Access to Electricity for Productive Uses of Energy and Economic Development

Background

A shop owner running different machines from energy produced by off grid Micro Hydro Project

Access to infrastructure is one of the basic requirement for the development of an economy and it holds its importance especially in the context of off-grid rural areas which are generally lagged behind in most of the developing countries. There are different elements which constitute infrastructure such as road, water, sanitation, electricity, health, telecommunication etc. Each one contribute and complement other elements in achieving overall development of a region or a country. Access to electricity is perceived to be a key requirement for poverty reduction by enabling the creation and improvement of income generating activities.

India being a fast developing country is actively pursuing rural electrification since decades. However, major push for electricity for all came out in 2003 with the passing of Electricity Act 2003. The use of electricity was mainly for two purposes i.e. household consumption and commercial consumption. Although government has extended its support in laying down grid infrastructures in  the villages and also supported Below Poverty Line (BPL) families in providing free of cost for connection, there was limited focus on active promotion of electricity for commercial uses. Although Rural Electrification policy acknowledges the role of electricity in productive activity and livelihood generation in rural areas, and requires especial efforts to be made to promote economic activities through electricity provision. There are few studies who attempted to establish direct relationship between access to electricity and productive uses of energy[1] leading to economic development. The relationship between access to electricity and productive uses of energy is inconclusive and need more comprehensive research. Most of the studies are country specific, adopt different methodologies, control group and time frame. In the context of India, we have one positive example where providing electricity for irrigation pumps by heavily subsidizing electricity rate has resulted in increase in agriculture productivity – but this is grid connected and not an off grid example.

In the context of Uttarakhand, Uttarakhand Renewable Energy Development Agency (UREDA) has been providing electricity to villages located in the remote and far-flung areas through decentralized off-grid MHPs. About 42 MHPs of cumulative capacity 4210 KW (4.2 MW) have been constructed so far and are providing electricity to about 136 villages and 148 hamlets. UREDA has adopted an approach that called for greater communities/societies participation towards establishing and managing these MHPs. Electricity is being used at household level as well as commercial level. However, in order to assess economic development in these areas due to access of electricity has not been thought about or has limited research.

---

[1] Productive uses of energy can be defined as an application of energy mainly derived from renewable sources which is used to create goods/services either directly or indirectly for production of income or value  (as per the definition of GEF and FAO)

►Go to Top

About the Study

Under this context, a study was undertaken to investigate whether micro hydro projects have led to productive uses of energy and in turn led to economic development in local area. The research presented in this report has sought to explore the question through a review of existing literature, field survey which included semi-structured interview and informal group discussions. The survey was conducted at five Micro hydro sites and villages who are beneficiaries of the power plants. These sites are Milkhet, Ramgaad, Toli, Taluka and Istergaad in the state of Uttarakhand. The sites were selected where some cognizable instances of use of Micro Hydro Power for productive purposes were reported.

Findings

While there are some evidences of positive relationships between access of electricity and productive uses of energy, it has not been possible to directly establish relationship between level of access of electricity and economic development. The relationship is ambiguous, and localized in nature. Findings from the survey in the context of consumptive uses of energy and productive uses of energy is presented in the table. The respondents stated one or the other good thing perceived by them about the power plant. These responses are presented in Table 1. 

Table 1: Table showing responses of beneficiaries as to the goods aspects about use of power from Micro Hydro Power Plants as per their perception (N=538) — (Multiple responses)

S.N.	Response	Total no. of responses	In %	Nature of response (Productive/ Consumptive)
1	Helpful in boosting tourism as pilgrims now travel to Yamanotri even during night due to lighting arrangements made along its route	13	2%	Consumptive
2	Access to TV has increased, Awareness is generated through TV, TV acts as a source of as entertainment	147	27.30%	Consumptive
3	Helpful for studies of children/Children get encouraged to study in sufficient light and get extra hours for studies due to extended time available for studies in the mornings and evenings/Has resulted in improvement in the level of academic achievement of children	205	38.10%	Consumptive
4	Helpful for carrying out household chores due to availability of light through MHP	29	5.40%	Consumptive
5	Invasion of human habitations by wild animals reduced	131	24.30%	NA
6	Helpful for children in learning computer/ Computer is being taught in schools for availability of power	40	7.40%	Consumptive
7	Availability of light in evening & morning saves time enabling local women to utilize the same for fetching fodder and fuel from forest	34	6.30%	Consumptive
8	Helpful to take up decoration work during festivities, marriages, pooja in temples, etc.	49	9.10%	Productive/ Consumptive
9	Women undertake carding, weaving and knitting work in the night/Women able to undertake productive work like weaving and knitting, etc.	29	5.40%	Consumptive
10	Enables use of electrical domestic appliances (heater in winter, heating water, ironing clothes, etc.)	47	8.70%	Consumptive
11	Causes convenience for going to toilet in the night	5	1%	Consumptive
12	People/women undertake threshing work in the night/people undertake grading/cleaning /sorting of farm produce	12	2.20%	Productive
13	The remote villages stand electrified/Villages look vibrant	106	19.70%	Consumptive
14	Literacy level and quality of education has improved	10	1.90%	Consumptive
15	Due to availability of flour mill in the village, women are relieved of grinding wheat/grains, etc. manually.	14	3%	Productive
16	Has enabled taking up sewing work through electrically driven machine	3	0.60%	Productive
17	Has resulted in improvement in the standard of living/Good for prosperity and development of village	10	1.90%	Consumptive
18	Women get information on  Govt. schemes, developmental schemes, such as, health, banking, SHGs, JSY, pension, etc.	12	2.20%	Consumptive
19	It is now possible to setup small enterprises	1	0.20%	Productive
20	Enables lifting of water from lower level through use of pump for minor irrigation	2	0.40%	Productive
21	Carpenters are able to use electrically driven plainer	1	0.20%	Productive
22	Electricity cheaper than grid supply by UPCL	81	15.10%	Consumptive
23	Some people in the village have got employment	2	0.40%	Productive
24	Welding facility becomes available within the village itself	1	0.20%	Productive

There are few cases, as mentioned below, the use of power generated through MHP may be treated as the cases having resemblance to productive use of energy:

• People/women undertake threshing work in the night/people undertake grading/ cleaning/sorting of farm produce (2.2%)—mainly Jakhana, Gogina and Taluka
• Due to availability of flour mill in the village, women are relieved of grinding wheat/grains, etc. manually (3%) — mainly Milkhet, Toli, Bursole, Ramgaad
• Has enabled taking up sewing work through electrically driven machine (0.6%) — mainly Ramgaad, Istargaad
• It is now possible to setup small enterprises (0.2%) — mainly Milkhet 
• Enables lifting of water from lower level through use of pump for minor irrigation (0.4%)—mainly Ramgaad'
• Carpenters are able to use electrically driven plainer (0.2%) - mainly Ramgaad
  
• Some people in the village have got employment (0.4%)—mainly Leeti
• Welding facility becomes available within the village itself (0.2%)—mainly Gogina

Overall, in terms of the definition of productive use of energy, there are rare cases which may be termed as the productive use of renewable energy.

The research highlighted three major findings:

• Access to electricity is virtually used for consumptive purposes across the entire state.
• Use of electricity for productive purposes is hardly made except for a few  cases
• Frequent breakdown of power plants has also prevented any attempt of productive uses of energy by local people

The research has also highlighted uni-directional causality running from economic growth to electricity consumption. In the religious places like Gangotri and Yamanotri, many enterprises in the form of hotels, restaurants have mushroomed up. Due to requirement of electricity for the temple, government has established micro hydro power plants mainly for consumptive purposes. However, access to electricity has also resulted into increased hours of operation in the markets, less dependency on diesel in the market, pilgrimage are able to reach the temple during night time, safety of women is enhanced and protection from wild animals ensured. 

The findings have also revealed that profitability of micro hydro power plants sometimes increases due to intermittent uses of electricity for commercial purposes such as wood cutting during the construction of houses, use of wielding machines during construction of houses, marriage ceremonies where power plants charged fixed cost and made some profit. However, these uses are not consistent. 

On a social development front, majority of the respondents highlighted the gains relating access of electricity such as children are now getting extra time in evening for their study, time saving caused to women because of extra hours available to them in late evening and early morning due to availability of light, which they used for disposing of household chores, access to television has resulted in to entertainment and infotainment etc.

►Go to Top

Conclusion

Based on the above findings, the research has strengthen the past research outcomes where combining electricity access with other enabling factors to achieve economic development has been reiterated. It is clear that access to electricity is important but its contribution has to be matched by particular needs of the communities, access to finance, skill development and market linkages.

►Go to Top

Further Information

• Productive use portal on energypedia
• Electricity Basics
  

►Go to Top

References

• Contact the author for further information
• This study has also been published in the newsletter from Government of India: Ministry of New and Renewable Energy. http://mnre.gov.in/file-manager/akshay-urja/may-june-2016/EN/18-21.pdf