves and fuel switch to LPG could partially contribute to surplus availability of biomass for power generation to meet electricity requirements in rural areas. This would displace fossil fuel based power generation and result in net emission reductions.

93 Figure 21 Absolute GHG Emissions and GHG Abatement from Cooking Cooking - GHG Emissions (Absolute) Cooking - GHG Abatement GHG Emissions (MtCO2) GHG Emissions (MtCO2) Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario BAU Demand 2032 Moderate Low-Carbon Scenario 2032 Aggressive Low-Carbon Scenario GHG abatement from fuel switch to LPG (MtCO2) GHG abatement from utilization of 50% of biomass saved (from fuel switch and use of efficient cookstoves) for power generation - displacing grid (MtCO2) Net GHG Abatement (MtCO2) Sustainable Energy for Lighting Key features of a sustainable energy scenario for lighting include: Shift from incandescent bulbs to CFLs and LEDs Shift from kerosene based lighting to electrical lighting Reduced indoor pollution / safety hazards associated with use of kerosene Reduction in economic costs associated with subsidies and under-recoveries on kerosene Integration of lighting applications with solar PV technologies Key assumptions for the scenarios considered are tabulated below. BAU Demand Scenario Moderate - Low Carbon Scenario Aggressive - Low Carbon Scenario Incandescent Lamps (ICLs) 644 million ICLs 50% of ICLs replaced by 5 W LEDs, 50% replaced by 15 W CFLs 100% of ICLs replaced by 5 W LEDs

94 Fluorescent Tube Lights (FTLs) 450 million FTLs 100% of FTLs replaced by 18 W LEDs 100% of FTLs replaced by 18 W LEDs Kerosene consumption energy 200 PJ 40 PJ 20 PJ Increased electrical demand due to switch from kerosene to electrical lighting PJ 25.2 PJ Lighting energy demand is met through a combination of electrical energy and thermal energy (kerosene). Complete replacement of incandescent lamps and tubular fluorescent lamps with LEDs (aggressive lowcarbon scenario) would result in around 83% reduction in electrical demand. This would be partially offset with increase in electrical demand resulting from switch-over from kerosene lamps to electrical lighting (either grid-connected or off-grid). Overall reduction in electrical demand is 77% in the aggressive scenario and 56% in the moderate scenario. Figure 22 Lighting Energy Consumption Lighting Energy by Source Total: 433 Energy (PJ) Total: BAU Demand Scenario Total: Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario Total: 101 Conventional Grid Off Grid RE Grid RE Lighting Kerosene

95 Reduction of GHG emissions in lighting applications are driven by a combination of energy efficiency measures, increased penetration of renewable energy power (grid-connected and off-grid), as well as reduced dependence on kerosene. Figure 23 Lighting GHG Emissions and GHG Abatement Lighting - GHG Emissions Lighting - GHG Abatement GHG Emissions (MtCO2) BAU Demand Scenario Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario Moderate Low-Carbon Scenario 2032 Aggressive Low-Carbon Scenario Lighting - GHG abatement from EE (MtCO2) Lighting - GHG abatement from RE GHG emissions due to Electrical Energy (MtCO2) GHG emissions due to Thermal Energy (MtCO2) Lighting - GHG abatement due to increased electrical load (shift from kerosene) (MtCO2) Lighting - GHG abatement from reduced kerosene consumption (shift from kerosene to electrical lighting) (MtCO2) Lighting - Total GHG emissions abatement (MtCO2) Sustainable Energy for Home Appliances Key features of a sustainable energy scenario for home appliances include: Energy efficient air conditioners and refrigerators (shift from 3 star rated to 5 star rated) Other energy-efficient appliances - ceiling fans, televisions, water heaters, air coolers, washing machines (shift from non-rated to 5 star rated) BAU Scenario Moderate - Low Carbon Scenario Aggressive - Low Carbon Scenario Air conditioners 3-star rated 50% 5-star rated 100% 5-star rated 50% 3-star rated

96 Refrigerators 3-star rated 50% 5-star rated 100% 5-star rated 50% 3-star rated Other appliances Non-rated 100% 3-star rated 100% 5-star rated Electricity demand from home appliances is bound to increase substantially by 2032 with increase purchasing power and electrification. However, enforcement of standards and labelling program (currently mandatory for air conditioners and frost-free refrigerators and voluntary for other home appliances) can reduce the impact of this increase. Further increased renewable energy in the grid and offgrid renewable energy generation would lead to GHG abatement of approximately 61.4 million tons of CO 2 in the aggressive low-carbon scenario and 22.8 million tons of CO 2 in the moderate low-carbon scenario. Figure 24 Home Appliances Energy Consumption End Use Energy (PJ) Home Appliances - Electrical energy by source BAU Demand Scenario Moderate Low- Carbon Scenario Conventional Grid Off Grid RE Grid RE Aggressive Low-Carbon Scenario End Use Energy (PJ) Home appliances - Total electrical energy BAU Demand Scenario Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario

97 Figure 25 Home Appliances GHG Emissions and GHG Abatement GHG Emissions (MtCO2) Home Appliances - GHG Emissions BAU Demand Scenario Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario HH Appliances - GHG Abatement Moderate Low-Carbon Scenario 2032 Aggressive Low-Carbon Scenario GHG abatement due to EE (MtCO2) Total Abatement Savings (MtCO2) GHG abatement due to RE (MtCO2) 6.2 Sustainable Energy for Agriculture Sustainable energy for Irrigation Energy efficiency improvements in agricultural pumps leads to a decrease in electrical energy demand and thermal energy demand for irrigation in low-carbon scenarios compared to the BAU demand scenario. However, it may be noted that thermal energy demand (due to diesel based pumps) is reduced substantially in the BAU demand scenario itself due to electrification of pumps. Key assumptions with respect to energy for irrigation for the scenarios considered are tabulated below. BAU Scenario Non-rated pump-sets Moderate - Low Carbon Scenario 3-star rated pump-sets (approximately 30% reduction in electricity consumption) Aggressive - Low Carbon Scenario 50% 3-star rated pump-sets 50% 5-star rated pump-sets (approximately 42% reduction in electricity consumption)

98 Figure 26 Irrigation Energy Consumption Irrigation - Energy by Source 600 Irrigation - Electrical and Thermal Energy Consumption Energy (PJ) End Use Energy (PJ) BAU Demand Scenario Conventional Grid (PJ) Off Grid RE (PJ) Grid RE (PJ) 2032 Moderate Low-Carbon Scenario 2032 Aggressive Low-Carbon Scenario BAU Demand Scenario 2032 Moderate Low-Carbon Scenario Total Electrical Demand (PJ) Total Thermal (Diesel) Demand (PJ) 2032 Aggressive Low-Carbon Scenario Total Thermal (Diesel) Demand (PJ) In addition to the reduced electrical and thermal energy demand, GHG emissions are further reduced due to increased penetration of off-grid renewable energy (eg: solar PV pumps and power from mini-grids coupled with renewable energy systems) as well as grid-connected renewable energy plants in low-carbon scenarios. Figure 27 Irrigation GHG Emissions and GHG Abatement Irrigation - GHG emissions Irrigation - GHG Abatement GHG Emissions (MtCO2) BAU Demand Scenario GHG emissions - grid (MtCO2) Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario GHG emissions - diesel (MtCO2) Moderate Low-Carbon Scenario 2032 Aggressive Low-Carbon Scenario Electrical pumps - GHG abatement due to EE (MtCO2) Electrical pumps - GHG abatement due to RE (MtCO2) Diesel pumps - GHG abatement due to EE (MtCO2) Electrical pumps - Total GHG abatement (MtCO2) Electrical and diesel pumps - Total GHG abatement (MtCO2) Sustainable Energy for Farming

99 Energy efficiency improvements or fuel switch measures are not proposed for the operation of tractors and other farm machinery. As such, increased agricultural productivity due to farm mechanization would contribute to the overall sustainable growth of the agriculture sector, contributing to increased carbon sinks from agricultural crops, and greater availability of biomass residues for distributed power generation. With advances in technologies for fuel cells, biodiesel production, and/or distribution networks for supply of CNG, there could be a potential for fuel switch from diesel to cleaner fuels in farm machinery. However, it is no clear whether these changes could be viable by 2032, and their potential impact is not quantified in the low-carbon scenarios. 6.3 Summary of GHG emissions and Energy Demand The overall difference between the BAU demand scenario and the aggressive low-carbon scenarios in 2032 amounts to: GHG emissions abatement of million tons of CO 2 (refer Figure 28), approximately 42% of BAU emissions in 2032 Electrical energy demand reduction of 709 PJ Thermal energy demand reduction of 202 PJ (including 180 PJ of kerosene and 22 PJ of diesel) A reduction in electrical energy demand would lead to an avoidance of approximately 22 GW of additional power capacity addition by Further, subsidies and under-recoveries resulting from supply of PDS kerosene in 2032 would be reduced by approximately INR 15 thousand crores (2.7 billion USD) based on present rates. 68 A total reduction in GHG emissions of 240 million tons of CO 2 is achieved if biomass savings from efficient cookstoves and fuel switch to LPG results in additional biomass based power generation and displacement of fossil fuels.

100 Figure 28 GHG Emissions Summary GHG Emissions Summary Total: Total: Total: Total: Farming Machinery - GHG Emissions Irrigation - GHG Emissions Lighting - GHG Emissions Appliances - GHG Emissions BAU Demand Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario Cooking - GHG Emissions

101 Figure 29 Energy Demand Summary Energy Demand Summary BAU Demand Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario 2232 Total Energy Demand Total Thermal Demand Total Electrical Demand Total Electrical Demand Total Thermal Demand Total Energy Demand 6.4 Prioritization of Abatement Measures The maximum contribution to GHG abatement is clearly from EE measures in the low-carbon growth scenarios envisaged (Figure 30). However, promoting RE measures is an essential strategy for increasing access to energy in rural areas in a sustainable manner (without over-relying on carbon-intensive grid connected plants). To reduce the cost of RE it is essential to maximize the penetration of energy efficient technologies / measures, as these will reduce the overall cost of RE technologies (through reduced sizing).

102 Figure 30 Total GHG Abatement by Type Total GHG Abatement - by type (MtCO2) % % Moderate Low- Carbon Scenario Increased RE (grid / offgrid) for various applications EE and fuel switch for various applications % % Aggressive Low-Carbon Scenario Therefore to maximize GHG abatement and to reduce the cost of introducing RE technologies, early action towards implementation of energy efficiency and fuel switch measures is necessary. Among the different applications, lighting applications may be accorded highest priority, as they represent the maximum potential for energy and GHG emissions abatement / energy demand reduction.

103 Figure 31 Total GHG Abatement EE and Fuel Switch Total GHG Abatement - EE and Fuel Switch (MtCO2) Moderate Low-Carbon Scenario Aggressive Low-Carbon Scenario Cooking - EE and fuel swtich to LPG Appliances - EE Lighting - EE and switch from kersone to electrical lighting Irrigation - EE in electrical and diesel pumps The other applications are all evenly placed in terms of abatement potential. As such, there is a strong case for promoting energy efficiency to the maximum extent across applications, as this would contribute towards: Reducing the gap between rural energy supply and demand Reducing the overall investment required in power generation capacity (both RE and conventional systems) Reducing the sizing of individual off-grid / decentralized RE systems (sizing of solar panels for individual homes or individual pump-sets would be reduced with more efficient appliances / pumps / lighting devices) Renewable energy plays an important role in the implementation of the sustainable energy rural roadmap as accelerated implementation of off-grid / decentralized renewable energy systems will: Increase access to energy in rural areas: Even with 100% electrification of households, grid electricity may not be available 24 hours a day for consumers. Therefore the implementation of renewable energy systems / decentralized units would fill the gap in electricity supply from the grid. Reduce the cost of supplying electricity to rural areas: State utilities typically supply electricity to rural areas at subsidized rates in the range of 3 to 5 INR/kWh. However the actual cost of supplying grid electricity to rural or remote areas is in the range of 9 to 15 INR /kwh. Off-grid / distributed renewable energy systems can generate electricity at lower costs. Generate opportunities for sale of surplus electricity: Off-grid renewable energy systems can potentially become grid-connected, and surplus electricity may be exported back into the grid.

104 Of the different renewable energy technology options available, when it comes to smaller off-grid / distributed systems, solar and biomass are the preferred options. This is reflected in MNRE s Strategic Plan for New and Renewable Energy Sector for the Period , which focuses primarily on solar and biomass technologies in its year-wise targets for off-grid RE applications. Although solar PV is currently the most expensive technology, its cost has been rapidly declining. Solar PV has a high potential for replication and is well suited for meeting distributed electricity requirements (eg: panels can be installed for individual homes or even individual devices). Biomass based power generation also has a high potential for replication, as agro-residues are abundantly available in rural areas. However, operation of biomass power generation systems is relatively more difficult and requires trained personnel, preventive maintenance, and standardization of fuel quality. Small hydro power plants are economical, but are site-specific, with most of the potential in North-eastern states. Small wind energy systems and comparatively less economical and face several technical barriers such as low PLF and intermittent generation. They are also site-specific and can be deployed only in areas with average wind speeds higher than 5 m/s. Table 24 Prioritization of Renewable Energy Technologies for Off-grid / Decentralized Power Generation Marginal Type of Operational ease Abatement Economic Potential for Renewable of Cost (INR / Attractiveness Replication Energy implementation tco2) Solar PV Low High High Biomass gasification based power generation Biogas based power generation Small Hydro power 4.53 Medium High Low 4.58 Medium High Low 4.00 Medium Medium Medium Small Wind energy systems 5.84 Medium Low Medium To increase the penetration of off-grid / decentralized renewable energy, a mix of different renewable energy sources need to be ocnsidered. However, based on factors such as economic attractiveness, potential for replication and operational ease of implementation (Table 24), the prioritization may be in the following order: (1) solar PV, (2) biomass (gasification or biogas), (3) small hydro power, (4) small wind energy systems.

105 Overall the sustainable energy roadmap requires simultaneous promotion of energy efficiency / clean fuels and renewable energy. The areas of highest priority in the two categories are energy efficiency / fuel switch in lighting and solar PV. However, to achieve optimal results balanced promotion of various abatement technologies / measures is necessary. Various policy regulatory and institutional interventions would be required for overcoming barriers and creating the right incentives for deployment of low-carbon technologies. 6.5 Implementing the Roadmap The sustainable energy roadmap would reduce costs associated with supply of grid electricity and subsidized fossil fuels to rural areas. Although these are significant incentives in themselves, there are various barriers to implementation of the solutions for sustainable energy in rural India. To overcome the barriers, the implementation of low carbon technologies / measures needs to be supported by short term, medium term and long term interventions as described below. Short Term Interventions Convergence between existing Government initiatives for rural development and initiatives for clean energy / climate change: Convergence between various schemes for rural development with clean energy / climate change initiatives can lead to successful models for sustainable energy supply to rural areas. Existing energy / climate change initiatives of the Government of India can also be given specific targets / additional institutional support for accelerated implementation in rural areas. (refer Table 25 and Table 27). Programs for distribution of EE devices to rural households: To increase penetration of high volume energy-efficient appliances, including efficient lighting (eg: CFLs / LEDs) and efficient cook-stoves, programs such as the Bachat Lamp Yojna need to be developed for rural areas. In the absence of a robust carbon market, other potential sources of funding like NCEF need to be explored for subsidizing the cost of efficient lighting / cook-stoves in India. Public- private partnerships: Although there have been successful case studies of private businesses which have setup off-grid / decentralized renewable energy systems in certain parts of India, more needs to be done to create an environment conducive to large scale deployment. Private-public partnerships, particularly between state utilities / REC and private businesses (Renewable Energy Supply Companies) can be explored. Policy markers have to create an entrepreneurial environment to drive change through clean technology. Schemes such as PURA may be applied for promoting private-public partnerships for clean energy solutions in rural India. Cross-subsidies: The telecom industry in expanding rapidly in rural areas. A potential solution for reducing cost of off-grid / decentralized renewable energy is cross-subsidizing the supply of electricity to rural households / farmers with supply of electricity to telecom towers in rural areas (refer to case study on OMC Power in chapter 5). Policies for addressing energy water nexus: Joint programs between the Ministry of Power and Ministry of Water Resources are required to address the energy water nexus. The issue of excessive usage of groundwater for irrigation and declining water tables, is a problem that can jointly be addressed by the two Ministries, with specific programs for promoting water management practices and water-efficient irrigation technologies.

106 Medium Term Interventions Mandatory standards and labeling: Mandatory standards and labeling for household appliance and irrigation pump-sets would help in enabling the transition to energy efficient appliances. Equally important is awareness building for consumers as well as retail distributors / dealers. Institutional support for R&D: The National Solar Mission is already aggressively promoting solar energy technologies through subsidies and loans. However, to increase penetration of solar PV technologies in the long run, the technology costs need to be reduced. On the other hand, biomass gasification is relatively economical, but technical barriers exist for its application for various types of biomass. Support for R&D programs on decentralized solar energy and biomass energy systems is necessary to overcome these barriers. Regional exchange of energy: Some of India s neighbors, including Nepal, Bangladesh, Bhutan and Sri Lanka have large resources of renewable power but limited on fluctuating energy demand. Enabling exchange of electricity between India and its neighbors, would help both India and its neighbors achieve universal access to energy in a low-carbon and cost-effective manner. Long Term Interventions Smart grids: There is a vast potential to integrate distributed renewable energy systems with the national grid through a smart grid network. This could potentially increase the economic viability of renewable energy systems as it would provide the opportunity to sell supply grid electricity back to the national grid. Phasing out / reducing subsidies for fossil fuels and grid power: Phasing out or reducing subsidies, which de-incentivize investment in energy efficient products is required in the long run. However, the objective of ensuring universal access to energy should not be comprised, and therefore this needs to be carried out in a controlled manner and as a long-term strategy. Augmentation of CNG/R-LNG pipelines to rural areas: Recently Petroleum and Natural Gas Regulatory Board has published the current plan of expanding the gas pipelines within India. Even with the current plan most of the states within the country will be connected via gas pipelines, which can potentially act as a catalyst for promoting clean energy (natural gas & LPG) in rural India. Ensuring last mile connectivity to rural areas would be a challenge and would require long term planning for development of pipeline infrastructure.

107 Table 26 Augmentation of existing rural Development Initiatives Existing Rural Development Initiative Potential for Convergence with clean energy / climate change initiatives Provision of Urban amenities to Rural Areas (PURA) - PURA is a scheme designed for deploying Public Private Partnerships to develop basic infrastructure for rural development, with the objective of bridging the rural-urban divide and reducing migration to urban areas. Financing for projects under the scheme would be through a combination of PURA grants, Ministry of Rural Development scheme funds, other funds of the state government, and equity funding by private players. 69 PURA can be an effective vehicle for developing models for distributed electricity generation with the involvement of private players, State Governments, and Gram Panchayats. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) The MNREGA is an act to provide for the enhancement of livelihood security of the households in rural areas of the country by providing at least one hundred days of Guaranteed wage employment in every financial year to every household. 70 MGNREGA can be combined with programs for augmenting energy supply in rural areas. For instance, employment opportunities may be provided for plantation of energy crops on Panchayat lands, for generation of biomass fuel. This fuel can be used for off-grid / distributed power generation in biomass gasification plants and / or for generation of bio-diesel for use in tractors / agricultural machinery. National Bank for Agricultural and Rural Since NABARD engages with cooperative banks 69 Source: Provision of Urban amenities in Rural Areas (PURA) Scheme, Crisil Infrastructure Advisory, 22 March 2011, accessed 16 December Source: Mahatma Gandhi National Rural Employment Guarantee Act, 2005, Vision, Strategic Framework and Plan of Action ( ), May 2010

108 Development (NABARD) NABARD is an apex institution overseeing policy, planning and operations related to financing for agriculture and rural development. NABARD is a refinancing agency for financial institutions such as cooperative banks and regional rural banks (RRBs). The bank carries out several functions including and RRBs for various activities including refinancing, capacity building, monitoring, etc. it is ideally suited to disperse knowledge and incentives for promotion on sustainable energy programs. Planning, dispensation, monitoring of credit Developmental and promotional functions Supervision of cooperative banks and regional rural banks Training and capacity building

109 Table 27 Augmentation of Existing Energy / Climate Change Initiatives Existing Energy / Climate Change Initiative Implementation in Rural Areas Agricultural DSM Program The agriculture demand supply management (DSM) management program of the Bureau of Energy Efficiency aims to promote and accelerate adoption of energy efficient technologies and measures in the agriculture sector. The program promotes DSM by creating appropriate framework for market based interventions in agricultural pumping sector (for introducing efficient pumping systems) and Public Private Partnerships. The program is already contributing to improved energy efficiency of electrical irrigation pump-sets. Opportunities for expanding the impact of the programme include: Energy efficiency measures for diesel based agricultural pump-sets Disbursement of viability gap funding for adoption of solar PV pumps, potentially through NCEF or other funds for climatefriendly technologies Capacity building for farmers and retailers of pump-sets Standards and Labeling Program Introduction of energy efficiency in end use appliances is one of the major components of Energy Conservation (EC) Act Standard and Labeling (S&L) scheme was launched by Ministry of Power (MoP), Government of India during May 2006 to promote energy efficiency in end use equipments. Bureau of Energy Efficiency (BEE) has been appointed by MoP as the executing agency for S&L program. Eleven products are currently included by the BEE under the voluntary labeling scheme; and since January 2010, BEE star labeling is mandatory for four equipments. National Clean Energy Fund (NCEF) The standards and labelling program can contribute to improving energy efficiency in rural areas. Minimum energy performance standards can be made mandatory for agricultural pump-sets Household appliances already included under voluntary standards and labelling can be gradually brought under a mandatory scheme Capacity building can be extended to retailers active in rural areas for sale of agricultural pump-sets and household appliances The National Clean Energy Fund can be utilized for provision of loans or viability gap funding for

110 The NCEF, which came into effect on July 2010, is based on a levy of a Clean Energy Cess of Rs. 50 per tonne on coal produced domestically or imported to India. The cess is collected by the Central Board of Excise & Customs (CBEC) and the Ministry of Finance is responsible for its disbursement. The fund was created for funding research and innovative projects in clean energy technologies. Clean energy projects (by private sector / public sector / consortiums / individuals) are eligible to receive support in the form of loan or viability gap funding. Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY) RGGVY is the government s flagship program for electrification of villages and households in rural India. RGGVY was launched in 2005 and is one of the major national efforts to universalize access to electricity. It aims to provide free of cost connection to all the people living below poverty line in rural India. various clean energy initiatives in rural areas such as: Community based models, private business models, or utility models for implementation of micro-grids with renewable energy systems R&D programs or pilot projects for improved gasifier technologies using different varieties of biomass CFL / LED distribution programs in rural households Solar PV pump-sets for irrigation Energy efficient cook-stove programs In the 11th five year plan ( ), the RGGVY had a dedicated budget of Rs. 540 crore out of total capital budget of Rs crore, for promoting decentralized distribution-cumgeneration from conventional or renewable or nonconventional sources. The proportion of funding for off-grid / decentralized renewable energy systems in RGGVY program may be increased. Further, apart from subsidies and loans different types of incentives may be given under the program to renewable energy suppliers: Generation based incentives for off-grid renewable energy generation Long-term contracts for supply of renewable energy Rebate on operation and maintenance costs (labor costs / costs of maintaining biomass fuel supply) It is essential to include independent monitoring and impact evaluation studies as part of government programs for rural development and low-carbon growth. Indendent monitoring and evaluation is a useful means to ensure that key bottlenecks or shortfalls in implementation are identified at early stages. The

111 combination of short term, medium term, and long term strategies described above would be instrumental in achieving the low carbon scenarios envisaged in this study. 6.6 Conclusion The objective of the roadmap described above is improved quality of life and universal access to energy in rural India. To achieve low-carbon growth it is necessary to create environments to foster and accelerate adoption of low-carbon technologies / measures beyond those in the BAU demand scenario. Once these environments are created, both the rural populace and the government of India would reap the benefits. For instance, in the aggressive low-carbon scenario envisaged: Approximately 23 GW of capacity addition could be avoided by 2032 due to reduction in electrical energy demand. The avoided power capacity addition would lead to avoided costs of around INR 111 thousand crores (USD billion) considering present costs of coal power. These benefits cover approximately 45% of the costs of incremental off-grid RE envisaged in the aggressive lowcarbon scenario. 71 Approximately INR 15 thousand crores (2.7 billion USD) of annual subsidies and underrecoveries from supply of kerosene would be avoided in Approximately INR 780 crores (0.14 billion USD) of annual subsidies and under-recoveries from supply of diesel would be avoided in Rural India would transform from being energy deficient to being a source of additional power for the grid. The national electricity grid would consist of a cleaner energy mix comprising of a combination of fossil fuel and renewable energy plants. Therefore, low-carbon growth for rural India can lead to significant reduction in the economic costs of subsidizing fossil fuels, and also ensure access to energy while reducing requirements for coal based power infrastructure. Overall, the low carbon development of rural India would improve socio-economic development of rural India, and achieve universal access to energy for farmers, rural households and rural businesses through sustainable and inclusive growth These estimates are based on present costs, quoted by CERC. As the costs of RE technologies (particularly solar) are expected to decrease over time, the percentage contribution could be much higher by 2032.

112 About the study: This study is supported by Shakti Sustainable Energy Foundation (Shakti). Ernst & Young LLP, India has provided services related to technical assistance in research, analysis and preparation of the report. About Shakti Sustainable Energy Foundation: Shakti Sustainable Energy Foundation works to secure the future of clean energy in India by supporting the design and implementation of policies that promote both the efficient use of existing resources as well as the development of new and cleaner alternatives. Shakti's efforts are concentrated in four specific areas: power, energy efficiency, transport, and climate policy. The organization acts as a systems integrator, bringing together stakeholders in strategic ways to enable clean energy policies in these fields. It also belongs to an association of technical and policy experts called the ClimateWorks Network. Being a member of this group further helps Shakti connect the policy space in India to the rich knowledge pool that resides within this network.