Off-grid power producers in the country are in a fix as the Centre aims to increase penetration of power grid connectivity to un-electrified villages and households. The Modi government has launched the Saubhagya scheme with the aim of making electricity accessible to every household in the country by the end of 2018.

The USP of off-grid power producers was that they were providing electricity to villages where grid connectivity was not considered feasible earlier. However, with the Saubhagya targets, these power producers will have to augment their business models or will be rendered irrelevant, an industry watcher told BusinessLine .

According to a government statement, under the Saubhagya scheme, the government will provide for solar power packs of 200-300 Watt power with battery bank for un-electrified households located in remote and inaccessible areas. The pack will comprise five LED lights, a DC fan and a DC power plug. The government will also assure repair and maintenance for five years.

This is in addition to the massive rural electrification drive that the Centre is already undertaking with just 2,791 inhabited villages left un-electrified in the country. In terms of household electrification, the Centre is left to electrify just 4,09,72,169 houses by 2018, against a target of 13,87,71,838.

According to the Ministry of New and Renewable Energy, distributed or decentralised renewable power projects are to be established in areas which are not likely to be electrified in the near future.

There are broadly two ways out for these projects. The first is that they supply the power they generate to the State government power distribution companies (discoms) under the Open Access guidelines. The second is to augment the power supply that comes through the grid and offer reliability to consumers.

Unviable projects

Said an off-grid power producer: “These projects were not designed to feed to the grid. Even at a price of ₹8 a unit, it will not be a fit business proposition for these small projects to feed to the grid.”

This is too high a price to buy power for a discom, as solar energy is now available for as low as ₹2.44 a unit from larger projects.

The worried off-grid power producers have now pinned their hopes on the Centre’s principal policy ideating body, the Niti Aayog.

The Aayog was tasked to devise the National Energy Policy, a guiding vision for India’s energy mix in the medium to long term.

According to Policy, floated by the Aayog in June, electrification of smaller habitations and remote locations will not be postponed until grid reaches, and in the short run, off-grid solutions will be provided. But not much has been said about what will happen to these producers once the grid reaches there.

A financing agency representative supporting multiple off-grid projects in the country said: “Since discoms have been errant, we are in talks with the NITI Aayog to fix a tariff at which they will buy power once the grid reaches these villages.”

“In the over all power procurement of discoms, the power that they will have to buy from off-grid producers will be negligible and they can afford it,” a hopeful off-grid player said.