Rural Electricity Adoption in India: What's Standing in the Way?

By Doug Barnes

For several years I have been involved in a project to understand why the electricity connection rates in India are not higher than they are. This resulted in a report probing various reason that are holding back India for achieving universal access, despite spending quite a bit of money on the problem. For details, see the report Power for All: Electricity Access Challenge in India. I have done quite a bit of work on India, including a some older major studies on Energy Strategies for Rural India (2002)  and The Impact of Energy on Women's Lives (2004). This new report complements the past work.

First some facts. Owing mainly to its large population, India still has by far the world’s largest number of households without electricity. About 311 million people still live without electricity, and they mostly reside in poor rural areas. By late 2012, the national electricity grid had reached 92 percent of India’s rural villages, about 880 million people. And 200 hundred million households in India live in villages with electricity, but they have not adopted service.

So what does this say about energy access? For me, given the significant benefits of rural electrification, with so many without electricity living in villages with grid service means that something is standing in the way of electricity adoption in India. For India it is necessary to understand the concepts involved in both village and household electrification. The electricity access rate is the percent of all households in India with electricity. The electricity availability rate is the percent of household living in communities with service, regardless of whether or not they have adopted electricity. Finally, the electricity hook-up rate is defined as the percent of households that have adopted electricity in communities that have service.

What Drives Electricity Adoption? A Review of Connection Charges in Sub-Saharan Africa

By Doug Barnes

Household Electricity Meter
Picture Credit: Douglas Barnes

Today many development agencies focus on the price and physical presence of access to electricity as being the main issue for lack of electricity in developing countries.  They may want to alter their thinking.  This is not to say that physical access and the price of electricity are not important, for clearly they are very important.  But a new study on Electricity Adoption and Connection Charges in Sub-Saharan Africa finds that an equally important factor may be electricity connection charges for new consumers.  Africa is the region with the lowest electricity access rates in the world (only 1 in 8 rural households and 1 of 2 urban households have electricity) and also is the region with the highest initial service connection charges.  One question not explored in this paper is the extent to which high connection charges are an indirect way for power companies to confine service to more profitable high income electricity users and to avoid political pressure to extend electricity to poor, low electricity using households. 

For electricity companies, expanding electricity to all makes quite a bit of sense for long term business development.  Electricity would contribute to economic development, and then more people could afford electricity.  As incomes grow even poorer people would buy more appliances and increase their electricity use, making them more financially attractive for electricity companies.  Thus, in the long term policies to expand electricity service make both solid financial and economic sense.

Eight Steps to Successful Rural Electrification Programs

The pace of rural electrification over much of the developing world has been painfully slow, especially in South Asia and Africa. Rural electrification programs can undoubtedly face major obstacles. The low population densities in rural areas result in high capital and operating costs for electricity companies. Consumers are often poor and their electricity consumption low.  This post is on grid rural electrification and there will be a similar future post on offgrid rural electrification.

The Challenge of Rural Electrification:  D. Barnes

Yet in spite of these problems, many countries have been quietly and successfully providing electricity to rural areas. In Thailand, well over 90 percent of rural people have a supply. In Costa Rica, cooperatives and the government power utility provide electricity to nearly 100% percent of the rural population. In Tunisia, over 90% percent of rural households already have a supply. In studying countries like these and others there appear to be 8 steps to achieving successful rural electrification. These steps are taken from my book called The Challenge of Rural Electrification: Strategies for Developing Countries. that examined 10 successful programs from around the world including the developed countries of the United States and Ireland. I know that it appears these programs are in middle to high income countries, but many were low income when they initiated their programs. 

To read more click below to continue.

Rural Electrification and Low Connection Costs

Village in Maharashtra India: by D. Barnes

Many developing countries still have very high connection costs.  This helps with the utility to recover costs of providing serive, but it also means that many people even in areas with electricity available may not be able to afford a connection to the electricity grid.  Reasearch from around the world indicates that those countries wth low new service connection costs or which provide financal assistance for such costs have much higher rates of connection by poorer households. 

Given that the benefits of rural electrification are quite high, should countries or utilities with high connection costs consider changing their policies?

For more information see short note on
Transformative Power.

There will be more to come on this topic in the future as we are just collecting collecting cost information from a large number of countries.  See new post added in 2013.