National Policy on Mini and Micro Grids

The Ministry of New and Renewable Energy aims to foster development of 10,000 mini or micro grids powered by renewable energy sources within five years, to reach electricity to the 237 million Indians who have no access to electricity today.

The Ministry has put out its draft National Policy on Mini/Micro grids for public comments, in which it says that with costs of power generated by renewable sources such as wind and solar coming down, RE-based mini/micro grids are a “durable solution” to provide electricity to the thousands of dark villages of India.

A mini or a micro grid is a network of power cables that reach electricity from a source—such as a small solar power plant — to homes in a particular area, such as a village or a group of villages.

The entire system is built and operated by an entrepreneur (or an Energy Services Company), who makes a business out of supplying energy to homes.

The draft policy defines a micro grid as one that is powered by a source of less than 10 kW capacity and a mini grid as one with 10 kW or more.

The ministry prefers ‘mini’ to ‘micro’, but if smaller systems are not possible, it wants a cluster of mini grids.

To fast-track the process, the Ministry is empanelling energy services companies as ‘Rural Energy Service Providers (RESPs)’, who will install, own and operate the systems.

The RESPs will earn certain privileges for implementation under the Ministry’s programmes.

A number of companies, such as Mera Gao Power, SunEdison and Minda NextGen, have put up several solar-powered mini or micro grids, mainly by supplying equipment to local entrepreneurs.

Their experience has been mixed. While the first few installations are always easy, they have encountered problems while scaling up.

Typically, the entrepreneurs (or those who will be RESPs) need training and handholding, which requires disproportionate investment, time and effort than the size of the business.

Also, there is always the fear of the state-owned electricity distribution company extending the grid to the region served by the micro or mini grid, leading to migration of customers.