Solar Mini-Grids In India and the Challenges to Overcome


Indian solar leap has become the toast of the world with continued improvements. Policies, strategies, and systems is place have done a great job in showing a way for the country to turn around and become the 4th largest economy in the world (already the 7th largest economy in 2016). India has high hopes of bridging the energy deficiency gap by accepting solar as a main stream energy generation source. However, energy generation in Northern, Eastern, and North- Eastern regions in India is still expected to show -1.8, -10.3, and -8.3 per cent deficit respectively. Urban areas in India have received great attention from the Government and have become the centre of development and change; however the rural areas are yet to receive full electrification (near about 5124 villages are still not electrified). As more than 60 per cent of the Indian population lives in villages, India cannot fill the energy deficit gap until the development reaches and changes the energy scenario therein.

Although the Government is trying to remedy the situation with Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), lighting up rural areas far from grid connectivity is facing challenges. In this scenario, establishing Solar mini-grids seems to present a viable solution. Mini grid installations in Chhattisgarh by CREDA and in Sunderbans (WB) supervised by WBREDA have shown promising traits to cut down energy deficit. However, challenges and issues constantly slow down the progress of Solar ‘mini-grid’ from further nationwide installations. Let us focus on these challenges to find solutions for quicker mini-grid installations to illuminate the rural areas.

Present Situation

Government has plans to install Mini-grids with near about 25 kw capacity for commercial purposes in villages. Additionally, the initiative to establish 70 grids in Bihar and UP are promising to satisfy energy starved households. Establishing a mini-grid circle has brought electricity to 130 households in villages like Kasina and Bheldi (in Bihar). All these changes have only achieved near about 16% of the off-grid development target. Considering Indian Government’s target to reach 100 per cent village electrification by 2018, the nation desperately needs a robust mini-grid infrastructure in place to support reaching these milestones.



Policy: The gap and confusion between creation and implementation of policies, material procurement laws, and lack of support in land acquisition- are slowing down mini-grid’s growth. Often a regulatory framework to complete these processes are missing in villages. Lack of awareness regarding solar road maps and tariffs also creates confusion. India needs private entities to deploy isolated Mini-grids. However, Government needs to make its subsidy disbursal rules more flexible to encourage entrepreneurial ventures.

Technological: Technological issues revolve around lack of deployment ratio of net-metering, lack of responses to system abuse, confusions in tariff collection. As long as these problems persist, the rate of mini-grid acceptance in the villages will always be limited.

Economic: Lack of financing processes, has isolated Mini-grid developers from mainstream economy. They are not sure if their ventures will be profitable or not. Unavailability of profitable off-take agreements, lack of debt financing facilities and subsidies on energy storage have made progress for mini-grid development challenging.

To Move Forward

Solar Mini-grids can offer standard grid based energy facilities, without introducing electricity supply or outages. Therefore, solar mini-grid is very important for Indian solar industry to thrive. And, just developing new solar road maps, policies, and programs will not be enough. We need to align all of our efforts to finally develop a system that can help in installing more and more mini-grids.


What We Need:

  • Creating ‘land banks’ for easy factory and plant setup.
  • New designs of off-take agreements to make mini-grid ventures bankable.
  • Microfinance scheme and PV system subsidies deployment that can aid the developers financially.
  • Introducing the option of bundling neighbouring villages to produce and share solar energy, can increase customer base and acceptance towards mini-grid setup.
  • Government should seriously consider involving Nodal agencies to raise awareness.
  • Creating pre-qualification process, and engaging with private entities can also boost mini-grid growth.
  • Policies should be developed upon a flexible frame to match stakeholder’s changing needs.
  • Ensuring a feed-in tariff and levelling cost of energy can incentivize purchase of the technology while helping developers to recover their investment.
  • Incentivizing project development will also encourage small entrepreneurs to shoulder these ventures, pushing mini-grid out of a centralized area to the furthest corners.

Solar mini-grids offer an easy and much feasible way to bring light to Indian rural areas. However, to make mini-grids more effective, some changes need to be made in the existing renewable energy structure. A clear policy development and implementation can certainly help. Nevertheless, the success lies within collaborative work between the Government and private entities.