India’s successful village electrification drive has a casualty: solar appliances

Catching up.
Catching up.
Image: REUTERS/Adnan Abidi
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India’s gains in village electrification have hit its off-grid solar industry.

Given its massive rural population and the low levels of electrification in villages, India was one of the biggest markets for solar power-charged appliances such as lanterns and fans that do not require power from the grid.

The volume of their sales, though, declined nearly 30% year-on-year in the first half of 2019, according to a report from the Global Off-Grid Lighting Association (GOGLA), an industry group based in the Netherlands. Sales have now been down for a year.

“In India, the government has officially declared having reached 100% household electrification through grid extension under the Saubhagya scheme; this is reported to have had a direct influence on the off-grid solar market,” the report says.

About 83% of rural homes in India had electricity connection in 2015, according to official estimates. Prime minister Narendra Modi’s flagship Saubhagya scheme, launched in 2017, claims to have brought this number up to 99.93%.

But the rise in village residents’ access to the grid is not a death knell for off-grid solar products as many households still don’t get electricity for more than a few hours a day, said Viraj Gada, GOGLA’s India regional representative.

Power outages are still common in Indian villages. Because residential electricity rates are kept low by regulation, state-owned utilities, nearly always financially-challenged, have little incentive to improve supply.

Off-grid solar systems come with a battery and hence offer some reliability to complement the erratic supply from the grid. Additionally, “aspirations of rural consumers are also increasing,” Gada said.

While sales of smaller products such as lanterns and fans are falling, multi-light and solar home systems, which can run appliances such as television sets for a limited time, recorded an increase in sales in the first half of this year. Multi-light system sales reached 92,000 units, almost doubling from last July-December. Solar home system sales crossed the 50,000-unit mark for the first time, the report said.