An Integrated Energy Approach Could Improve Access in Jharkhand: Study
— Vagisha Nandan (ISEP), Harshit Vallecha (IIT Kharagpur)
A household in Ponchi, a village in Palamu district in Jharkhand lost their electricity connection a year ago. A family of 11, with limited means, found it difficult to pay the monthly charges required to maintain connection and have been relying ever since on kerosene as their primary lighting source. The unreliable nature of supply makes them question if it’s even worth getting connected again.
While rural electrification in Jharkhand has improved significantly over the last decades, going from 10 percent in 2001 to 32 percent in 2011, and more recently, a study by Initiative for Sustainable Energy Policy (ISEP) found rural access was at 87 percent in 2019. However, it indicates approximately 3 million people in the state still lack access. Despite remarkable gains, several challenges exist in connecting the remaining households and providing reliable power supply to those who are connected. Jharkhand requires power sector reforms and state-level policy interventions to make universal access a reality.
Policy gaps
In 2017, the government’s Saubhagya scheme offered subsidized grid connections, or alternatively, access to off-grid technology. However, the scheme was designed to provide free connections for poor households, but made no provision for them to cope with the recurring payments needed to maintain these connections. In addition, for those who could afford to pay, an area of concern was poor supply. Households were not prepared to spend the subsidized rate of INR 500 (~USD 6.70) towards the cost of connection when they were not guaranteed reliable 24/7 power. Another flaw in Saubhagya’s design is the way in which defaulting consumers were dealt with: a defaulting consumer becomes ineligible to resume its connection.
Issues with quality of supply
ISEP’s survey of 1440 rural households found that on an average, the availability of power supply for an electrified household was limited to 9 hours per day, with typically 5 days of complete power outages each month. These problems are worsened when DISCOMs suffer from financial constraints that prevent them from upgrading their infrastructure to meet with the expanding capacity. Despite the availability of surplus generation capacity, DISCOMs are unable to procure deficit power from Gencos owing to poor recovery rates due to metering and collection inefficiencies. Jharkhand Bijli Vitran Nigam Limited (JBVNL) owes more than INR 50 billion (~USD 676 million) to Damodar Valley Corporation (DVC), one of the generation utilities in the state.
However, it’s not just poor households that default on their payments. The state utilities face non-payment from government consumers, whose connections, in contrast to rural households, are not at risk of disconnection. This compounds the utilities’ cash flow problems. Indian states collectively owed about INR 410 billion (~USD 5.4 billion) to DISCOMs for fiscal year 2019. JBVNL arrears from government defaulters stood at more than INR 1.73 billion (~USD 22.9 million).
Non-payment, combined with inefficient metering and billing contributes to an Aggregate Technical and Commercial (AT&C) loss of around 36 percent, which is approximately twice the national average. Metering and billing issues are particularly prominent in rural areas. The ISEP survey in rural Jharkhand found that only 9 percent of grid connected households were metered, received a bill, and paid it on time. Although DISCOMs are adopting measures like feeder metering, consumer indexing and installing smart meters to reduce their losses, the gaps are still prominent. JBVNL admits that less than 10 percent of the rural consumers connected under Saubhagya or DDUGJY (12th Plan) scheme receive electricity bills.
An integrated approach to access
Achieving true universal energy access in Jharkhand requires an integrated approach. Firstly, communities and households currently without access owing to socio-structural dynamics, payment defaults, or other issues need to be reached out to via concerted reconnection campaigns, waiving of penalties, and flexible payment options.
Secondly, while poor supply is closely linked with the DISCOM’s financial and operational inefficiencies, this cash flow crisis must be managed reasonably by ensuring timely payments by non-paying government facilities, who are currently the utilities’ biggest defaulters. Ensuring greater transparency can increase pressure on government officials to pay bills in a timely fashion. Pre-paid metering for government consumers along with service level agreements can reduce defaulting and consumption during non-essential hours.
Thirdly, operational inefficiencies must be reduced. This can be done by introducing public-private partnerships (PPPs). In the case of Jharkhand, private players like Tata Steel Limited (TSL) and Jamshedpur Utilities and Services Company (JUSCO) have set an excellent model of supplying round the clock power with minimal AT&C losses in a few urban centres. Introducing distribution franchises through PPPs could result in better overall management and improve collections, thereby enhancing the quality of supply.
Lastly, Jharkhand’s diverse geography and population distribution demands a suite of energy access solutions in order to achieve universal access effectively. Decentralized renewable energy (DRE) is a much more reliable solution for the state whose large tribal population, accounting for a quarter of the state’s inhabitants, resides in groups of sparsely located hamlets. However, the rate of deployment of distributed generation systems remains low due to uncoordinated integration of off-grid systems in energy access planning. Quite often, off-grid projects developed by private players lose their purpose after the penetration of grid access by state utilities, owing to uncoordinated planning which poses a risk to the off-grid developers’ return on investment.
Jharkhand needs an integrated energy policy that incorporates both grid and off-grid energy access modes. This requires policy level interventions by the state regulator, the Jharkhand State Electricity Regulatory Commission (JSERC), in order to formulate provisions that direct DISCOMs to introduce transparency in grid extension plans and improve coordination with the state renewable energy agency, the Jharkhand Renewable Energy Development Agency (JREDA), as well as private off-grid players. Coordinated planning strategies integrating both grid and off-grid initiatives could provide sustainable energy access solutions to the remote and least electrified pockets of Jharkhand.
